Robo.Ai Inc 20-F for FY2025
Robo.Ai Inc. (AIIO)
About this 20-F
Robo.Ai Inc filed this 20-F on April 30, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $950K
- down 92.1% from $12M a year earlier
- Net loss
- $167.34M
- compared with a net loss of $172.54M a year earlier
- Diluted EPS
- -$10.59
- compared with -$11.81 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OR
For the Fiscal Year Ended
OR
For the transition period from _________ to __________
OR
Date of event requiring this shell company report _________
Commission file number
(Exact Name of registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Telephone:
Email:
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of
each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: as of December
31, 2025,
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐
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Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☐
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | Emerging growth company |
If an emerging growth company that prepares its financial statements
in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act.
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
☐ Yes
If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| International Financial Reporting Standards as issued | Other ☐ | |
| By the International Accounting Standards Board ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
Table of Contents
i
CERTAIN TERMS AND CONVENTIONS
Unless otherwise stated or unless the context otherwise requires, the terms “Company,” “the registrant,” “our company,” “the company,” “we,” “us,” “our,” “ours,” and “Robo.ai” refer to Robo.ai Inc., an exempted company incorporated under the laws of the Cayman Islands and the term the “Group” refers to Robo.ai Inc. and its subsidiaries. In this annual report:
“$,” “US$” and “U.S. dollar” each refers to the United States dollar.
“Amended and Restated Memorandum and Articles of Association” means the fourth amended and restated memorandum and articles of association of Robo.ai Inc., dated October 23, 2025.
“Business Combination Agreement” means that certain Business Combination Agreement, dated as of April 15, 2022, as amended as of September 28, 2022, by and among Robo.ai Inc., East Stone, ICONIQ, Muse Merger Sub I Limited, Muse Merger Sub II Limited and Navy Sail International Limited.
“Business Combination” means the Mergers and the other transactions contemplated by the Business Combination Agreement and related ancillary documents.
“Closing” or “Closing Date” means the closing of the Business Combination, or November 11, 2022.
“Code” means the Internal Revenue Code of 1986, as amended.
“East Stone” means East Stone Acquisition Corporation, a British Virgin Islands business company.
“EarlyBird” refers to EarlyBird Capital, Inc.
“EV” refers to electric vehicle.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“I-Bankers” refers to I-Bankers Securities, Inc.
“ICONIQ” means ICONIQ Holding Limited, a Cayman Islands exempted company.
“JOBS Act” means the Jumpstart Our Business Startups Act.
“Listing Rules of Nasdaq” refers to the listing rules of Nasdaq Stock Market LLC.
“Mainland China” refers to the People’s Republic of China, excluding, for the purpose of this annual report, Taiwan, the Hong Kong Special Administrative Region and the Macau Special Administrative Region.
“Nasdaq” means the Nasdaq Stock Market LLC.
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“Robo.ai,” the “Company,” “the registrant,” “our company,” “the company,” “we,” “us,” “our,” or “ours” means Robo.ai Inc., an exempted company incorporated in the Cayman Islands.
“PIPE” means the issuance and sale by Robo.ai Inc. of the PIPE Shares to the PIPE Investors, pursuant to the Subscription Agreements.
“PIPE Investors” means the two accredited investors that each respectively entered into a Subscription Agreement with East Stone and Robo.ai Inc. on June 15, 2022 and September 23, 2022, namely the June PIPE Investor and the September PIPE Investor, respectively.
“PIPE Shares” means up to 38,986,354 Class B ordinary shares being issued to the PIPE Investors in accordance with the Subscription Agreements.
“PRC” or “China” refers to the People’s Republic of China.
“Class A ordinary shares” means the class A ordinary shares, par value $0.002 per share (before the reverse stock split becoming effective) or par value $0.002 per share (after the Reverse Stock Split becoming effective), of Robo.ai Inc., each of which is entitled to twenty-five (25) votes.
“Class B ordinary shares” means the class B ordinary shares, par value $0.002 per share (before the reverse stock split becoming effective) or par value $0.002 per share (after the Reverse Stock Split becoming effective), of Robo.ai Inc., each of which is entitled to one (1) vote.
“Representative’s Warrants” means the 690,000 warrants of East Stone issued to I-Bankers and EarlyBird, in connection with their services as underwriters for East Stone’s initial public offering, and which were converted upon the consummation of the Business Combination into warrants of Robo.ai Inc., each of which entitles the holder thereof to purchase one full Class B ordinary share of Robo.ai Inc. in lieu of one ordinary share of East Stone.
“RMB” and “Renminbi” each refers to the legal currency of the People’s Republic of China, excluding, for the purpose of this definition, Taiwan, the Hong Kong Special Administrative Region and the Macau Special Administrative Region.
“SAFE” means the State Administration of Foreign Exchange of the PRC, or, where the context permits, its designated local authorities.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as may be amended.
“SEC” means the U.S. Securities and Exchange Commission.
“U.S.” means the United States of America.
“U.S. GAAP” or “GAAP” means generally accepted accounting principles in the United States of America.
We report financial results in U.S. dollars, and a material portion of its sales and operating costs are realized in currencies other than the U.S. dollar. As such, we are exposed to currency risk due to cash, trade and other receivables, borrowings and trade and other payables denominated in foreign currency, being primarily the U.S. dollar. If the value of any currencies in which sales are realized, particularly Renminbi, depreciates relative to the U.S. dollar, our foreign currency revenue will decrease when translated to U.S. dollars for reporting purposes. In addition, any depreciation in foreign currencies could result in higher local prices, which may negatively impact local demand and have a material adverse effect on our business, results of operations or financial condition. Alternatively, if the value of any of the currencies in which operating costs are realized appreciates relative to the U.S. dollar, our operating costs will increase when translated to U.S. dollars for reporting purposes.
We own or have rights to trademarks or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. In addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that protect the content of our products. This annual report may also contain trademarks, service marks and trade names of other companies, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this annual report is not intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience, some of the copyrights, trade names and trademarks referred to in this annual report or the documents incorporated by reference herein are listed without their ©, ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks. All other trademarks are the property of their respective owners.
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FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that reflect our current expectations and views of future events. These forward-looking statements are made under the “safe-harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements contained in this annual report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements include statements relating to:
| ● | the ability to maintain the listing of Robo.ai Inc.’s securities on the Nasdaq Capital Market; |
| ● | our market opportunity and our ability to acquire new customers and retain existing customers; |
| ● | our ability to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing client needs, requirements or preferences; |
| ● | the timing and impact of our growth initiatives on our future financial performance; |
| ● | the occurrence of one or more high profile accidents by autonomous driving vehicles that result in lower customer demand or more stringent regulations in one or more jurisdictions in which we intend to operate; |
| ● | our ability to execute our business model, including market acceptance of our planned products and services and achieving sufficient production volumes at acceptable quality levels and prices; |
| ● | alternative autonomous driving products and technological improvements by our peers and competitors; |
| ● | our ability to raise capital; |
| ● | the possibility that we may be adversely affected by other economic, business and/or competitive factors, which might be beyond our control; |
| ● | changes in applicable laws or regulations; and |
| ● | the other matters described in the section titled “Item 3. Key Information—D. Risk Factors” of this annual report. |
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Item 3. Key Information—D. Risk Factors,” “Item 5. Operating and Financial Review and Prospects,” and elsewhere in this annual report. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this annual report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of these forward-looking statements after the date of this annual report or to conform these statements to actual results or revised expectations.
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PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
A. [Reserved]
B. Capitalization and indebtedness.
Not applicable.
C. Reasons for the offer and use of proceeds.
Not applicable.
D. Risk factors.
Summary of Risk Factors
Below please find a summary of the principal risks we face, organized under relevant headings.
Risks Relating to Our Business
| ● | Our ongoing business transformation and limited operating history make it difficult to evaluate our prospects and the risks and challenges we may encounter. |
| ● | The cessation of our major product line of Rabdan branded vehicles has materially and adversely affected, and may continue to materially and adversely affect, our business, financial condition, results of operations and prospect. Failure to effectively and efficiently manage changes of our existing business and new business may materially and adversely affect our ability to capitalize on new business opportunities. |
| ● | We conduct analysis and outlook on the future market and will introduce some new automotive products and adjust some of our past ones, which may cause some impacts and challenges to our Company at the market and production levels. |
| ● | We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses in our internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results. |
| ● | Our ability to develop, manufacture, and deliver automobiles of high quality and appeal to customers, on schedule, and on a large scale is unproven and still evolving. Our vehicles may not perform in line with customer expectations. |
| ● | Our financial statements have been prepared on a going concern basis and we may need to raise additional capital in the future to fund our continued operations. |
| ● | Our ability to generate positive cash flow is uncertain, as customers may cancel or delay orders. |
| ● | Changes in international trade policies, tariffs and treaties affecting imports and exports may have a material adverse effect on our business operations. |
| ● | We may be adversely affected by economic uncertainty and volatility in the market, including as a result of the military conflicts in Ukraine and the Middle East. |
| ● | Our inability to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which we may apply could have a material adverse effect on our business, results of operations or financial condition. |
1
| ● | Our brand and reputation could be harmed by negative publicity or safety concerns regarding our products or the products of our competitors, which could materially and adversely affect our business, results of operations or financial condition. |
| ● | We are dependent upon our relationship with certain third-party manufacturers for the manufacturing of our products and technological partners for the advancement of our research and development. |
| ● | The proposed transaction to acquire operational rights to a facility in Pakistan exposes us to substantial counterparty and regional risks. |
| ● | Any problems or delays in the establishment of new semi-knockdown (“SKD”) vehicle manufacturing bases could negatively affect the production of our vehicles. |
| ● | Our future growth is dependent upon consumers’ willingness to adopt EVs and specifically our vehicles. |
| ● | The global passenger vehicle market is highly competitive, and demand for EVs may be cyclical and volatile. We may not be successful in competing in this industry, which may materially and adversely affect our business, results of operations or financial condition. |
| ● | Changes in government policies that are favorable for EVs or domestically manufactured vehicles in the markets where we intend to sell our vehicles could materially and adversely affect our business, financial condition, results of operations, and prospects. |
| ● | Developments in alternative technologies or improvements in the internal combustion engine (“ICE”) may materially adversely affect the demand for our EVs. |
| ● | Our research and development efforts may not yield expected results. |
| ● | We may be subject to intellectual property infringement claims or other allegations, which may be time-consuming and result in substantial costs and removal of data or technology from our system. |
| ● | Any deterioration in relationships between us and our employees, as well as any work stoppage or similar difficulties, could have a material adverse effect on our business, results of operations or financial condition. |
| ● | Our vehicles are subject to motor vehicle standards and the failure to satisfy such mandated safety standards would materially and adversely affect our business and results of operations. |
Risks Relating to the Regions in Which We Operate
| ● | We face risks associated with our international operations, including unfavorable regulatory, political, trade, tax and labor conditions in the UAE and Mainland China, and if we are unable to effectively manage these risks, our business, financial condition and results of operations may be materially and adversely affected. |
| ● | Uncertainties with respect to the UAE legal system and changes in laws and regulations in the UAE, including with respect to licenses, approvals and taxes, could adversely affect our business. |
| ● | The economies of a number of our markets in the Gulf Cooperation Council region are highly dependent upon the oil and gas industry. |
| ● | Current and escalating geopolitical tensions in the middle east may adversely affect the potential business opportunities for government procurement contracts for GHIATH vehicles. |
| ● | Our insurance coverage may be inadequate or unavailable to cover losses resulting from geopolitical instability and ongoing armed conflict in the Middle East. |
| ● | Because some of our operations are in Mainland China, uncertainties with respect to the PRC legal system and rapid changes in laws and regulations in Mainland China could adversely affect our business. |
| ● | The Chinese government may exercise significant oversight and discretion over the conduct of our business in Mainland China and may intervene in or influence our operations in Mainland China at any time, which could result in a material change in our operations and/or the value of our securities. |
| ● | As some of our operations are conducted in Mainland China, recent regulatory developments in Mainland China, including an intent indicated by the Chinese governmental authorities to exert more oversight and control over offerings that are conducted outside Mainland China and/or foreign investment in Mainland China-based issuers, may subject us to additional regulatory review or otherwise restrict or hinder our ability to offer securities and raise capitals outside Mainland China, all of which could materially and adversely affect our business and cause the value of our securities to significantly decline. |
| ● | It may be difficult to enforce a U.S. judgment against us or our directors and officers outside the United States, or to assert U.S. securities law claims outside of the United States. |
Risks Relating to Being a Public Company
| ● | We will incur increased costs as a result of operating as a public company, and our management devotes substantial time to new compliance initiatives. |
| ● | A market for our securities may not be sustained, which would adversely affect the liquidity and price of our securities. |
2
Risks Relating to Ownership of Our Ordinary Shares
| ● | Our ability to pay any dividends in the future will depend entirely on distributions from ICONIQ and our other subsidiaries. |
| ● | As a “foreign private issuer” under the rules and regulations of the SEC, we are permitted to file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules and are permitted to follow certain home-country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers. |
| ● | We are a “controlled company” within the meaning of the Listing Rules of Nasdaq and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies. |
| ● | The market price and trading volume of our Class B ordinary shares and warrants may be volatile. |
Risks Relating to Our Business
Our ongoing business transformation and limited operating history make it difficult to evaluate our prospects and the risks and challenges we may encounter.
Since August 2025, we have been transitioning our business focus from primarily developing smart electric vehicles to building a decentralized, AI-powered intelligent asset platform that connects AI terminals across sectors. This transformation involves significant changes to our business model, technology architecture, and target markets. It is difficult to predict our future revenues and appropriate budget for our expenses, and we may have limited visibility into trends that may emerge and affect our business, particularly as we expand into new areas such as AI-driven intelligent mobility, decentralized computing, and smart logistics, where we have limited operating experience. Given that our new initiatives remain at an early stage of development, we cannot assure you that we will be able to successfully execute our transformation strategy or achieve commercial success in these new areas.
We may face various challenges during this transition, including technology integration risks, higher research and development costs, potential delays in product commercialization, and uncertainties in market acceptance. Our existing products, such as MUSE and Astra, are still under development, and our ability to leverage their technologies to support our new platform model remains untested. Furthermore, as we shift toward an AI-driven ecosystem, we may need to modify our business model or discontinue certain legacy projects. Any failure to manage these changes effectively could adversely affect our business, financial condition, and results of operations.
The cessation of our major product line of Rabdan branded vehicles has materially and adversely affected, and may continue to materially and adversely affect, our business, financial condition, results of operations and prospect. Failure to effectively and efficiently manage changes of our existing business and new business may materially and adversely affect our ability to capitalize on new business opportunities.
In March 2024, we were orally informed by a representative of the UAE authority, who oversees the trademark use of the Rabdan brand for vehicles, to refrain from producing any vehicles under the Rabdan brand, as the authority intended to create a premium automotive product line using the Rabdan moniker. We immediately suspended new orders of Rabdan branded vehicles and engaged in discussions for collaborations with Rabdan Motors LLC, an entity set up by the UAE authority to develop a premium automotive product line under Rabdan brand.
In June 2024, we were notified by the same representative to refrain from selling any Rabdan branded vehicles within the UAE. Since that time, we have commenced the re-badging of vehicles held in inventory from the Rabdan brand to our own brand and have those re-branded vehicles.
In connection with the discontinuance of the Rabdan branded vehicles, we initiated a workforce restructuring plan beginning in January 2024. As of December 31, 2024, we had reduced our workforce by 222 employees and recognized severance-related charges totaling US$1.7 million, which were recorded within general and administrative expenses, selling expenses, and research and development expenses in our consolidated statement of operations for the year then ended.
In the event we may incur additional severance costs in future periods as the restructuring plan progresses, such costs will be recognized in the period in which they become probable and reasonably estimable, in accordance with ASC 420-10.
We have been actively exploring new partnerships in new regions, including potential investment from original equipment manufacturers (“OEMs”) in China. However, we may not find alternative partners on favorable terms or maintain our existing strategic cooperation relationships with our business partners. If we are unable to introduce or manage new and existing brands and models of vehicles that customers recognize as valuable, we may fail to retain and attract customers and our operating results may be further adversely affected.
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Our ability to develop, manufacture, and deliver automobiles of high quality and appeal to customers, on schedule, and on a large scale, is unproven and still evolving. Our vehicles may not perform in line with customer expectations.
The sustainability of our business depends, in large part, on our ability to timely execute our plan to develop, manufacture, and deliver, on a large scale, vehicles of high quality and appeal to customers. Currently, we have not launched mass production of any vehicles and our plans for the development and commercialization of our vehicles have experienced changes and delays in the past few years. See also “- Any delays in the manufacturing and launch of the commercial production vehicles in our pipeline could have a material adverse effect on our business.”
The development, manufacturing, and delivery of automobiles of high quality to achieve our targeted production volume is and will be subject to risks, including with respect to:
| ● | lack of necessary funding; |
| ● | delays or disruptions in supply chain; |
| ● | quality control deficiencies; |
| ● | compliance with environmental, workplace safety, and relevant regulations; and |
| ● | cost overruns. |
Historically, automakers are expected to periodically introduce new and improved models to stay abreast of the market. To remain competitive, we may be required to introduce new vehicle models and perform facelifts on existing vehicle models earlier or more frequently than is originally planned. We cannot assure that any models launched will appeal to the customers as expected.
Furthermore, we rely on third-party ESPs, such as W Motors and other service providers for the designing, development and manufacturing of our vehicles. To the extent these third-party service providers experience any difficulties in providing us with the services, we could experience delays in delivering vehicles. Any delay in the designing, development, manufacturing, and delivery of any of our vehicle models could subject us to customer complaints and materially and adversely affect our reputation, demand for our vehicles, and our growth prospects.
Any of the foregoing could materially and adversely affect our business, financial condition, and results of operations.
We conduct analysis and outlook on the future market and will introduce some new automotive products and adjust some of our past ones, which may cause some impacts and challenges to our Company at the market and production levels.
As of the date of this annual report, we have postponed the research and development of supercars and ADA, a mid-sized compact SPV models. We are conducting market analysis and research to explore a shift in focus to autonomous logistics vehicles and specialty vehicles in the UAE. We believe that these vehicle lines could be more adaptable to future market competition. Although we have already reserved corresponding technologies, personnel and resources, we anticipate that we will face some risks and challenges in this market shift:
| ● | The risk of market acceptance: we will face the challenges of promoting to new markets. |
| ● | The risk of technology and regulations: The production process and quality control system of the new product may be different from those of the original product. If quality cannot be effectively controlled during the production process, and problems such as unstable supply of components and imperfect assembly techniques occur, it may lead to uneven product quality, increase after-sales maintenance costs, and damage the brand image. |
| ● | The risk of internal management: The transformation of product strategy requires us to make corresponding adjustments in aspects such as strategic planning, organizational structure, and human resources. If the work among various departments within the Company cannot be effectively coordinated, resulting in the inadequate implementation of the strategy, it may affect the promotion of new products and the overall development of the Company. |
We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses in our internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
We have identified material weaknesses in our internal control over financial reporting relating to (i) our lack of sufficient competent financial reporting and accounting personnel with appropriate understanding of the generally accepted accounting principles in the United States of America (“U.S. GAAP”) and financial reporting requirements set forth by the SEC to address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial statements, including disclosure notes, in accordance with U.S. GAAP and SEC financial reporting requirements, (ii) our lack of period end financial closing policies and procedures for preparation of consolidated financial statements, including disclosure notes, which are in compliance with U.S. GAAP and relevant SEC financial reporting requirements, (iii) our lack of internal file management procedures and an effective record management system which causes the deficiency in liability recording and cut-off evaluation process, and (iv) our lack of sufficient approval process for expenditures. The deficiency may result in material errors going unnoticed or unauthorized transactions being processed.
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In view of the material weaknesses in the Company’s internal control over financial reporting, the Company has hired a qualified financial reporting personnel with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements to oversee the accounting closing and financial reporting. The Company has performed additional work to obtain assurance regarding the reliability of its financial statements. However, the Company still has substantial work remaining to remedy these material weaknesses, and the Company is in the process of further developing a remediation plan to address its control deficiencies.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. To respond to the material weaknesses we identified, we plan to implement enhanced communication processes with our independent registered public accounting firm relating to future Public Company Accounting Oversight Board (“PCAOB”) audits of our financial statements, as described in “Item 15. Controls and Procedures.” Even if we successfully implement our remediation plan, there is no assurance that this initiative will ultimately have its intended effect.
If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such a case, we may be unable to maintain compliance with applicable U.S. securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result.
Our financial statements have been prepared on a going concern basis and we may need to raise additional capital in the future to fund our continued operations.
Our ability to continue as a going concern is subject to significant uncertainty due to our deteriorating financial condition and lack of executed recovery measures. For the years ended December 31, 2025, 2024 and 2023, the Company incurred significant and recurring operating losses of approximately US$157.1 million, US$95.4 million and US$212.0 million, respectively. Operating cash flows were negative at approximately US$5.1 million and US$138.0 million for the years ended December 31, 2025 and 2023, respectively, compared with a positive inflow of US$33.6 million for the year ended December 31, 2024. Additionally, we reported an accumulated deficit of US$904.4 million as of December 31, 2025, as compared to US$737.0 million as of December 31, 2024.
We remain highly dependent on securing external financing to sustain our operations, with no assurance that additional capital will be available on acceptable terms, or in sufficient amounts, if at all. In addition, unresolved litigation exposures and guarantee obligations create further contingent demands on our limited liquidity. Our commercial prospects and operational outlook have been materially weakened by the discontinuation of our Rabdan-branded vehicle line, following regulatory directives from UAE authorities, without the introduction of replacement revenue streams.
While management has intentions to obtain additional financing and reduce expenditures, no definitive agreements have been reached save as disclosed, and no credible pathway to achieving financial stability has been demonstrated. Based on these conditions, and absent the successful execution of a comprehensive restructuring or capital-raising strategy, substantial doubt about our ability to continue as a going concern has not been alleviated. These matters represent a material business risk, exposing us to a heightened likelihood of financial distress, restructuring, or liquidation.
We may in the future need to raise additional funds to meet our capital requirements, and such funds may not be available to us on commercially reasonable terms, or at all, which could materially and adversely affect our business, results of operations or financial condition and our ability to continue as a going concern.
Our business and future plans are capital-intensive. We will need significant capital to, among other things, conduct research and development, ramp up our production capacity and build up our sales and service network. As we ramp up our production capacity and operations, we may also require significant capital to acquire, construct and maintain our property, plant and equipment and such costs may be greater than anticipated. We expect that our level of capital expenditures will be significantly affected by user demand for our vehicles and other services. As a result, our future capital requirements may be uncertain and actual capital requirements may be different from those we currently anticipate. We may seek equity or debt financing to finance a portion of our future capital expenditures. Such financing might not be available to us in a timely manner or on terms that are acceptable, or at all. If we fail to obtain required additional financing to sustain our business before we are able to produce levels of revenue to meet our financial needs, we would need to delay, scale back or eliminate our business plan and may be forced to curtail or discontinue our operations.
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Our ability to obtain the necessary financing to carry out our business plan is subject to a number of factors, including general market conditions and investor acceptance of our business plan. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. In particular, recent disruptions in the financial markets and volatile economic conditions could affect our ability to raise capital. If we are unable to raise sufficient funds, we will have to significantly reduce our spending or delay or cancel our planned activities. In addition, our future capital needs and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could dilute our shareholders. The issuance of debt securities and incurrence of additional indebtedness would result in increased debt service obligations. Holders of any debt securities or preferred shares will have rights, preferences and privileges senior to those of holders of our ordinary shares in the event of liquidation. Any financial or other restrictive covenants from any debt securities would restrict our operations or our ability to pay dividends to our shareholders.
Our ability to generate positive cash flow is uncertain, as customers may cancel or delay orders.
We had negative cash flow from operating activities of US$138.0 million, excluding US$45.0 million in an escrow account for the year ended December 31, 2023. We had cash inflow of $33.6 million for the year ended December 31, 2024. We had negative cash flow from operating activities of US$5.1 million for the year ended December 31, 2025. We had comprehensive loss of US$268.2, US$172.5 million, and US$169.3 million for the years ended December 31, 2023, 2024, and 2025, respectively.
We may continue to have significant negative cash flow from operating and investing activities in the future until we are able to achieve mass production of our vehicles and generate significant revenue, as we expect to incur research and development, general and administrative expenses, and make capital expenditures in our efforts to engage in research and development work and ramp up operations. Such cancelations or delays could materially and adversely affect our ability to generate positive cash flow (which could in turn affect our ability to raise needed capital on reasonable terms), diminish supplier or customer willingness to enter into transactions with us and have other adverse effects that may decrease our long-term viability. There can be no assurance that we will achieve positive cash flow in the near future or at all.
Changes in international trade policies, tariffs and treaties affecting imports and exports may have a material adverse effect on our business operations.
There have recently been significant changes to international trade policies and tariffs affecting imports and exports. Any significant increases in tariffs on goods or materials or other changes in trade policy could negatively affect our business operations.
Recently, the U.S. has implemented a range of new tariffs and increases to existing tariffs. In response to the tariffs announced by the U.S., other countries have imposed, are considering imposing, and may in the future impose new or increased tariffs on certain exports from the United States. There is currently significant uncertainty about the future relationship between the United States and other countries with respect to trade policies, taxes, government regulations and tariffs. and we cannot predict whether, and to what extent, current tariffs will continue or trade policies will change in the future.
Tariffs, the threat of tariffs, increased tariffs or retaliatory tariffs could have a significant negative impact on automotive industry and our businesses. These tariffs and threats of tariffs and other potential trade policy changes could negatively affect our business prospects, or lead to material adverse effects on our company. Among other things, historical financial performance of our company affected by trade policies and/or tariffs may not provide useful guidance as to our future performance, because our future financial performance may be materially affected by new U.S. tariffs or foreign retaliatory tariffs, or other changes to trade policies.
The Company is an automotive enterprise targeting the markets of Dubai and the Middle East. Therefore, the impact of the U.S. tariffs on the Company is limited. Our focus remains on local markets and other segments of the global supply chain and Dubai and the Middle East is not a major source of U.S. auto imports. However, U.S. tariffs could indirectly affect global logistics and supply chain. The Company will closely monitor the disturbances to the global supply chain caused by the tariff policy and flexibly adjust its procurement, production and market strategies.
Our global operations, manufacturing capabilities, and financial performance face material adverse effects from disruptions in the supply of rare earth elements and neodymium-iron-boron magnets due to China’s export restrictions. These restrictions, effective since April 4, 2025, may impair our ability to source critical components for EV motors, power steering, braking systems, and electronic subsystems, potentially halting production lines, increasing costs, and eroding market competitiveness.
We may not be able to adequately address the risks presented by these tariffs or other potential trade policy changes. Consequently, our operations and financial results could be adversely affected as a result of tariffs or changes to trade policies, which may cause the market value of our securities to decline.
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We may be materially adversely affected by current global geopolitical conditions resulting from the ongoing Russia-Ukraine conflict and the recent escalation of conflict in the Middle East and Southwest Asia.
United States and global markets are experiencing volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine conflict and the recent escalation of conflict in the Middle East and Southwest Asia. In response to the ongoing Russia-Ukraine conflict, the North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Certain countries, including the United States, have also provided and may continue to provide military aid or other assistance to Ukraine and to Israel, or have undertaken or will undertake military strikes in Southwest Asia, increasing geopolitical tensions among a number of nations. The invasion of Ukraine by Russia and the escalation of conflict in the Middle East and Southwest Asia and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union, Israel and its neighboring states and other countries have created global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing conflicts are highly unpredictable, they could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions and increased cyber-attacks against U.S. companies. Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.
The extent and duration of the ongoing conflicts, resulting sanctions and any related market disruptions are impossible to predict, but could be substantial, particularly if current or new sanctions continue for an extended period of time or if geopolitical tensions result in expanded military operations on a global scale. Any such disruptions may also have the effect of heightening many of the other risks described in this section. Although we are not aware of any company-related operations or activities in Russia, the Middle East and Southwest Asia, any economic sanctions and other laws and regulations could disrupt our supply chains, impair our ability to compete in current or future markets, or otherwise subject us to potential liability. Failure by our employees, representatives, contractors, agents, intermediaries, or other third parties to comply with applicable laws and regulations in this regard could have negative consequences for us, including reputational harm, government investigations, loss of export privileges, and penalties or fines. These economic sanctions and other restrictions continue to evolve, and the long-term potential impact on our operations and business is still unclear.
If sanctions and supply chain disruptions discussed above persist when we commence commercial production of vehicles, we may experience, including but not limited to, suspension of the production, purchase, sale or maintenance of certain items; higher costs due to constrained capacity or increased commodity prices or challenges sourcing materials (e.g., nickel, palladium, neon, cobalt, iron, platinum or other raw material sourced from Russia, Belarus, or Ukraine); surges or declines in consumer demand for which we are unable to adequately adjust our supply; inability to supply products at competitive prices or at all due to export restrictions, sanctions, or the ongoing invasion; or exposure of other supply chain risks in light of Russia’s invasion of Ukraine and/or related geopolitical tension and may be forced to “de-globalize” our supply chain. The occurrence of any such event may materially and adversely affect our business, results of operations and prospects.
Any of the abovementioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion of Ukraine, the escalation of conflict in the Middle East and Southwest Asia and subsequent sanctions or related actions, could adversely affect our business, results of operations and prospects.
Our inability to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which we may apply could have a material adverse effect on our business, results of operations or financial condition.
We expect in the future to apply, for grants, loans and tax incentives under government programs designed to support the development of autonomous driving vehicles and related technologies. Our ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of our applications to participate in such programs. The application process for these funds and other incentives will likely be highly competitive. There is no assurance that we will be successful in obtaining any of these additional grants, loans and other incentives. We cannot assure you that we will be successful in obtaining any of these grants, loans and other incentives, and our inability to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which we may apply could have a material adverse effect on our business, results of operation or financial condition.
Our brand and reputation could be harmed by negative publicity or safety concerns regarding our products or the products of our competitors, which could materially and adversely affect our business, results of operations or financial condition.
Our business and prospects heavily depend on our ability to develop, maintain and strengthen our brand. Our ability to develop, maintain and strengthen our brand will depend heavily on the success of our marketing efforts and our ability to offer high-quality products and services. If product liability incidents happen, whether or not such incidents are our fault, we could be subject to negative publicity, which could quickly proliferate on the internet and harm customer perceptions of, and confidence in, our brand. Additionally, in recent years, we have experienced a number of labor disputes with our employees in the PRC, primarily involving wage arrears, as well as a number of commercial disputes as we and/or our PRC subsidiaries were unable to repay debts and/or account payables to certain creditors and/or vendors due to liquidity issue. See “- We are subject to claims, disputes, lawsuits and other legal and administrative proceedings in the ordinary course of our business. If the outcomes of these proceedings are adverse, it could have a material adverse effect on our business, prospects, results of operations or financial condition.” Such disputes and resulting litigation, arbitration and administrative or judicial measures may also harm customer perceptions of, and confidence in, our brand. If we do not develop and maintain a strong brand, we may lose the opportunity to build a critical mass of customers, and our business, prospects, financial condition and operating results will be materially and adversely impacted.
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We are dependent upon our relationship with certain third-party manufacturer for the manufacturing of our products and other technological partners for the advancement of our research and development. Any adverse change in our relationship with such manufacturers or partners may result in a material and adverse effect on our business, results of operations or financial condition.
We currently rely on W Motors, our sole manufacturer in Dubai, for the contract manufacturing of our products. For details, see “Business - Manufacturing.”
While we take comprehensive measures to ensure that W Motors manufacture our vehicles in accordance with our standards, there can be no assurance that such measures will be effective. Collaboration with third parties for the manufacturing of vehicles is subject to risks with respect to operations over which we have limited control. We could experience delays to the extent such third-party manufacturer do not meet agreed upon timelines or experience capacity constraints as well as quality issues. There is risk of potential disputes with such third-party manufacturer, and we could be affected by adverse publicity related to such third-party manufacturer, whether or not such publicity is related to their collaboration with us. Our ability to successfully build our brand could also be adversely affected by perceptions about the quality of our vehicles. In addition, although we are closely involved in each step of the supply chain and manufacturing process, given that we also rely on such third-party manufacturer to meet our quality standards, there can be no assurance that we will successfully maintain quality standards of the vehicles produced at the plants of such third-party manufacturer.
We may be unable to enter into new agreements or extend existing agreements with such third-party manufacturer on terms and conditions acceptable to us. The agreement with such third-party manufacturer may also be terminated by mutual consent. If any of these events occurs, we may need to contract with other third parties or start to build its own production capacity from scratch. There can be no assurance that, in such event, we would be able to partner with other third parties or build our own production capacity to meet our needs on acceptable terms or at all. The expense and time required to complete any transition and to assure that vehicles manufactured at facilities of new third-party partners comply with our quality standards and regulatory requirements may be greater than anticipated. Any of the foregoing could adversely affect our business, results of operations, financial condition and prospects.
The proposed transaction to acquire operational rights to a facility in Pakistan exposes us to substantial counterparty and regional risks.
We have entered into an asset contribution and share issuance agreement to acquire exclusive operational rights for a facility located in Pakistan in exchange for the issuance of our equity. The completion and subsequent success of this proposed transaction are subject to significant uncertainties inherent in conducting business within this jurisdiction. Even if all conditions precedent are technically satisfied at closing, the facility’s long-term viability remains highly susceptible to Pakistan’s volatile macroeconomic climate, including chronic energy shortages, severe currency devaluation of the Pakistani Rupee, and shifting foreign investment regulations. Any political instability or change in cross-border trade policies in the region could render the four-year operational rights significantly less valuable than the equity issued in exchange. Ultimately, if these regional or contractual risks materialize, we may suffer dilution of our share capital without realizing a commensurate return on the contributed assets, potentially leading to material impairment charges.
Any problems or delays in the establishment of new SKD vehicle manufacturing bases could negatively affect the production of our vehicles.
We may construct additional manufacturing facilities in China or other countries. NWTN Technologies Industries Solo Proprietorship L.L.C. (“NWTN Technologies Industries”), an Abu Dhabi-based industrial and manufacturing company wholly-owned by ICONIQ Green, entered into a lease agreement with Khalifa Economic Zones Abu Dhabi (“KEZAD”) to establish a SKD facility for EV assembly in the UAE to manufacture and market our vehicles in the Middle East, Africa, Southeast Asia and Europe.
The establishment of the new vehicle manufacturing bases in new locations is subject to a number of uncertainties. The commencement of operations in new facilities may be affected by, among other things, availability of funding, progress of construction and installation of production equipment, grant of applicable regulatory approvals, as well as hiring and retention of qualified employees. Any policy change affecting investments in EV manufacturing facilities in general may also have an impact on the establishment of our new vehicle manufacturing bases. There can be no assurance that the new vehicle manufacturing bases will be able to commence operation in accordance with our plan. In addition, we may not be able to successfully ramp and maintain our operation. We must also maintain good working relationships with the relevant partners throughout the term of our cooperation. In addition, upon the commencement of operations of the new vehicle manufacturing bases in these locations, our rental expenses will increase, which could adversely affect our results of operations.
If we experience any issues or delays in meeting our projected timelines, maintaining sufficient funding and capital efficiency, increasing production capacity or generating sufficient demand for production of vehicles or the new vehicle manufacturing bases, our business, prospects, operating results and financial condition could be adversely impacted.
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We are dependent on our suppliers, some of which are single-source suppliers. Suppliers may fail to deliver necessary components of our vehicles according to our schedule and at prices, quality levels and volumes acceptable to us.
We procure components from both domestic and global suppliers, some of which are currently single-source suppliers for certain components. We attempt to mitigate our supply chain risk by qualifying and obtaining components from multiple sources where practicable and maintaining safety stock for certain key components and components with lengthy procurement lead times. However, we may still experience component shortages for our production or the components may not meet our specifications or quality needs. Furthermore, qualifying alternative suppliers or developing our own replacements for certain highly customized components of our vehicles may be time-consuming and costly. Any disruption in the supply of components, whether or not from a single-source supplier, could temporarily disrupt production of our vehicles until an alternative supplier is fully qualified by us or we are able to procure the relevant components in sufficient quantities from other existing suppliers. Any failure to timely find alternative component sources may materially delay delivery of our vehicles, which may materially and adversely affect our business and results of operations. The loss of any supplier for any reason, including any export control measures adopted by any foreign country to limit the import of supplies into China, could lead to vehicle design changes, production delays and potential loss of access to important technologies, any of which could result in quality issues, delays and disruptions in deliveries, negative publicity and damage to our brand. If any of such suppliers fails to meet our demand, it may take us significant time, and we may incur significant expenses, to find alternative suppliers and quantify our components. In addition, our suppliers may fail to comply with applicable laws and regulations, or they may be involved in product liability claims or incidents of negative publicity. If any of these incidents occur, customers may also lose confidence in our vehicles that incorporate components from the relevant suppliers, and our reputation, business and results of operations could be adversely affected. Developments that we cannot presently anticipate, such as changes in business conditions or government policies, natural disasters or epidemics, could also affect our suppliers’ ability to deliver components to us in a timely manner.
Any significant increases in our production, such as the launch of a new model or SKD operations, have required and may in the future require us to procure additional components in a short amount of time. Our suppliers may not ultimately be able to sustainably and timely meet our cost, quality and volume needs, requiring us to replace them with other sources. While we believe that we will be able to secure additional or alternative sources of supply for most of our components in a relatively short time frame, there is no assurance that we will be able to do so or develop our own replacements for certain highly customized components. Additionally, we continuously negotiate with existing suppliers to obtain cost reductions and avoid unfavorable changes to terms, seek new and less expensive suppliers for certain parts, and attempt to redesign certain parts to make them less expensive to produce. Our failure to control and reduce supplier costs as well as increases in costs, disruption of supply or shortage of components and materials could materially and adversely affect our business, results of operations or financial condition.
Furthermore, as the scale of our vehicle production increases, we will need to accurately forecast, purchase, warehouse and transport components to the relevant manufacturing facilities and service stores and at much higher volumes. If we are unable to accurately match the timing and quantities of component purchases to our actual needs or successfully implement automation, inventory management and other systems to accommodate the increased complexity in our supply chain, we may incur unexpected production disruption, as well as storage, transportation and write-off costs, which could have a material adverse effect on our financial condition and operating results.
Any delays in the manufacturing and launch of the commercial production vehicles in our pipeline could have a material adverse effect on our business.
We continue aiming to commence mass production of our first full-sized SPV, MUSE, in 2027 and specialty vehicles and autonomous logistics vehicles at the end of 2025. We plan to continuously introduce new models and facelifts to enrich our product portfolio and offer customers more selections. OEMs often experience delays in the design, manufacture and commercial release of new vehicle models. Delays in the launch of new models and new versions may occur for a variety of reasons, such as changes in market conditions, technological challenges, lack of necessary funding, as well as disruptions in our supply chain or manufacturing facilities. To the extent we need to delay the launch of our vehicles, our growth prospects could be adversely affected as we may fail to grow our market share. We also plan to periodically perform facelifts or refresh existing models, which could also be subject to delays. Furthermore, we rely on third-party suppliers for the provision and development of many of the key components and technologies used in our vehicles. To the extent our suppliers experience any delays in providing us with or developing necessary components or technologies or experience quality issues, we could experience delays in delivering on our timelines. Any delay in the manufacture and launch of our vehicle models or in performing facelifts to existing models could lead to customer dissatisfaction and materially and adversely affect our reputation, demand for our vehicles, results of operations and growth prospects.
Our future growth is dependent upon consumers’ willingness to adopt EVs and specifically our vehicles.
The demand for our vehicles and services will highly depend upon the adoption by consumers of EVs in general and our vehicles in particular. The market for EVs is still rapidly evolving, characterized by rapidly changing technologies, prices and the competitive landscape, evolving government regulation and industry standards and changing consumer demands and behaviors. Other factors that may influence the adoption of EVs, and specifically our vehicles, include:
| ● | perceptions about EV quality, safety, design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of EVs, whether or not such vehicles are produced by us or other OEMs; |
| ● | perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technologies, such as autonomous driving and lithium battery cells; |
| ● | the limited range over which EVs may be driven on a single battery charge and the speed at which batteries can be charged; |
| ● | the decline of an EV’s range resulting from deterioration over time in the battery’s ability to hold a charge; |
| ● | the availability of other types of EVs, including plug-in hybrid electric vehicles; |
| ● | improvements in the fuel economy of the ICE; |
| ● | the availability of after-sales service for EVs; |
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| ● | the environmental consciousness of consumers; |
| ● | access to charging stations, standardization of EV charging systems and consumers’ perceptions about convenience and cost for charging an EV; |
| ● | the availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased use of non-polluting vehicles; |
| ● | perceptions about and the actual cost of alternative fuel; and |
| ● | macroeconomic factors. |
Any of the factors described above may cause current or potential customers not to purchase our vehicles and use our services. If the market for EVs does not develop as we expect or develops more slowly than we expect, our business, prospects, financial condition and operating results will be negatively affected.
The global passenger vehicle market is highly competitive, and demand for EVs may be cyclical and volatile. We may not be successful in competing in this industry, which may materially and adversely affect our business, results of operations or financial condition.
The global passenger vehicle market is large yet competitive, and we have strategically focused on offering vehicles for the mid- to high-end segment. We directly compete with other pure-play EV companies, especially those targeting the mid- to high-end segment. To a lesser extent, our vehicles also compete with (i) new energy vehicles (“NEVs”), which include EVs, plug-in hybrid electric vehicles, hybrid electric vehicles and fuel cell electric vehicles, and (ii) ICE vehicles in the mid- to high-end segment offered by traditional OEMs. We may also in the future face competition from new entrants that will increase the level of competition. Many of our current and potential competitors, particularly international competitors, have more financial, technical, manufacturing, marketing and other resources than us, and may be able to devote significant resources to the design, development, manufacturing, distribution, promotion, sale and support of their products.
We expect competition in our industry to intensify in the future in light of increased demand and regulatory push for alternative fuel vehicles, continuing globalization and consolidation in the worldwide automotive industry. Factors affecting competition include, among others, product quality and features, innovation and development time, pricing, reliability, safety, energy efficiency, sales and marketing capabilities, distribution network, 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. There can be no assurance that we will be able to compete successfully. Our competitors may introduce new vehicles or services that surpass the quality or performance of our vehicles or services, which would adversely affect our competitive position in the market. They may also offer vehicles or services at more competitive prices, which would have an adverse impact on our sales and profitability. In addition, we may compete with state-owned enterprises or companies that have received investments or other forms of support from state-owned enterprises or other government entities, and such competitors may therefore possess more resources than us.
In addition, volatility in the automobile industry may materially and adversely affect our business, prospects, operating results and financial condition. The sales volume of EVs in the mid- to high-end segment may not grow at the rate that we expect, or at all. Demand for EVs depends to a large extent on general, economic, political and social conditions in a given market and the introduction of new vehicles and technologies. As a new entrant to the EV market, we have fewer financial resources than more established OEMs to withstand changes in the market and disruptions in demand. Demand for our vehicles may also be affected by factors directly impacting automobile price or the cost of purchasing and operating automobiles, such as sales and financing incentives, prices of raw materials and components, cost of oil and gasoline and governmental regulations, including tariffs, import regulation and sales taxes. Volatility in demand may lead to lower vehicle unit sales and increased inventory, which may result in further downward price pressure and adversely affect our business, prospects, financial condition and operating results. These effects may have a more pronounced impact on our business given our relatively smaller scale and less financial resources as compared to many traditional OEMs.
Changes in government policies that are favorable for EVs or domestically manufactured vehicles in the markets where we intend to sell our vehicles could materially and adversely affect our business, financial condition, results of operations, and prospects.
The growth of our business in part depends on government policies in the markets where we intend to sell our vehicles that support the development of EVs and domestically manufactured vehicles. For instance, changes in government policies on the classification of NEVs and license plates materially and adversely affect the demand for MUSE and our future vehicles, which in turn could materially and adversely affect our business, results of operations, financial conditions, and prospects. Furthermore, changes in government incentives or subsidies to support EVs could adversely affect our business. It cannot be guaranteed that any government policy changes would be favorable to our business. Furthermore, 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 EVs, fiscal tightening or other factors may affect government incentives or subsides and result in the diminished competitiveness of the EV industry generally.
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As of June 2025, the UAE government has shown strong support for the EV industry, aiming to position itself as a global leader in clean and sustainable mobility. However, some government policies and initiatives, though beneficial in the long term, have inadvertently slowed the pace of development in the sector. For example, the implementation of stringent regulatory frameworks around EV manufacturing and the approval processes for new technologies has caused delays in the rollout of certain projects. Additionally, there have been challenges related to the development of nationwide EV charging infrastructure, with some policies needing further alignment between local and federal authorities. While the UAE’s ambitious goals to reduce carbon emissions and diversify its energy sources remain a priority, these policy gaps have led to temporary slowdowns in the speed of EV adoption and related infrastructure projects, preventing the market from achieving its full potential as quickly as adoption and related infrastructure projects, preventing the market from achieving its full potential as quickly as anticipated.
Developments in alternative technologies or improvements in the ICE may materially adversely affect the demand for our electric vehicles.
Significant developments in alternative technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the ICE, may materially and adversely affect our business and prospects in ways it cannot anticipate. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay its development and introduction of new and enhanced electric vehicles, which could result in the loss of competitiveness of its vehicles, decreased revenue and a loss of market share to competitors.
We may be subject to product liability or warranty claims that could result in significant direct or indirect costs, including reputational harm, increased insurance premiums or the need to self-insure, which could adversely affect our business and operating results.
Our vehicles, including MUSE, have autonomous driving capabilities, which present the risk of significant injury, including fatalities. We may be subject to claims if any of our vehicles is involved in an accident and persons are injured or purport to be injured or if property is damaged. Any insurance that we carry may not be sufficient or it may not apply to all situations. The risk of serious injury, death and substantial damage to property may be much higher with larger fast-moving autonomous passenger vehicles. In the event of such an event or multiple events, our insurance premiums could increase significantly or insurance may not be available to it at all. Furthermore, if insurance is not available on commercially reasonable terms, or at all, we might need to self-insure. In addition, lawmakers or governmental agencies could pass laws or adopt regulations that limit the use of systems equipped by our vehicles or increase liability associated with their use. Any of these events could adversely affect our brand, customer relationships, operating results, or financial condition.
Our vehicles make use of lithium cells, and lithium cells may catch fire or vent smoke and flame on rare occasions.
Our vehicles’ battery packs make use of lithium cells. On rare occasions, lithium 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 cells. While our batteries are built with robust safety features and strong thermal management capabilities, there can be no assurance that our batteries will always function safely. If any safety accident occurs with any of our vehicles’ battery pack, we could be subject to lawsuits, product recalls or redesign efforts, all of which would be time-consuming and expensive. Also, negative public perceptions regarding the suitability of lithium cells for automotive applications or any future incident involving lithium cells, such as a vehicle fire, even if such incident does not involve our vehicles, could seriously harm customers’ confidence in our vehicles.
The autonomous driving technology we seek to develop relies on software and hardware that is highly technical, and if the software or hardware contains errors, bugs or vulnerabilities, or if we are unsuccessful in addressing or mitigating the technical limitations in our system, our business, results of operations or financial condition could be materially and adversely affected.
The autonomous driving technology we seek to develop relies on software and hardware, including software and hardware developed or maintained internally or by third parties, that is highly technical and complex and will require modification and updates over the life of the vehicle. This software and hardware may contain errors, bugs or vulnerabilities that could subject our system to certain technical limitations that may compromise our ability to meet our objectives. Some errors, bugs or vulnerabilities may be inherently difficult to detect and may only be discovered after the code has been released for external or internal use. Although we may attempt to remedy any issues we observe in our products as effectively and rapidly as possible, such efforts may not be timely, may hamper production or may not be to the satisfaction of our customers. If we are unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in our software and hardware, we may suffer damage to our reputation, loss of customers, loss of revenue or liability for damages, any of which could materially and adversely affect our business and financial results.
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Failure to carry adequate insurance coverage may have a material adverse effect on our business, results of operations or financial condition.
Our directors and officers (“D&O”) liability insurance policy expired in November 2023. We purchased a new D&O liability insurance policy in December 2024, which applied retroactively with certain conditions.
While we may obtain certain insurance associated with our business operation in the future, there can be no assurance that our insurance coverage will be sufficient, or that insurance proceeds will be paid to us in a timely manner. In addition, there are types of losses that we may incur but against which we cannot be insured, or that we believe are not economically reasonable to insure, such as losses due to acts of war and certain natural disasters. If we incur these losses and they are material, our business, results of operations or financial condition could be materially and adversely affected.
We may not be able to successfully implement our growth strategy on a timely basis, or at all, and we may be unable to manage future growth effectively, which could negatively impact our brand and financial performance.
Our future growth, results of operations and financial condition depend upon our ability to successfully implement our growth strategy, which, in turn, is dependent upon a number of factors, some of which are beyond our control, including our ability to:
| ● | keep existing, and obtain future, partners and customers; |
| ● | economically achieve the mass production of our vehicles; |
| ● | effectively introduce new products and services; |
| ● | strengthen and expand relationships with our partners, including ESPs, technology providers and key component suppliers; |
| ● | keep pace with technological advances affecting the EV industry; |
| ● | effectively compete in the markets in which we operate; |
| ● | adapt to changing regulatory environment; and |
| ● | attract and retain management or other employees who possess specialized market knowledge and technical skills. |
There can be no assurance that we can successfully achieve any or all of the above initiatives in the manner or time period that we expect. Furthermore, achieving these objectives will require investments that may result in both short- and long-term costs without generating any current revenue and therefore may be dilutive to earnings. We cannot provide any assurance that we will realize, in full or in part, the anticipated benefits we expect to generate from our growth strategy. Failure to realize those benefits could have a material adverse effect on our business, results of operations or financial condition.
Even if we can achieve the above benefits and successfully implement our growth strategy, any failure to manage our growth effectively could materially and adversely affect our business, results of operations or financial condition. We intend to expand our operations significantly, which will require us to hire and train new employees across all divisions, accurately forecast supply and demand, production and revenue, control expenses and investments in anticipation of expanded operations, establish new or expand current design, production, and sales and service facilities and implement and enhance administrative infrastructure, systems and processes. Failure to efficiently manage any of the above could have a material adverse effect on our business, results of operations or financial condition.
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Our research and development efforts may not yield expected results.
While we have our own research and development team, we have also entered into agreements with third-party service providers to conduct research and development. Besides the technologies researched and developed by third-party service providers for us, we also rely on certain technologies of our suppliers to enhance the performance of our vehicles. We have been and will continue to invest in our research and development efforts.
The EV industry is experiencing rapid technological changes, and we need to invest significant resources in research and development in order to remain competitive in the market. Therefore, we expect to continue investing in our research and development activities and those of our partners. Furthermore, research and development activities are inherently uncertain, and there can be no assurance that we or our partners will be able to achieve technological breakthroughs and successfully commercialize such breakthroughs. As a result, our expenditures on research and development may not generate corresponding benefits. If our research and development efforts fail to keep up with the latest technological developments, we would suffer a decline in our competitive position. There can be no assurance that we will be able to equip our products with the latest technologies. Even if we are able to keep pace with changes in technologies and develop new vehicle models, our prior models could become obsolete more quickly than expected, potentially reducing our return on investment.
Interruption or failure of our information technology and communications systems could impact our ability to effectively provide our services.
The production of our vehicles will require the development, maintenance and improvement of information technology and communication systems, which will include product data management, procurement, inventory management, production planning and execution, sales, service and logistics, financial, tax and regulatory compliance systems. In addition, software, information technology and communication systems will be integral to the operation and functionality of vehicles, which are designed with built-in data connectivity to accept and install periodic remote updates to improve or update their functionality.
All of these systems may be vulnerable to damage or interruption from, among other things, data breaches, cyberattacks, fire, natural disasters, power loss, telecommunications failures, computer viruses and other attempts to access our proprietary information or to harm our system or vehicles. Although these systems will be designed and tested for resiliency and security, there can be no assurance that these systems or their required functionality will be effectively and timely developed, implemented and maintained or that they will be entirely free from vulnerabilities. Any compromise of our proprietary information or our systems could adversely affect our reputation and could result in lengthy interruptions to our business operations and our customers’ ability to operate the vehicles.
Although we have not yet experienced cyberattacks as of the date hereof, the risks of potential cyberattacks by state actors or others have been heightened in connection with the ongoing conflicts between Russia and Ukraine and in the Middle East and Southwest Asia and it is uncertain how this new risk landscape will impact our operations. When geopolitical conflicts develop, government systems as well as critical infrastructures such as financial services and utilities may be targeted by state-sponsored cyberattacks even if they are not directly involved in the conflict. There can be no assurance that our business will not become a potential target as adversaries may attack networks and systems indiscriminately. Such cyberattacks may potentially cause unauthorized access to our sensitive data (including our proprietary software codes), products, and systems, causing data breach, or disruption, modification, destruction to our systems and applications. As a result, we may suffer monetary losses, business interruption, and long-lasting operational issues, damage to our reputation and brand, loss of our intellectual property or trade secrets. To mitigate such risks, we have adopted robust cybersecurity protection practices. Our key confidential information is only saved on private cloud servers, segregated from any public cloud platform and only allows for access from authorized devices. Other information is stored on public cloud systems maintained by leading infrastructure providers and with anti-cyberattack services enacted. For background operations and maintenance, we adopt a bastion machine solution to protect our systems from being attacked. We will endeavor to ensure that any business network and data security systems we establish or procure in the future are capable of adequately protecting our business against such risks.
We may be subject to intellectual property infringement claims or other allegations, which may be time-consuming and result in substantial costs and removal of data or technology from our system.
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, sell or market our products, which could make it more difficult for us to operate our business. We may not be aware of all the intellectual property infringement assertions from third parties surrounding our current or future products, which could materially impair our ability to commercialize our products. Any analysis performed may not identify all the third-party intellectual property that is potentially relevant, including intellectual property that is not publicly available for review, and would not prevent third parties from bringing intellectual property infringement claims.
From time to time, we may need to defend ourselves against intellectual property infringement or trade secret misappropriation claims, and companies holding patents, copyrights, trademarks or other intellectual property rights may bring suits alleging infringement of such rights by us or our employees or otherwise assert their rights and urge us to purchase licenses. Any such intellectual property infringement claim could result in costly litigation and divert management’s attention and resources.
If we or our employees 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 offering products and solutions that incorporate or use the challenged intellectual property; |
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| ● | pay substantial damages; |
| ● | seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all; |
| ● | redesign our products and solutions or relevant services, which would result in significant cost; or |
| ● | establish and maintain alternative branding for our products and solutions 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, prospects, financial condition and results of operation could be materially and adversely affected. In addition, any litigation or claims, whether valid or not, could result in substantial costs, negative publicity and diversion of resources and management attention.
We rely on patents (including pending patent applications), unpatented proprietary know-how, trade secrets and contractual restrictions to protect some of our intellectual and other proprietary rights. Failure to adequately protect, enforce or otherwise obtain sufficient coverage of intellectual and other proprietary rights may undermine our competitive position and could materially and adversely affect our business, prospects, results of operations or financial condition.
Protection of proprietary technology, processes, methods and other intellectual property related to us is critical to our business. We rely on patents (including pending patent applications), unpatented proprietary know-how, trade secrets and contractual restrictions to protect our intellectual property and other proprietary rights. For details, see “Business - Intellectual Property.” However, the patent applications that we have filed and may file in the future may not result in patents being issued, and the issuance of a patent may not provide us with sufficient protection with respect to our current and future products or against competitors. It cannot be guaranteed that our procedures and process will absolutely prevent any disclosures that would result in a loss of our confidential information. Failure to adequately protect our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive advantages and a decrease in revenue, which would adversely affect our business, prospects, financial condition and operating results.
In addition, there can be no assurance that competitors and other third parties will not independently develop or publicly disclose the know-how and trade secrets related to our proprietary technology, in which case we would not be able to prevent such third parties from using such know-how and trade secrets, or develop better products or manufacturing methods or processes than us. There can also be no assurance that competitors will not or cannot design their products to avoid our patents. The validity or enforceability of our intellectual property, including patents, could also be challenged by third parties, which could result in our intellectual property being found invalid or unenforceable.
Further, we may not be able to deter current and former employees, consultants, suppliers and customers or other parties from breaching confidentiality agreements and misappropriating proprietary information, for which breaches we may not receive adequate remedies, and it is possible that third parties may copy or otherwise obtain and use our information and proprietary technology without authorization or otherwise infringe on our intellectual property and other proprietary rights. We may in the future need to rely on litigation to enforce our intellectual property rights and contractual rights, and, if not successful, may not be able to protect the value of our intellectual property. Any litigation could be protracted and costly and have a material adverse effect on our business, prospects, results of operations or financial condition regardless of the outcome. In some cases, the costs associated with such litigation could make enforcement impracticable. Further, intellectual property and contract laws vary throughout the world, making the policing of the unauthorized use of our intellectual property difficult in various jurisdictions. Therefore, there is no assurance that we will be able to enforce our intellectual property rights as expected. Failure to adequately enforce our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue, which would adversely affect our business, prospects, financial condition and operating results.
We are dependent on proprietary technologies co-developed with third parties. If we fail to obtain rights to own or use these proprietary technologies, it may not be able to timely find replacement technology on acceptable terms, or at all, and may be forced to modify or cease selling our products.
We are dependent on proprietary technologies co-developed with third parties, including W Motors and other third-party suppliers and partners. If we fail to obtain the rights to own or use these technologies on commercially reasonable terms or if such technologies otherwise become unavailable to us, our expenses could increase, and our ability to sell our products and our results of operations could be impaired until equivalent services are obtained or replacements are developed. In the occurrence of such event, we may be forced to acquire or develop alternative technology and may not be able to do so in a commercially feasible manner or at all, resulting in us having to use alternative technology of lower quality or performance. This could limit and delay our ability to offer new or competitive products and increase our costs of production. As a result, our business and results of operations could be significantly harmed.
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Furthermore, we cannot be certain that those technologies co-developed with or licensed from our partners are not infringing the intellectual property rights of third parties, or have sufficient rights to the licensed intellectual property in all jurisdictions in which we may sell our products. Accordingly, our use of this intellectual property may expose us to third-party claims of infringement. In addition, many licenses are nonexclusive and may not prevent our competitors from licensing the same technology on equivalent or more favorable terms.
We are highly dependent on the services of our senior management team. Our inability to attract and retain management or other employees who possess specialized market knowledge and technical skills could materially and adversely affect our business, results of operations or financial condition.
Our success depends, in part, on our ability to retain our senior management team. The unexpected loss of or failure to retain one or more of our management or other employees who possess specialized market knowledge and technical skills could adversely affect our business. Our success also depends, in part, on our continuing ability to identify, hire, attract, train and develop other highly qualified personnel. Experienced and highly skilled employees are in high demand, and competition for these employees can be intense. In particular, as certain number of our senior management have joined after 2024, the stability of senior management team cannot be guaranteed in the future.
We have had recent changes of key executive officers, including Chief Executive Officer and Chief Financial Officer, and changes in our board of directors. These changes have resulted, and may result in the future, in changes to our management style, operations, and strategies. Any significant leadership change or senior management transition involves inherent risk and could hinder our strategic planning, business execution and future performance. In particular, this or any future leadership transition may result in a loss of personnel with deep institutional or technical knowledge and changes in business strategy or objectives, and has the potential to disrupt our operations and relationships with employees and customers due to added costs, operational inefficiencies, changes in strategy, decreased employee morale and productivity, and increased turnover. Failure to successfully transition to the new leadership team could affect our ability to attract and retain skilled personnel and may have an adverse effect on our results of operations, business, and financial position.
The ability to hire, attract and retain talent depends on our ability to provide competitive compensation, and we may not be able to attract, assimilate, develop or retain qualified personnel in the future, and failure to do so could adversely affect our business, including the execution of our global business strategy. Furthermore, certain of our senior management may hold positions in entities other than Robo.ai. Such positions outside of Robo.ai may require significant management attention by such individuals and the actions taken by such individuals in such positions outside of Robo.ai may not be aligned with the interest of Robo.ai. Any failure by our management team and our employees to perform as expected may also have a material adverse effect on our business, prospects, financial condition and operating results.
Our employees, business partners and suppliers may engage in misconduct or other improper activities, either during or before their service for us, including noncompliance with regulatory standards and requirements, which could expose us to potentially significant legal liabilities, reputational harm and have a material adverse effect on our business, results of operations or financial condition.
We are exposed to the risk that our employees, ESP partners, technology providers, suppliers or other parties we collaborate with may engage in misconduct or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or other activities that violate laws and regulations, including production standards, fraud, abuse, data privacy and security laws, other similar laws or laws that require the true, complete and accurate reporting of financial information or data. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting it from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us and it is not successful in defending ourselves or asserting our rights, those actions could have a material adverse effect on our business, results of operations or financial condition, including, without limitation, by way of imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, imprisonment and other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations.
Our vehicles are subject to motor vehicle standards and the failure to satisfy such mandated safety standards would materially and adversely affect our business and results of operations.
All vehicles sold must comply with various standards of the market where the vehicles are sold. Our vehicles must meet or exceed all mandated safety standards in the markets where we sell our vehicles. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving these standards. For example, in Mainland China, vehicles must pass various tests and undergo a certification process and be affixed with the China Compulsory Certification before receiving delivery from the factory, being sold, or being used in any commercial activity, and such certification is also subject to periodic renewal. Furthermore, the government authorities may carry out supervision and scheduled or unscheduled inspection of certified vehicles on a regular basis. In the event that our certification fails to be renewed upon expiry, a certified vehicle has a defect resulting in quality or safety accidents, or consistent failure of certified vehicles to comply with certification requirements is discovered during follow-up inspections, the certification may be suspended or even revoked. With effect from the date of revocation or during suspension of the certification, any vehicle that fails to satisfy the requirements for certification may not continue to be delivered, sold, imported, or used in any commercial activity. Our failure to satisfy motor vehicle standards would materially and adversely affect our business and results of operations.
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We are subject to anti-corruption, anti-bribery, sanctions and similar laws, and non-compliance 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 and reputation.
We are subject to anti-corruption, anti-bribery and similar laws and regulations in various jurisdictions in which we conduct our activities. We may 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 endeavor to implement policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives, consultants, agents and business partners with applicable anti-corruption and anti-bribery and similar laws and regulations. However, such 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.
Non-compliance with anti-corruption or anti-bribery laws and regulations 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 and reputation.
We are subject to claims, disputes, lawsuits and other legal and administrative proceedings in the ordinary course of our business. If the outcomes of these proceedings are adverse, we could have a material adverse effect on our business, prospects, results of operations or financial condition.
We are and may continue to be subject to legal proceedings from time to time in the ordinary course of our business, which could have a material adverse effect on our business, results of operations or financial condition. Claims arising out of actual or alleged violations of law could be asserted against us by our creditors, customers, competitors, governmental entities in civil or criminal investigations and proceedings, or other entities. These claims could be asserted under a variety of laws, including, but not limited to, product liability laws, consumer protection laws, intellectual property laws, labor and employment laws, securities laws, tort laws, contract laws, property laws and employee benefit laws. There is no guarantee that we will be successful in defending ourselves in legal and administrative actions or in asserting our rights under various laws. Even if we are successful in our attempt to defend ourselves in legal and administrative actions or to assert our rights under various laws, enforcing our rights against the various parties involved may be expensive, time-consuming and ultimately futile. These actions could expose us to negative publicity and/or to substantial monetary damages and legal defense costs, injunctive relief and criminal, civil and administrative fines and penalties.
Risks Relating to the Regions in Which We Operate
We face risks associated with our international operations, including unfavorable regulatory, political, trade, tax and labor conditions in the UAE and Mainland China, and if we are unable to effectively manage these risks, our business, financial condition and results of operations may be materially and adversely affected.
We have operations in the UAE and Mainland China with plans to further expand the geographic coverage of our product and service offerings. Therefore, we are and will be subject to a number of risks associated with international business activities that may increase our costs, impact our ability to expand on a global basis and require significant management attention. These risks include:
| ● | conforming our vehicles to various international regulatory requirements as applicable; |
| ● | difficulty in staffing and managing foreign operations; |
| ● | difficulty in attracting customers in new countries or regions; |
| ● | foreign government taxes, regulations, and permit requirements; |
| ● | fluctuations in foreign currency exchange rates and interest rates; |
| ● | foreign government trade restrictions, tariffs and price or exchange controls; |
| ● | changes in diplomatic and trade relationships; |
| ● | compliance by our company and our business partners with anti-corruption laws, import and export control laws; |
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| ● | tariffs, trade barriers and economic sanctions, and other regulatory limitations on our ability to provide our services and products in certain international markets; |
| ● | attract, recruit and retain talent internationally; |
| ● | foreign labor laws, regulations and restrictions; |
| ● | political instability, natural disasters, epidemics, war or events of terrorism; and |
| ● | the strength of international economies. |
The military conflicts between Russia and Ukraine and in the Middle East and Southwest Asia may increase the likelihood of supply interruptions and hinder our ability to procure the materials we need to manufacture our vehicles. Any supply disruption may make it harder for us to find favorable pricing and reliable sources for the materials it needs, putting upward pressure on our costs and increasing the risk that it may be unable to acquire the materials and services we need to for the production of our vehicles.
If we fail to successfully address these risks, our business, prospects, operating results and financial condition could be materially affected.
Uncertainties with respect to the UAE legal system and changes in laws and regulations in the UAE, including with respect to licenses, approvals and taxes, could adversely affect our business.
Headquartered in Dubai, our operations are subject to the laws and regulations of the UAE. Any UAE entity must perform the activities in the manner stipulated in the trade license issued by the relevant UAE government authorities or face penalties. Moreover, an automotive manufacturer may face restrictions in selling its vehicles directly in the region unless they are produced in the UAE. We may overcome such restrictions by entering into contract manufacturing and distributorship agreements with W Motors to sell our vehicles in the region. We cannot guarantee if we will be able to enter into new agreements or extend existing agreements with W Motors on terms and conditions acceptable to us. Such agreement with W Motors may also be terminated by mutual consent. If any of these events occurs, we may need to contract with other local contract manufacturers and/or distributors or start to build our own production and distribution capacity in the UAE. There can be no assurance that in such event we would be able to partner with other third parties or build our own production and distribution capacity in the region to meet our needs on acceptable terms or at all. The expense and time required to complete any transition and to assure that vehicles manufactured at facilities of new third-party partners comply with our quality standards and regulatory requirements may be greater than anticipated. Any of the foregoing could adversely affect our business, results of operations, financial condition and prospects.
Currently, companies operating in the designated free zones of the UAE are exempt from any personal, income and corporate taxes as well as granted exception from custom duty for goods and services, except that any free zone company selling any goods in the UAE mainland must pay a 5% duty tax. The UAE’s Federal Corporate Tax Law indeed came into effect on June 1, 2023, and has impacted many industries, including the EV sector. Under this law, companies with an annual net profit exceeding AED 375,000 (approximately US$ 100,000) will be subject to a tax at a standard rate of 9%. Certain industries or businesses, such as energy, oil, and gas sectors, as well as government-supported enterprises in specific regions, may benefit from tax incentives. Although the Corporate Tax Law does not specifically mention the EV industry, the UAE government’s promotion of green energy and sustainable development strategies means that the EV sector, as part of renewable energy and clean technology, is likely to benefit from other government support policies, such as tax reductions, subsidies, and infrastructure development support.
Implementation of such corporate tax may increase our tax expenses and adversely affect our business, results of operations, financial condition and prospects.
ICONIQ is incorporated in a free zone in the UAE and is following the Dubai Silicon Oasis regulations, which offers certain regulatory benefits over those entities incorporated in the mainland of the UAE, such as permission of wholly-foreign ownerships (without a UAE local sponsor), wider range of business activities, import and export duty exemptions, tax benefits and full profit repatriation, ease of hiring foreign workers (as opposed to entities operating in the UAE mainland, which are required to hire certain ratios of Emiratis). As the UAE legal system is evolving rapidly, the interpretations of many laws, regulations and rules may contain inconsistencies, the enforcement of these laws, regulations and rules involves uncertainties, existing laws and regulations are subject to amendments and interpretations, and new laws and regulations can be promulgated relatively quickly. While there has been a general relaxation of requirements for foreign entities operating in the UAE over the years, any removal or amendment of benefits offered to entities incorporated in the UAE may result in ICONIQ being subject to increased regulatory oversights and requirements, which could in turn adversely affect its business, results of operations, financial condition and prospects.
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The economies of a number of our markets in the Gulf Cooperation Council region are highly dependent upon the oil and gas industry.
The UAE’s economy as well as a number of other economies within the Gulf Cooperation Council region are highly dependent upon the oil and gas industry. Oil and gas prices fluctuate in response to changes in many factors, including, but not limited to:
| ● | economic and political developments in oil producing regions; |
| ● | global and regional supply and demand, and expectations regarding future supply and demand, for oil and gas products; |
| ● | the ability of members of OPEC and other crude oil producing nations to agree upon and maintain specified global production levels and prices; |
| ● | the impact of international environmental regulations designed to reduce carbon emissions; |
| ● | actions taken by major crude oil and gas producing or consuming countries; |
| ● | prices and availability of alternative fuels; |
| ● | global economic and political conditions; |
| ● | development of new technologies; and |
| ● | global weather and environmental conditions. |
Oil prices declined significantly beginning in June 2014, and although prices have recovered in 2018, they have remained volatile with periodic declines since October 2018, including during the first quarter of 2020. If oil prices decline again, this is likely to have an adverse effect on the GDP and other economic indicators of oil producing markets, such as the UAE, and may also adversely affect consumer confidence and purchasing power, resulting in lower overall expenditure by mobile users, which could materially and adversely affect our business, financial condition, and results of operations.
Current and escalating geopolitical tensions in the middle east may adversely affect the potential business opportunities for government procurement contracts for GHIATH vehicles.
We plan to collaborate with the Dubai Police for the development and procurement of the GHIATH vehicle, a purpose-built vehicle tailored to specific public service needs and law enforcements. Our ability to gain potential government procurement contracts is subject to the UAE government’s continued prioritization of smart-city infrastructure. The ongoing conflict in the Middle East may result in regional instability that affects the relevant authorities’ budgetary allocations. If our potential government customers shift fiscal resources toward defense or regional security initiatives, their procurement timelines may be deferred or cancelled. As a result, our business opportunities for government procurement contracts could be adversely affected.
Our insurance coverage may be inadequate or unavailable to cover losses resulting from geopolitical instability and ongoing armed conflict in the Middle East.
A substantial part of our assets, employees, and operations are currently located in Dubai, UAE. The continuation or escalation of armed conflict in the Middle East could lead to physical damage to our property, disruptions in our supply chain, or threats to the safety of our personnel. We have not obtained any war insurance and our other insurance policies typically exclude losses arising from war-related risks or hostile acts. As a result, any loss not covered by insurance, or exceeding our policy limits, would have to be paid out of our own resources, which would significantly impair our liquidity and financial condition.
Because some of our operations are in Mainland China, our business is subject to a certain degree of the complex and rapidly evolving laws and regulations there. The Chinese government may exercise significant oversight and discretion over the conduct of our business in Mainland China and may intervene in or influence our operations in Mainland China at any time, which could result in a material change in our operations and/or the value of our securities.
As a company having certain business operations in Mainland China, we are subject to the laws and regulations of Mainland China, which can be complex and evolve rapidly. The Chinese government has the power to exercise significant oversight and discretion over the conduct of our business in Mainland China, and the regulations to which our business in Mainland China is subject may change rapidly and with little advance notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in Mainland China are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. New laws, regulations, and other government directives in Mainland China may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:
| ● | delay or impede our development in Mainland China, |
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| ● | result in negative publicity or increase our operating costs in Mainland China, |
| ● | require significant management time and attention, and |
| ● | subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices in Mainland China. |
The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business in Mainland China and could require us to change certain aspects of our business to ensure compliance, could decrease demand for our products, reduce revenues, increase costs and expenses, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected and the value of our securities could significantly decline.
As some of our operations are conducted in Mainland China, recent regulatory developments in Mainland China, including an intent indicated by the Chinese governmental authorities to exert more oversight and control over offerings that are conducted outside Mainland China and/or foreign investment in Mainland China-based issuers, may subject us to additional regulatory review or otherwise restrict or hinder our ability to offer securities and raise capitals outside Mainland China, all of which could materially and adversely affect our business and cause the value of our securities to significantly decline.
As a company having certain business operations in Mainland China, the recent regulatory developments in Mainland China, in particular with respect to more oversight and control over offerings that are conducted outside Mainland China and/or foreign investment in Mainland China-based issuers, may lead to additional regulatory review in China.
Under the finalized Overseas Issuance and Listing Management Rules (2023), we must complete CSRC filing before initiating any offshore listing process. Failure to comply may result in penalties including fines up to RMB 10 million, revocation of business licenses, or criminal sanctions for management. Compliance requires disclosing material contracts, data security protocols, and VIE structures (if applicable). As of 2025, all filings are processed electronically via the Overseas Listing Filing Management System.
We cannot assure you that our subsidiaries in Mainland China will not in the future be required to obtain the approval of the CSRC or of potentially other regulatory authorities in order (i) to maintain the listing status of our ordinary shares on the Nasdaq or (ii) to conduct offerings of securities in the future. In the event that it is determined that we are required to obtain approval from the CSRC or any other regulatory authority, the failure to obtain such approval could result in (i) the delisting of our securities on exchanges outside Mainland China and/or (ii) a decrease in the value of our securities. We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC, the CAC, or other regulatory authorities in Mainland China required for listings outside Mainland China. As of the date hereof, we have not received any inquiries, notices, warnings, sanctions, denials, or regulatory objections from the CSRC, CAC, nor any other regulatory authority in Mainland China. To our knowledge, we are, as of the date hereof, not required to obtain permission or approval from the CSRC nor any other regulatory authority in Mainland China. In the event that regulations change in the future and we are required to obtain permission or approval from the CSRC or any other authority in Mainland China, any failure to do so could result in (i) the delisting of our securities on exchanges outside Mainland China and/or (ii) a decrease in the value of our securities (among other consequences).
Our business generates and processes a large amount of data, and we are required to comply with laws and regulations in Mainland China and other jurisdictions relating to data privacy and security. The improper use or disclosure of data could have a material and adverse effect on our business and prospects.
We capture or collect, process, transmit and store employee and partner data as of the date hereof, and may, in the future, capture or collect, process, transmit and store client data, including personal information, in and across multiple jurisdictions during our course of business. These are common data collected for the type of business we are engaged in and we do not intend to track or store customer usage data after their purchase of our vehicles.
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As a result of our global operations, we may be subject to a variety of laws and regulations in various jurisdictions where we operates, as well as contractual obligations, regarding data privacy, protection and security. Some of these laws and regulations require obtaining data subjects’ consent to the collection and use of their data, honoring data subjects’ requests to delete their data or limit the processing of their data, providing notifications in the event of a data breach and setting up the proper legal mechanisms for cross-border data transfers. Some users may refuse to provide consent to have their personal information collected or may restrict the use of such personal information. Furthermore, it is not feasible to obtain consent from data subjects in the general public whose personal information may be captured by our vehicles, all of which may hinder our ability to enhance our data analytics and artificial intelligence technology, and may harm the competitiveness of our technology. In many cases, these laws and regulations apply not only to the collection and processing of personal information from third parties with whom we do not have any contractual relationship, but also to the sharing or transfer of information between or among us, our subsidiaries and other third parties with which we have commercial relationships, such as our business partners and customers. The regulatory framework for data privacy, protection and security worldwide is continuously evolving and developing and, as a result, interpretation and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. In particular, some of these laws and regulations may require us to store certain categories of data collected from individuals residing in a jurisdiction only on servers physically located in such jurisdiction, and may further require us to conduct security assessments and/or adopt other cross-border data transfer mechanisms in order to transfer such data outside of such jurisdiction. In addition, the number of high-profile data breaches at major companies continues to accelerate, which will likely lead to even greater regulatory scrutiny.
In addition, the research and testing of autonomous driving technology on public or permitted roads may require certain qualifications, permits or consents from different governmental authorities, but such requirements are not firmly settled. In particular, it is not firmly settled in Mainland China whether companies developing the autonomous driving technology are required to obtain surveying and mapping licenses in connection with the collection of data and images when conducting road tests. Most companies, if not all, do not obtain such licenses, but rather cooperate with map suppliers that do have the required licenses. We and our subsidiaries may need to apply for qualifications, permits or consents from relevant government authorities in each jurisdiction in which we test autonomous driving technology.
In Mainland China, the PRC Cyber Security Law became effective on June 1, 2017. The Cyber Security Law reaffirms the basic principles and requirements specified in other existing laws and regulations on personal information protection, such as the requirements on the collection, use, processing, storage, and disclosure of personal information. Specifically, it requires that network operators take technical measures and other necessary measures in accordance with applicable laws and regulations and the compulsory requirements of the national and industrial standards to safeguard the safe and stable operation of its networks, maintain the integrity, confidentiality and availability of network data, take technical and other necessary measures to ensure the security of the personal information they have collected against unauthorized access, alteration, disclosure or loss, and formulate contingency plans for network security incidents and remediation measures. It also requires a subset of network operators that meet certain thresholds to be critical information infrastructure operators (“CIIO”) and to store personal information and important data collected and generated during operation within the territory of Mainland China locally on servers in Mainland China. The State Council of China released the Critical Information Infrastructure Security Protection Regulations (“CII Regulations”) on August 17, 2021 and became effective on September 1, 2021, a key administrative regulation in the implementation of the PRC Cyber Security Law. CII Regulations clarify the definition of critical information infrastructure (“CII”), the authorities-in-charge of CII security protection, determination of CII, obligations of a CIIO, CII security support and promotion, and legal liability. Industry regulators which are CII security protection work departments will formulate the rules for determination of CII, organize the determination of CII within their respective industries and sectors, notify CIIOs of the results of determinations, and report the same to the Ministry of Public Security. The interpretation of what network operators are qualified as CIIOs is unclear under the PRC Cyber Security Law and the CII Regulations do not set out detailed standards or operating guidelines for determining who will be viewed as CIIOs. If ICONIQ is deemed to be a CIIO, it would become subject to additional requirements applicable to CIIOs. Any violation of the PRC Cyber Security Law and/or the CII Regulations may subject a CIIO to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, shutdown of websites or criminal liabilities. In addition, if any of ICONIQ’s subsidiaries in Mainland China is identified as a CIIO, in the case of its merger, division or dissolution, such subsidiary shall promptly report to relevant regulatory authorities and dispose the CII according to the requirements of such regulatory authorities to ensure security.
In addition, the PRC Data Security Law (“Data Security Law”), which was promulgated by the Standing Committee of the National People’s Congress on June 10, 2021 and came into effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner and stipulates that, for the purpose of data protection and data security, data processing activities must be conducted based on data classification and a hierarchical protection system that is based on the importance of data for social and economic development and the degree of harm to national security, public interests, or the legitimate rights and interests of individuals or organizations that may result from the tampering, destruction, leakage or illegal possession or usage of such data. As the Data Security Law was recently promulgated, we may be required to make further adjustments to our data practices to comply with this law. If our data processing activities were found to be not in compliance, orders to make corrections and, under certain serious circumstances such as severe data divulgence, penalties could be imposed.
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On August 16, 2021, the CAC, the State Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security and the Ministry of Transport jointly promulgated the Rules on the Administration of Automobile Data Security (For Trial Implementation) (“Auto Data Rules”), which became effective on October 1, 2021. The Auto Data Rules encourage that auto data processors, including automakers, parts and software suppliers, distributors, maintenance organizations and mobility service companies, to adhere to the data processing principles, such as “in-car processing”, “no collection by default”, “proper precision” and “desensitization” in carrying out the auto data processing activities, so as to reduce the disordered collection and illegal use of the auto data. The Auto Data Rules make it clear that auto data processors should fulfil personal information protection responsibilities and fully protect the security of personal information as well as the legitimate rights and interests of individuals. To carry out personal information processing activities, the automobile data processors must expressly inform the individual of the relevant information and obtain the individual’s consent, unless permitted by applicable laws or regulations. If it is needed for ensuring driving safety, personal information from outside a vehicle is collected without the consent of the relevant individual and is provided outside of the vehicle, the information to be provided must be anonymized. The Auto Data Rules also require the local storage of important data in Mainland China and a security assessment by CAC and other relevant authorities in the case of important data transfers outside of Mainland China. In addition, auto data processors dealing with important data shall conduct risk assessment and report its auto data security management status to the CAC or its local branches each year. If we are deemed to be an auto data processor dealing with important data, we will need to review and enhance our internal procedures and policies for the collection, processing, storage localization in compliance with the Auto Data Rules. Any violation of the Auto Data Rules may subject us to the penalties under the PRC Cyber Security Law and/or the PRC Data Security Law, including warnings, fines, confiscation of illegal gains, revocation of licenses, cancelation of filings, shutdown of websites or criminal liabilities.
The National People’s Congress of China adopted on August 20, 2021 the PRC Personal Information Protection Law (“PIPL”), which came into effect on November 1, 2021. The PIPL sets forth a range of obligations, administrative guidelines, and enforcement mechanisms with respect to the processing of personal information. The PIPL states that handling of personal information must have clear and reasonable purpose and shall be limited to the “minimum scope necessary to achieve the goals of handling” data. It also lays out conditions for which companies can collect personal data, such as obtaining an individual’s consent. The PIPL regulates personal information transfers outside of Mainland China by imposing obligations on handlers before transferring data abroad such as complying with a security assessment by relevant authorities. It also mandates risk assessments for specific processing including automated decision-making and handling that could have a major influence on individuals. In addition, the PIPL has a complex system of enforcement, including fines (that can go up to 5% of a company’s annual turnover) and administrative action (including warnings, orders to stop processing, confiscation of unlawfully obtained profit, revocation of licenses), individual rights to obtain compensation, and civil public interest litigation cases through a public prosecutor. If we were to be found in violation of the PIPL when conducting our business in Mainland China, it could be subject to the above administrative penalties and civil liabilities, such as warnings, fines, or service suspension or even revocation of licenses, which could materially and adversely affect our business, financial condition, and results of operations.
In addition to government regulation, privacy advocates and industry groups have proposed, and may in the future propose, self-regulatory standards from time to time. These and other industry standards may legally or contractually apply to us, and/or we may elect to comply with such standards. We expect that there will continue to be new proposed laws and regulations concerning data privacy and security, and we cannot yet determine the impact that such future laws, regulations and standards may have on our business. New laws or amendments, or re-interpretations of existing laws, regulations, standards and other obligations may require us to incur additional costs and restrict our business operations. Because the interpretation and application of laws, regulations, standards and other obligations relating to data privacy and security are still uncertain, it is possible that these laws, regulations, standards and other obligations may be interpreted and applied in a manner that is inconsistent with our data processing practices and policies or the features of its products and services. If so, in addition to the possibility of fines, lawsuits, regulatory investigations, public censure, other claims and penalties and significant costs for remediation and damage to our reputation, we could be required to fundamentally change our business activities and practices, which could adversely affect our business, and we may be unable to make such changes and modifications in a commercially reasonable manner, or at all. Any inability to adequately address data privacy or security-related concerns, even if unfounded, or to comply with applicable laws, regulations, standards and other obligations relating to data privacy and security, could subject it to additional cost and liability, harm our reputation and brand, damage our relationship with important clients and affect our financial condition, operating results and reputation.
Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations in China.
With some of our assets and operations located in China, our business, financial condition, results of operations and prospects are influenced by political, economic and social conditions in China, including, among others, overall economic growth, level of urbanization and level of per capita disposable income. China’s economy differs from the economies of most developed countries in many ways, including with respect to the amount 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. The Chinese government also exercises significant control over China’s economic growth through strategically allocating resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. While the PRC economy has experienced significant growth over the past decades, that growth has been uneven across different regions and between economic sectors and may not continue, as evidenced by the slowing of the growth of the Chinese economy since 2012. 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. Any prolonged economic downturn could adversely affect our business and operating results in China, leading to reduction in demand for our products and adversely affect our competitive position in the country.
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Uncertainties with respect to the legal system in Mainland China and changes in laws and regulations in Mainland China, including the interpretation and enforcement of laws, rules and regulations in Mainland China, could adversely affect our business.
Our operations in Mainland China are governed by laws and regulations in Mainland China. The legal system in Mainland China is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. Furthermore, the legal system in Mainland China is based in part on government policies and internal rules, some of which are not published on a timely basis, or at all, and may have retroactive effect. As a result, we may not be aware of our violation of any of these laws and regulations until sometime after the violation. As the legal system in Mainland China is evolving rapidly, the interpretations of many laws, regulations and rules may contain inconsistencies, the enforcement of these laws, regulations and rules involves uncertainties, existing laws and regulations are subject to amendments and interpretations, and new laws and regulations can be promulgated relatively quickly with little advance notice. From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Administrative and court proceedings in Mainland China may be protracted, resulting in substantial costs and diversion of management attention. Since administrative and court authorities in Mainland China have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection available than in more developed legal systems. Such unpredictability towards our contractual, property and procedural rights and legal obligations could adversely affect our business and impede our ability to continue our operations.
Uncertainties with respect to the interpretation and implementation of the PRC Foreign Investment Law and Implementation Regulations may affect our corporate governance.
On January 1, 2020, the PRC Foreign Investment Law (the “Foreign Investment Law”) and the Regulations for Implementation of the Foreign Investment Law (the “Implementation Regulations”), came into effect and replaced the trio of prior laws regulating foreign investment in Mainland China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law, and the Wholly Foreign-invested Enterprise Law, together with their implementation rules. Since the Foreign Investment Law and the Implementation Regulations are relatively new, uncertainties still exist in relation to their interpretation and implementation. The Foreign Investment Law and the Implementation Regulations may affect our relevant corporate governance practices and increase our compliance costs. For instance, the Foreign Investment Law and the Implementation Regulations require that foreign-invested enterprises established before the Foreign Investment Law became effective have five years to complete the necessary adjustments to their organization form, governance structure and other required matters to comply with the PRC Company Law, the Partnership Enterprise Law and other laws. The PRC Company Law significantly differs from the Sino-foreign Equity Joint Venture Enterprise Law and the Sino-foreign Cooperative Joint Venture Enterprise Law. These differences include, but are not limited to, an enterprise’s highest authority, minimum number of directors, quorum, term of directors, voting mechanisms, profit distributions and equity transfer restrictions. According to the Implementation Regulations, the provisions regarding equity interest transfer and distribution of profits or remaining assets may remain the same as previously provided in the contracts among the joint venture parties of a foreign-invested enterprise. Uncertainties still exist with respect to the specific adjustments foreign-invested enterprises must make. The local branch of the State Administration for Market Regulation of the PRC (the “SAMR”) may, at its discretion, require our subsidiaries in Mainland China to make necessary adjustments to their articles of association and other filing documents to comply with the PRC Company Law and the Partnership Enterprise Law, as applicable.
In addition, the Foreign Investment Law and the Implementation Regulations impose information reporting requirements on foreign investors and foreign-invested enterprises. Any foreign investors or foreign-invested enterprises found to be non-compliant with these reporting obligations may be subject to fines or administrative liabilities.
The 2024 Foreign Investment Negative List eliminates most manufacturing restrictions. However, ancillary services (e.g., data processing) may require sector-specific approvals. National security reviews under the Foreign Investment Law could still apply to investments in sensitive infrastructure linked to our supply chain.
China’s M&A Rules and certain other regulations in Mainland China establish complex procedures for some acquisitions of companies in Mainland China by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in Mainland China.
Among other things, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (“M&A Rules”) and Anti-Monopoly Law of the People’s Republic of China promulgated by the Standing Committee of the NPC which became effective in 2008 (“Anti-Monopoly Law”), established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. Such regulation requires, among other things, that SAMR be notified in advance of any change-of-control transaction in which a foreign investor acquires control of a domestic enterprise in Mainland China or a foreign company with substantial operations in Mainland China, if certain thresholds under the Provisions of the State Council on the Standard for Declaration of Concentration of Business Operators, issued by the State Council in 2008, are triggered. Moreover, the Anti-Monopoly Law requires that transactions which involve national security, the examination on national security shall also be conducted according to the relevant provisions of the State. In addition, PRC Measures for the Security Review of Foreign Investment which became effective in January 2021 require acquisitions by foreign investors of companies in Mainland China engaged in military-related or certain other industries that are crucial to national security be subject to security review before consummation of any such acquisition. We may pursue potential strategic acquisitions that are complementary to our business and operations.
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Complying with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval or clearance from the Ministry of Commerce of China (“MOFCOM”), may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
Mainland China regulations relating to offshore investment activities by residents in Mainland China may limit the ability of our subsidiaries in Mainland China to increase their registered capital or distribute profits to us or otherwise expose us to liability and penalties under PRC law.
The SAFE promulgated the Notice of the State Administration of Foreign Exchange on Issues Relating to Foreign Exchange Control for Overseas Investment and Financing and Roundtripping by PRC Residents through Special Purpose Vehicles (“SAFE Circular 37”) in July 2014 that requires residents or entities in Mainland China 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 residents or entities in Mainland China must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating to any change of basic information (including change of such citizens or residents in Mainland China, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released in February 2015 by SAFE, as amended in December 2019 (“SAFE Circular 13”), local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 2015.
To our knowledge, all of ICONIQ’s shareholders have completed SAFE Circular 37 Registration and are in compliance.
However, ICONIQ may not be informed of the identities of all the residents or entities in Mainland China holding direct or indirect interest in their company, nor can ICONIQ compel its beneficial owners to comply with SAFE registration requirements. As a result, ICONIQ cannot provide any assurances that all of ICONIQ’s current and future shareholders who are residents in Mainland China will comply with ICONIQ’s request to make or obtain and maintain any applicable registration or comply with other requirements required by SAFE Circular 37 or other related rules. Failure by such shareholders or beneficial owners to comply with SAFE regulations could subject ICONIQ to fines or legal sanctions, restrict ICONIQ’s investment activities outside Mainland China or affect ICONIQ’s ownership structure, which could adversely affect ICONIQ’s business and prospects.
Restrictions on our subsidiaries in Mainland China and Hong Kong on paying dividends or making other payments to it under existing or new laws and regulations of Mainland China and Hong Kong may restrict our ability to satisfy its liquidity requirements.
While our subsidiaries have not yet distributed dividends in the past, dividend payments from our subsidiaries in Mainland China in the future are subject to various restrictions under laws and regulations in Mainland China in force at the time and could be subject to additional, more onerous restrictions under new laws and regulations in Mainland China that may come into effect in the future. Current regulations in Mainland China permit our subsidiaries in Mainland China to pay dividends to us only out of their accumulated after-tax profits upon satisfaction of relevant statutory condition and procedures, if any, determined in accordance with accounting standards and regulations in Mainland China. In addition, each of our subsidiaries in Mainland China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. In addition, the PRC Enterprise Income Tax Law and its implementation rules provide that withholding tax at the rate of 10% will be applicable to dividends payable by Chinese companies to non-Mainland China-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-Mainland China-resident enterprises are incorporated. Furthermore, if our subsidiaries in Mainland China incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us, which may restrict our ability to satisfy its liquidity requirements. Due to these restrictions and additional restrictions that may be imposed under new laws and regulations in Mainland China that may come into effect in the future, cash and/or non-cash assets held by our subsidiaries in Mainland China may not be available to fund our foreign currency needs or any foreign operations that we may have in the future or for other uses outside of Mainland China.
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Based on the experience of our management team, we do not believe that remittance of cash and/or non-cash assets from Hong Kong is subject to the aforementioned interventions, restrictions and limitations by the government of Mainland China or similar interventions, restrictions or limitations from the government of Hong Kong, nor do we believe such interventions, restrictions and limitations will be imposed on us or any future Hong Kong subsidiary that we may have in the foreseeable future. To the extent that our cash and/or non-cash assets in Hong Kong or any cash and/or non-cash assets held by our Hong Kong subsidiaries are subject to the aforementioned interventions, restrictions and limitations by the government of Mainland China or the government of Hong Kong, then, as a result of such interventions, restrictions and limitations, such cash/assets may not be available to pay dividends to us, to fund the operations of our subsidiaries outside Hong Kong or to be used outside of Hong Kong for other purposes.
Mainland China regulation of loans to and direct investment in entities in Mainland China by offshore holding companies and governmental control of currency conversion may restrict or delay us from using the proceeds of the Business Combination to make loans or additional capital contributions to our subsidiaries in Mainland China, which could adversely affect our liquidity and its ability to fund and expand our business.
We are an offshore holding company with some of our operations conducted in Mainland China. We may make loans to our subsidiaries in Mainland China subject to the approval, registration, and filing with governmental authorities and limitation of amount, or we may make additional capital contributions to our wholly foreign-owned subsidiaries in Mainland China. Any loans to our wholly foreign-owned subsidiaries in Mainland China, which are treated as foreign-invested enterprises under laws of Mainland China, are subject to foreign exchange loan registration with the National Development and Reform Commission (the “NDRC”) and SAFE or its local branches. In addition, a foreign invested enterprise shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of a foreign invested enterprise shall not be used for the following purposes: (1) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (2) directly or indirectly used for investment in securities or investments other than banks’ principal-secured products unless otherwise provided by relevant laws and regulations; (3) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (4) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).
In light of the various requirements imposed by regulations in Mainland China on loans to and direct investment in entities in Mainland China by offshore holding companies, there is no assurance that we will be able to complete the necessary government registrations or obtain the necessary government approvals or filings on a timely basis, if at all, with respect to future loans by Robo.ai Inc. to our subsidiaries in Mainland China or with respect to future capital contributions by Robo.ai Inc. to our subsidiaries in Mainland China. If we fail to complete such registrations or obtain such approvals, our ability to use any future proceeds and to capitalize or otherwise fund our operations in Mainland China may be negatively affected, which could adversely affect liquidity of our operations in Mainland China and our ability to fund and expand our business.
Because Robo.ai Inc.is incorporated in the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
Robo.ai Inc. is an exempted company incorporated in the Cayman Islands with limited liability. As a result, it may be difficult for investors to effect service of process within the United States upon Robo.ai Inc.’s directors or officers, or enforce judgments obtained in the United States courts against Robo.ai Inc.’s directors or officers.
Robo.ai Inc.’s corporate affairs are governed by our Amended and Restated Memorandum and Articles of Association, the Companies Act (Revised) of the Cayman Islands (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. Robo.ai Inc. is subject to the federal securities laws of the United States. The rights of our shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of Robo.ai Inc.’s directors to Robo.ai Inc. under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law. Decisions of the Privy Council (which is the final Court of Appeal for British overseas territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court and the Court of Appeal are generally of persuasive authority but are not binding in the courts of the Cayman Islands. Decisions of courts in other Commonwealth jurisdictions are similarly of persuasive but not binding authority. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less prescriptive body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a federal court of the United States.
We have been advised by Appleby, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
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As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or controlling shareholders than they would as public shareholders of a corporation incorporated in the United States.
It may be difficult to enforce a U.S. judgment against us or our directors and officers outside the United States, or to assert U.S. securities law claims outside of the United States.
Not all of our directors and executive officers are residents of the United States, and the assets of the company or these persons may be located outside the United States. As a result, it may be difficult or impossible for investors to effect service of process upon us within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. Additionally, it may be difficult to assert U.S. securities law claims in actions originally instituted outside of the United States. Foreign courts may refuse to hear a U.S. securities law claim because foreign courts may not be the most appropriate forum in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the law of the jurisdiction in which the foreign court resides, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process, and certain matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides.
A number of our directors and executive officers are located in Mainland China. As a result, investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in Mainland China against our management named in this annual report based on foreign laws.
A number of our directors and executive officers reside within Mainland China for at least a significant portion of the time. As a result, it may be difficult for investors to effect service of process upon our management located in Mainland China. It may also be difficult for investors to enforce in U.S. courts of the judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against our officers and directors located in Mainland China. In addition, there is uncertainty as to whether the courts of Mainland China would recognize or enforce judgments of U.S. courts against our management located in Mainland China predicated upon the civil liability provisions of the securities laws of the United States or any state.
There is uncertainty as to whether the courts of Mainland China would enforce judgments of United States courts or Cayman courts obtained against our management located in Mainland China predicated upon the civil liability provisions of the U.S. federal and state securities laws. The courts in Mainland China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law and other applicable laws and regulations based either on treaties between Mainland China and the country where the judgment is made or on principles of reciprocity between jurisdictions. Mainland China does not have any treaties or other form of reciprocity with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. Further, according to the PRC Civil Procedures Law, courts in Mainland China will not enforce a foreign judgment against our management located in Mainland China if they decide that the judgment violates the basic principles of laws of Mainland China or national sovereignty, security or public interest. As a result, it may be difficult for our shareholders or investors to effect service of process upon our management inside Mainland China, and it is uncertain whether and on what basis a court in Mainland China would enforce a judgment rendered by a court in the United States or in the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on laws of Mainland China against a company in Mainland China, if they can establish sufficient nexus to Mainland China for a court in Mainland China to have jurisdiction, and meet other procedural requirements. However, it would be difficult for foreign shareholders to establish sufficient nexus to Mainland China by virtue only of holding our securities.
Any financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially and adversely affect our business, prospects, financial condition and results of operations.
The global macroeconomic environment is facing challenges. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States. Economic conditions in China, the UAE and other regions where we seek to operate are sensitive to global economic conditions. In particular, there have been signs that the rate of China’s economic growth is declining; any prolonged slowdown in China’s economic development might lead to tighter credit markets, increased market volatility, sudden drops in business and consumer confidence and dramatic changes in business and consumer behaviors. Credit risks of customers and suppliers and other counterparty risks may also increase.
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Sales of our vehicles depend in part on discretionary consumer spending and are even more exposed to adverse changes in general economic conditions. In response to their perceived uncertainty in economic conditions, consumers might delay, reduce or cancel purchases of our vehicles and our results of operations may be materially and adversely affected.
Natural disasters, unusually adverse weather, epidemic or pandemic outbreaks, boycotts and geo-political events could materially and adversely affect our business, results of operations or financial condition.
The occurrence of one or more natural disasters, such as hurricanes and earthquakes, unusually adverse weather, epidemic or pandemic outbreaks, boycotts and geopolitical events, such as civil unrest and acts of terrorism, or similar disruptions, could materially and adversely affect our business, results of operations or financial condition. These events could result in physical damage to property, an increase in energy prices, temporary or permanent closure of one or more of our current or planned facilities, temporary lack of an adequate workforce in a market, temporary or long-term disruption in the supply of raw materials, product parts and components, temporary disruption in transport, or disruption to our information systems. We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results and financial condition.
Cayman Islands economic substance requirements may have an effect on our business and operations.
The Cayman Islands enacted the International Tax Co-operation (Economic Substance) Act (2024 Revision) (the “ES Act”) together with the Guidance Notes published by the Cayman Islands Tax Information Authority from time to time. Under the Cayman Islands ES Act, if a company is considered to be a “relevant entity” and is conducting one or more of the nine “relevant activities” then that company will be required to comply with the economic substance requirements in relation to the relevant activity from 1 July 2019. All companies, whether a relevant entity or not, is required to file an annual report in the Cayman Islands with the Companies Registry confirming whether or not it is carrying on any relevant activities and if it is, it must satisfy an economic substance test. If the only business activity that the Company carries on is to hold equity participation in other entities and only earns dividends and capital gains, then based on the current interpretation of the ES Act, the Company is a “pure equity holding company” and will therefore only subject to the minimum substance requirements, which require us to (i) comply with all applicable requirements under the Companies Act and (ii) have adequate human resources and adequate premises in the Cayman Islands for holding and managing equity participations in other entities. However, there can be no assurance that we will not be subject to more requirements under the ES Act. Uncertainties over the interpretation and implementation of the ES Act may have an adverse impact on our business and operations.
We may re-domicile or continue out of the Cayman Islands into another jurisdiction, and the laws of such jurisdiction will likely govern all of our material agreements and we may not be able to enforce our legal rights.
We may relocate the home jurisdiction of our business or re-domicile or continue out of the Cayman Islands to another jurisdiction. If we determine to do this, the laws of such jurisdiction would likely govern all of our material agreements. The system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Any such reincorporation and the international nature of our business will likely subject us to foreign regulations.
Risks Relating to Being a Public Company
We will incur increased costs as a result of operating as a public company, and our management devotes substantial time to new compliance initiatives.
We are a public company subject to reporting requirements in the United States, and it incurs significant legal, accounting and other expenses that it did not incur as a private company, and these expenses may increase even more after we are no longer an emerging growth company, as defined in Section 2(a) of the Securities Act. As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. The increased costs will increase our net loss. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain D&O liability insurance and it may be forced to accept reduced policy limits or incur substantially higher costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs it may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
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A market for our securities may not be sustained, which would adversely affect the liquidity and price of our securities.
The price of our securities may fluctuate significantly due to, among other things, general market and economic conditions. An active trading market for our securities may not be sustained. In addition, the price of our securities can vary due to general economic conditions and forecasts, our general business conditions and the release of our financial reports. Additionally, if our securities become delisted from Nasdaq and are quoted on the OTC Bulletin Board (an inter-dealer automated quotation system for equity securities that is not a national securities exchange), the liquidity and price of our securities may be more limited than if we were quoted or listed on the New York Stock Exchange, Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
Risks Relating to Ownership of Our Ordinary Shares
Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our securities.
On November 12, 2024, the Company received a delisting determination notice (the “Determination”) from the staff of the Listing Qualifications Department (the “Staff”) of Nasdaq to delist the Company’s securities from Nasdaq on the grounds that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) because it failed to file its Annual Report on Form 20-F for the fiscal year ended December 31, 2023 (the “2023 Annual Report”) with the SEC by November 11, 2024, the extended deadline previously approved by the Staff for filing such report. On January 6, 2025, the Company received notice (the “January 6, 2025 Notice”) from the Staff informing the Company that: (i) the Company no longer met the audit committee requirements for continued listing on Nasdaq set forth in Nasdaq Listing Rule 5605 due to the resignations of Messrs. Xiaoma (Sherman) Lu and Changqing (Benjamin) Ye on December 6, 2024 and Ms. Xinyue (Jasmine) Geffner on December 7, 2024; and (ii) the Company is not in compliance with Nasdaq Listing Rule 5250(c)(2) because it failed to the file a Form 6-K containing interim balance sheet and income statement as of the end of its second quarter ended June 30, 2024, which two deficiencies serve as additional bases for delisting.
On January 16, 2025, the Company attended the hearing before a Hearings Panel (the “Panel”). On February 24, 2025, the Panel issued its decision (“Decision”) to grant the Company’s request for continued listing on Nasdaq, subject to the conditions that: (i) on or before March 30, 2025, the Company shall file restatements for the financial statements included in the Company’s Form 20-F for fiscal year 2022 and the interim financial statements for fiscal year 2023; (ii) on or before May 12, 2025, the Company shall file its 2023 Annual Report and its interim financial statements for fiscal year 2024; and (iii) on or before May 12, 2025, the Company shall demonstrate compliance with Nasdaq Listing Rule 5605(c)(2). On March 31, 2025, the Company filed Amendment No. 1 to the Annual Report on Form 20-F for fiscal year 2022 and Amendment No. 1 to its report Form 6-K for the six-month periods ended June 30, 2023 and 2022.
On January 9, 2025, the board of directors of the Company appointed (i) Elizabeth Ching Yee Chung as a member of the Board, as chairperson of the audit committee and as a member of the compensation committee; (ii) Benjamin Bin Zhai as a member of the board and as chairperson of the compensation committee; (iii) Jin He as a member of the Board, as a member of the audit committee and as a member of the compensation committee; (iv) Joseph Levinson as a member of the Board and as a member of the audit committee; and (v) Jinming Dong as Chief Financial Officer of the Company. With the appointments of Ms. Chung and Messrs. He and Levinson to the Board’s audit committee on January 9, 2025, the Company believes that it has regained compliance with the audit committee requirements in Nasdaq Listing Rule 5605(c)(2).
On February 24, 2025, the Panel issued its decision on the Company’s appeal, granting the Company’s request for continued listing until May 12, 2025 while the Company seeks to regain compliance with the aforementioned deficiencies, subject to the Company meeting certain compliance milestones.
The Company filed its 2023 Annual Report on April 28, 2025 and its interim report for the six months ended June 30, 2024 on May 12, 2025. On May 19, 2025, the Company received a letter from the Panel informing the Company that it had regained compliance with the requirements set forth in Nasdaq Listing Rules 5250(c)(1) (the “Periodic Filing Rule”), 5250(c)(2), and 5605(c)(2), and in application of Nasdaq Listing Rule 5815(d)(4)(B), the Company will be subject to a mandatory Panel monitoring period of one year from May 19, 2025 (the “Mandatory Panel Monitor”). If, within that one-year monitoring period, the Staff finds the Company again out of compliance with the Periodic Filing Rule, the Staff will issue a delisting determination and notice and the Company will not be permitted to provide the Staff with a plan of compliance, nor will the Staff will be permitted to grant additional time for the Company to regain compliance with respect to that deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Nasdaq Listing Rule 5810(c)(3).
On May 21, 2025, the Company received a delisting determination letter, informing the Company that in accordance with the Mandatory Panel Monitor, as a result of the Company’s failure to file its Annual Report on Form 20-F for the fiscal year ended December 31, 2024 (the “2024 Annual Report”) with the SEC and comply with the Periodic Filing Rule, the Company’s securities will be delisted from Nasdaq (the “2025 Delisting Determination”). Unless the Company requests an appeal of the delisting determination by May 28, 2025, trading of the Company’s ordinary shares and warrants will be suspended at the opening of business on May 30, 2025 and a Form 25-NSE will be filed with the SEC, which will remove the Company’s securities from listing and registration on Nasdaq.
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On May 28, 2025, the Company requested a hearing to appeal the 2025 Delisting Determination and an extended stay of the trading suspension until a Hearings Panel has rendered a decision on such appeal. The Company is working diligently to file the 2024 Annual Report as soon as practicable, however there can be no assurance that the Company will be able to regain compliance with the Periodic Filing Rule or will otherwise maintain compliance with other Nasdaq listing criteria. There can be no assurance that the Hearings Panel will grant the Company’s request for continued listing or stay the suspension of the Company’s securities. On May 28, 2025, the Company issued a press release announcing its receipt of the 2025 Delisting Determination.
If we fail to satisfy the continued listing requirements of Nasdaq, Nasdaq may take steps to delist our securities. Such a delisting would likely have a negative effect on the price of our securities and would impair your ability to sell or purchase our securities when you wish to do so. In the event of a delisting, we can provide no assurance that any action we take to attempt to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the Nasdaq minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements. Additionally, if our securities become delisted from Nasdaq, for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than if it were quoted or listed on Nasdaq or another national securities exchange. You may be unable to sell your securities unless a market can be established or sustained.
Our ability to pay any dividends in the future will depend entirely on distributions from ICONIQ and our other subsidiaries.
Robo.ai Inc. is a holding company and does directly own any operating assets other than its ownership of interests in ICONIQ and our other subsidiaries. We depend on ICONIQ and our other subsidiaries for distributions, loans and other payments to generate the funds necessary to meet our financial obligations, including our expenses as a publicly traded company, and to pay any dividends. The earnings from, or other available assets of, ICONIQ and our other subsidiaries may not be sufficient to make distributions or pay dividends, pay expenses or satisfy our other financial obligations.
If we fail to implement and maintain an effective system of internal control over financial reporting, our ability to accurately and timely report financial results or prevent fraud may be adversely affected, and investor confidence and the market price of our securities, including our Class B ordinary shares, may be adversely impacted. If we fail to implement and maintain an effective system of internal control, we will not be able to conclude, and our independent registered public accounting firm will not be able to report, that we have effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act in any future annual report on Form 20-F covering the fiscal year in which this failure occurs.
We are subject to the reporting requirements of the Exchange Act and to the requirements of the Sarbanes-Oxley Act, and the rules and regulations of Nasdaq. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
Effective internal control over financial reporting is necessary for us to produce reliable financial reports. Any failure to maintain effective internal control over financial reporting could prevent us from identifying fraud and result in the loss of investor confidence in the reliability of our financial statements, which in turn could have a material and adverse effect on the trading price of our securities. Furthermore, we may need to incur additional costs and use additional management and other resources as our business and operations further expand or in an effort to remediate any significant control deficiencies that may be identified in the future.
We may or may not pay cash dividends in the foreseeable future.
Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, applicable law, regulations, restrictions, our results of operations, financial condition, cash requirements, contractual restrictions, our future projects and plans and other factors that the board of directors may deem relevant. In addition, our ability to pay dividends depends significantly on the extent to which we receive dividends from ICONIQ and our other subsidiaries, and there can be no assurance that ICONIQ our other subsidiaries will pay dividends. As a result, capital appreciation, if any, of our ordinary shares will be an investor’s sole source of gain for the foreseeable future.
Provisions in our Amended and Restated Memorandum and Articles of Association may inhibit a takeover of Robo.ai Inc., which could limit the price investors might be willing to pay in the future for our securities and could entrench management.
Our Amended and Restated Memorandum and Articles of Association contains provisions that may discourage unsolicited takeover proposals that our shareholders may consider to be in their best interests. Among other provisions, subject to the right of our shareholders as specified in the Amended and Restated Memorandum and Articles of Association, the ability of our board of directors to issue additional shares, with or without preferred, deferred or other rights or restrictions, whether in regard to dividend, voting, return of capital or otherwise and to such persons, at such times and on such other terms as the board of directors may determine, to the extent authorized but unissued, and without shareholder approval, may make it more difficult for our shareholders to remove incumbent management and accordingly discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
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We are an “emerging growth company,” and it cannot be certain if the reduced SEC reporting requirements applicable to emerging growth companies will make our Class B ordinary shares less attractive to investors, which could have a material and adverse effect on us, including our growth prospects.
We are an “emerging growth company” as defined in the JOBS Act. We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Business Combination (the “Closing”), (b) in which we have total annual gross revenue of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than $1.0 billion in non-convertible debt during the prior three-year period. We intend to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting and reduced disclosure obligations regarding executive compensation.
In addition, Section 102(b)(1) of the JOBS Act exempts “emerging growth companies” from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.
Furthermore, even after we no longer qualify as an “emerging growth company,” as long as we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including, but not limited to, the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, we will not be required to file annual reports and financial statements with the SEC as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and are not required to comply with Regulation FD, which restricts the selective disclosure of material information.
As a result, our shareholders may not have access to certain information they deem important. We cannot predict if investors will find our Class B ordinary shares less attractive because it relies on these exemptions. If some investors find our Class B ordinary shares less attractive as a result, there may be a less active trading market and share price for our Class B ordinary shares may be more volatile.
As a “foreign private issuer” under the rules and regulations of the SEC, we are permitted to file less or different information with the SEC than a company incorporated in the United States or otherwise subject to these rules and are permitted to follow certain home-country corporate governance practices in lieu of certain Nasdaq requirements applicable to U.S. issuers.
We are considered a “foreign private issuer” under the Exchange Act and is therefore exempt from certain rules under the Exchange Act, including the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations for U.S. and other issuers. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or within the same time frames as U.S. companies with securities registered under the Exchange Act, although it may elect to file certain periodic reports and financial statements with the SEC on a voluntary basis on the forms used by U.S. domestic issuers. We are not required to comply with Regulation FD, which imposes restrictions on the selective disclosure of material information to shareholders. In addition, our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of Robo.ai Inc.’s securities.
In addition, as a “foreign private issuer,” we are permitted to follow certain home-country corporate governance practices in lieu of certain Nasdaq requirements. A foreign private issuer must disclose in its Annual Reports filed with the SEC each Nasdaq requirement with which it does not comply followed by a description of its applicable home country practice. We currently intend to follow some, but not all, of the corporate governance requirements of Nasdaq. With respect to the corporate governance requirements of Nasdaq that we do follow, we cannot give any assurances that we will continue to follow such corporate governance requirements in the future, and may therefore in the future, rely on available Nasdaq exemptions that would allow us to follow our home country practice. Unlike the requirements of Nasdaq, we are not required, under the corporate governance practice and requirements in the Cayman Islands, to have our board consist of a majority of independent directors, are we required to have a compensation committee or a nominating or corporate governance committee consisting entirely of independent directors, or have regularly scheduled executive sessions with only independent directors each year. Such Cayman Islands home country practices may afford less protection to holders of our ordinary shares. For additional information regarding the home country practices we intends to follow in lieu of Nasdaq requirements, see the section of this annual report entitled “Item 16G. Corporate Governance.”
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We would lose our status as a “foreign private issuer” under current SEC rules and regulations if more than 50% of our outstanding voting securities becomes directly or indirectly held of record by U.S. holders and one of the following is true: (i) the majority of our directors or executive officers are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United States; or (iii) our business is administered principally in the United States. If we lose our status as a foreign private issuer in the future, we will no longer be exempt from the rules described above and, among other things, will be required to file periodic reports and annual and quarterly financial statements as if we were a company incorporated in the United States. If this were to happen, we would likely incur substantial costs in fulfilling these additional regulatory requirements and members of our management would likely have to divert time and resources from other responsibilities to ensuring these additional regulatory requirements are fulfilled.
Our dual-class capital structure may render our Class B ordinary shares ineligible for inclusion in certain stock market indices, and thus adversely affect the trading price and liquidity of our Class B ordinary shares.
We cannot predict whether our dual-class capital structure will result in a lower or more volatile market price of our Class B ordinary shares, adverse publicity or other adverse consequences. Certain index providers have announced and implemented restrictions on including companies with multiple-class share structures in certain of their indices. For example, in July 2017, FTSE Russell announced that it would require new constituents of its indices to have greater than 5% of the company’s voting rights in the hands of public shareholders, and S&P Dow Jones announced in the same month that it would no longer admit companies with multiple-class share structures to certain of its indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together make up the S&P Composite 1500. Also in 2017, MSCI, a leading stock index provider, opened public consultations on its treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices; however, in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under the announced policies, our dual-class capital structure might make our Class B ordinary shares ineligible for inclusion in any of these indices, and as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not be investing in our Class B ordinary shares. It is unclear what effect, if any, these policies will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may adversely affect valuations, as compared to similar companies that are included. Due to the dual-class capital structure of our ordinary shares, we will likely be excluded from certain indices and we cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class B ordinary shares less attractive to other investors. As a result, the market price and liquidity of our Class B ordinary shares could be materially adversely affected.
We are a “controlled company” within the meaning of the Listing Rules of Nasdaq and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
In addition to being a foreign private issuer, we are a “controlled company” as defined under the Listing Rules of Nasdaq, because Alan Nan Wu, our Executive Chairman, is able to exercise 78% of the aggregate voting power of our total issued and outstanding shares. For as long as we remain a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules, including an exemption from the rule that a majority of our board of directors must be independent directors or that we have to establish a nominating committee and a compensation committee composed entirely of independent directors. As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. For additional information regarding the corporate governance practices that we intend to follow in lieu of Nasdaq requirements, see the section of this annual report entitled “- The market price and trading volume of our Class B ordinary shares and warrants may be volatile.”
The stock markets, including Nasdaq on which we list our Class B ordinary shares and warrants under the symbols “AIIO,” and “AIIOW,” respectively, have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market is sustained for our Class B ordinary shares and warrants, the market price of our Class B ordinary shares and warrants may be volatile and could decline significantly. In addition, the trading volume in our Class B ordinary shares and warrants may fluctuate and cause significant price variations to occur. If the market price of our Class B ordinary shares and warrants declines significantly, you may be unable to resell your shares or warrants at or above the market price of such shares and warrants. We cannot assure you that the market price of our Class B ordinary shares and warrants will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:
| ● | the realization of any of the risk factors presented in this annual report; |
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| ● | actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, results of operations, level of indebtedness, liquidity or financial condition; |
| ● | additions and departures of key personnel; |
| ● | failure to comply with the requirements of Nasdaq; |
| ● | failure to comply with the Sarbanes-Oxley Act or other laws or regulations; |
| ● | future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our securities including due to the expiration of contractual lock-up agreements; |
| ● | publication of research reports about our company; |
| ● | the performance and market valuations of other similar companies; |
| ● | failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; |
| ● | new laws, regulations, subsidies, or credits or new interpretations of existing laws applicable to our company; |
| ● | commencement of, or involvement in, litigation involving our company; |
| ● | broad disruptions in the financial markets, including sudden disruptions in the credit markets; |
| ● | speculation in the press or investment community; |
| ● | actual, potential or perceived control, accounting or reporting problems; |
| ● | changes in accounting principles, policies and guidelines; and |
| ● | other events or factors, including those resulting from infectious diseases, health epidemics and pandemics (including the ongoing COVID-19 public health emergency), natural disasters, war, acts of terrorism or responses to these events. |
In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on us.
Our periodic operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price.
Our operating results may fluctuate significantly because of several factors, including:
| ● | labor availability and costs for hourly and management personnel; |
| ● | our ability to successfully develop, commercialize, and obtain market acceptance for our products; |
| ● | changes in interest rates; |
| ● | impairment of long-lived assets; |
| ● | macroeconomic conditions, both internationally and locally; |
| ● | changes in consumer preferences and competitive conditions; |
| ● | expansion to new markets; and |
| ● | fluctuations in commodity prices. |
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If securities or industry analysts do not publish or cease publishing research or reports about our company, our business, or our market, or if they change their recommendations regarding our securities adversely, then the price and trading volume of our securities could decline.
The trading market for our securities is and will be influenced by the research and reports that industry or financial analysts publish about our business. We do not control these analysts, or the content and opinions included in their reports. As a new public company, we may be slow to attract research coverage and the analysts who publish information about our securities will have had relatively little experience with our company, which could affect their ability to accurately forecast our results and make it more likely that we may fail to meet their estimates. In the event that we obtain industry or financial analyst coverage, if any of the analysts who cover our company issues an inaccurate or unfavorable opinion regarding our company, the price of our securities would likely decline. If our financial results fail to meet, or significantly exceed, the announced guidance or the expectations of analysts or public investors, analysts could downgrade our securities or publish unfavorable research about us. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, our visibility in the financial markets could decrease, which in turn could cause the price of our securities or trading volume to decline.
In the event that our Class B ordinary shares are delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in our Class B ordinary shares 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 Class B ordinary shares 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 our Class B ordinary shares, which could severely limit the market liquidity of such ordinary shares 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 investor losses. 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.
Alan Nan Wu, whose interests may conflict with yours, can exercise significant influence over our company. The concentrated ownership of our ordinary shares may prevent you and other shareholders from influencing significant decisions or may prevent or discourage unsolicited acquisition proposals or offers for our capital stock, and that may adversely affect the trading price of our securities.
Alan Nan Wu, through Muse Limited, a company incorporated in the British Virgin Islands (“Muse Limited”), owns 100% of our Class A ordinary shares and 426,941 of our Class B ordinary shares, which represent 72.3% of the voting interests of Robo.ai Inc. For so long as he holds at least a majority of the voting interests of Robo.ai Inc., Alan Nan Wu will have the ability, through our board of directors, to significantly influence decision-making with respect to our business direction and policies. Matters over which Alan Nan Wu may, directly or indirectly, exercise significant influence include: (i) the election of members of our board of directors; (ii) business combinations and other merger transactions requiring shareholder approval, including proposed transactions that would result in our shareholders receiving a premium price for their shares; and (iii) amendments of our Amended and Restated Memorandum and Articles of Association or increases or decreases in the size of our board of directors. Even if Alan Nan Wu’s voting interests fall below a majority, he may continue to be able to strongly influence our decisions. In addition, such concentrated control may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our shareholders. As a result, such concentrated control may adversely affect the market price of our Class B ordinary shares.
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If we are characterized as a passive foreign investment company for U.S. federal income tax purposes, our U.S. shareholders may suffer adverse tax consequences.
If we are a passive foreign investment company (“PFIC”) for any taxable year (or portion thereof) that is included in the holding period of a U.S. holder of our ordinary shares, the U.S. holder may be subject to adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. Our PFIC status for our current and subsequent taxable years may depend on our unbooked goodwill as valued based on the projected market value of our equity and whether we qualify for the PFIC start-up exception. Depending on the particular circumstances, the application of the start-up exception may be subject to uncertainty, and there cannot be any assurance that we will qualify for the start-up exception. Accordingly, there can be no assurances with respect to our status as a PFIC for our current taxable year or any subsequent taxable year. Our actual PFIC status for any taxable year, however, will not be determinable until after the end of such taxable year. U.S. holders are urged to consult their tax advisors regarding the possible application of the PFIC rules to holders of our ordinary shares.
The registration of shares for resale as provided by the Business Combination and the grant and future exercise of registration rights may adversely affect the market price of our securities.
In connection with the Business Combination, Robo.ai Inc. agreed to register for resale on Form F-1 (i) the ordinary shares, which have been exchanged for, or which shall be issued upon exercise of the other Robo.ai securities that were exchanged for securities of East Stone underlying the private placement units that were issued concurrently with the East Stone’s initial public offering, (ii) the ordinary shares issued to the shareholders of ICONIQ as consideration in connection with the consummation of the Business Combination, and (iii) all the ordinary shares issued or to be issued upon conversion of certain convertible notes and equity investment, subject to certain conditions,, no later than sixty (60) business days after the closing date of the Business Combination (the “Closing Date”), and to use its reasonable efforts to cause such resale registration statement to become effective on or before one hundred twenty (120) days after the Closing.
In connection with the Closing of the Business Combination, East Stone, Robo.ai Inc., certain initial shareholders of East Stone and the other parties thereto entered into an amendment to the Founders Registration Rights Agreement (the “Founders Registration Rights Agreement Amendment”), pursuant to which such holders can demand that we register their registrable securities under certain circumstances and will also have piggyback registration rights for these securities in connection with certain registrations of securities that we undertake. We intend to file and maintain an effective registration statement under the Securities Act covering such securities.
In addition, Yellow River (Cayman) Limited, a Cayman Islands company, has been granted both demand and piggyback registration rights for the Robo.ai securities that it received in connection with the Business Combination.
As of the date of this report, the resale of the above-described securities have not been registered. The registration of these securities, once completed, will permit the public resale of such securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class B ordinary shares post-Business Combination.
We may be subject to legal proceedings due to failure to timely file the registration statement as required by the Founders Registration Rights Agreement Amendment.
As of the date of this annual report, we have not yet filed a registration statement for the aforementioned securities under the Founders Registration Rights Agreement Amendment. Failure to file a registration statement by the required deadline constitutes an event of default and investors may proceed to protect and enforce its rights by suit in equity or action at law, whether for specific performance of any term contained in the Founders Registration Rights Agreement Amendment or for an injunction against the breach of any such term or in aid of the exercise of any power granted in the Founders Registration Rights Agreement Amendment or to enforce any other legal or equitable right, or to take any one or more of such actions, without being required to post a bond.
Item 4. Information on the Company
| A. | History and development of the company. |
Our Corporate Information
Robo.ai Inc. was incorporated on March 22, 2022 as a Cayman Islands exempted company, and our principal executive office is located at c/o Meydan Grandstand, 6th floor, Meydan Road, Nad AI Sheba, Dubai, United Arab Emirates. Our website address is http://www.roboai.io, and our telephone number is (971) 58 543 6466. Information contained on, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference herein. We have included our website address in this annual report solely for informational purposes. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers, such as we, that file electronically, with the SEC at www.sec.gov. Our agent for service of process in the United States is Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19711.
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Establishment of Dubai Global Headquarters
We trace our history back to 2014 when our predecessor entity was incorporated in Dubai, the UAE. After expanding into China in 2016 to utilize its supply chain, manufacturing capabilities and market opportunities, on March 22, 2022, we established our global headquarters in Dubai to reinforce our heritage from the Middle East as well as our vision to offer “passenger-centric” SPVs on a global scale. Our presence in the Middle East enables us to look both “East and West” to pursue our global growth ambitions. As of December 31, 2025:
| ● | our Dubai headquarters’ business scope covered science and technology consultancy, innovation and artificial intelligence (“AI”) research and consultancy, as well as automobile engineering services; |
| ● | our Dubai headquarters entity, ICONIQ Green, controls all of our UAE operating subsidiaries and through its wholly owned subsidiary ICONIQ Motors Limited, controls those in Mainland China; |
| ● | our senior management have signed employment contracts with our Dubai headquarters entity; and |
| ● | we had transferred over 60 patent rights from our Mainland China operating subsidiaries to our Dubai headquarters entity. |
Rabdan Discontinuation
The Company has developed its major product line of Rabdan branded vehicles, including the Rabdan One model, which was the first NEV awarded a “Made in the Emirates” certificate in the UAE. The Company has marketed three Rabdan models, Rabdan One, Rabdan Five (which was discontinued shortly upon the launch) and Rabdan Seven, to its customers, each of which have been jointly developed by the Company and its partners in China. The Company holds registered trademarks for Rabdan One and Rabdan Seven in the UAE. In the fiscal years ended December 31, 2023, 2024, and 2025, the Company assembled and delivered 889 Rabdan-branded vehicles to its customers.
In March 2024, the Company was orally informed by a representative of the UAE authority, who oversees the trademark use of the Rabdan brand for vehicles, to refrain from producing any vehicles under the Rabdan brand, as the authority intended to create a premium automotive product line using the Rabdan moniker. The Company immediately suspended new orders of Rabdan branded vehicles and engaged in discussions for collaborations with Rabdan Motors LLC, an entity set up by the UAE authority to develop a premium automotive product line under Rabdan brand.
In June 2024, the Company was notified by the same representative to refrain from selling any Rabdan branded vehicles within the UAE. Since that time, the Company has commenced the re-badging of approximately 320 vehicles held in inventory from the Rabdan brand to the Company’s own brand. The Company has entered into a sales agreement to sell all such re-badged vehicles. At the date of this report, the Company is progressing the vehicle delivery under the sales agreement and collecting the sales proceeds of delivered vehicles and has delivered approximately 300 vehicles under the sales agreement.
In connection with the discontinuance of the Rabdan branded vehicles, we initiated a workforce restructuring plan beginning in January 2024. As of December 31, 2024, we had reduced our workforce by 222 employees and recognized severance-related charges totaling US$1.7 million, which were recorded within general and administrative expenses, selling expenses, and research and development expenses in our consolidated statement of operations for the year then ended.
In the event we may incur additional severance costs in future periods as the restructuring plan progresses, such costs will be recognized in the period in which they become probable and reasonably estimable, in accordance with ASC 420-10.
Joint Venture with W Motors
On January 14, 2025, we entered into a joint venture agreement with W Motors, a homegrown brand and a mobility solutions provider in UAE, to establish a joint venture company to engage in the businesses of automobile modification and customizations, vehicle distribution, sale of after-sales auto parts and provision of car services.
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Pursuant to the joint venture agreement, we will hold a majority stake of 51% in the joint venture while W Motors will hold the remaining 49%. We will provide intellectual property valued at US$100 million, including patents, software, and related technologies. W Motors, on the other hand, will contribute its existing police vehicle and modification business, encompassing market channels, contracts, and equipment, valued at US$100 million.
Pursuant to the joint venture agreement, the joint venture will have a board of directors appointed by both parties, with us appointing the Chairperson and a total of 3 directors (including the Chairperson) and W Motors appointing a total of 2 directors. W Motors will appoint the general manager of the joint venture, while we and W Motors will jointly nominate the chief financial officer.
As of the date of the annual report, the joint venture has not yet been formally established.
Partnership with W Motors Dubai Branch
On October 9, 2025, we through one of our wholly-owned subsidiaries, Astra Mobility Meta (Cayman) Limited, entered into a partnership agreement with W Motors Dubai Branch, a company providing turnkey mobility services with in-house design, engineering, and manufacturing capabilities and mobility fleet solutions to governments and corporates in the Middle East and North Africa region, to establish a strategic collaboration focusing on the joint development, procurement, and deployment of electric and autonomous vehicle solutions in the Middle East and other target markets.
Pursuant to this partnership agreement, we and W Motors Dubai Branch will collaborate on the design, engineering, prototyping, and manufacturing of last-mile delivery vehicles, multi-purpose autonomous vehicles (including autonomous delivery solutions), and electric utility vehicles tailored to the operational needs of W Motors’ clients. Upon successful development and testing of such vehicles, W Motors Dubai Branch has committed to procure 30,000 vehicles over a period of five years. The partnership agreement further provides W Motors Dubai Branch with exclusivity for manufacturing such vehicles, subject to limitations. If we terminate the partnership agreement prior to the completion of this project, we are required to refund any development payments made by W Motors Dubai Branch.
Strategic Cooperation with JW Group
Asset Contribution and Share Issuance Agreement with JW International LLC-FZ
On August 8, 2025, we entered into an asset contribution and share issuance agreement with JW International LLC-FZ, a limited liability company organized under United Arab Emirates law that owns and operates a complete knock-down automotive assembly facility in Pakistan (“JW,” together with its parent company, JW Corporation, the “JW Group”).
Pursuant to this Agreement, JW will grant us exclusive operational rights to a 563,000-square-foot manufacturing factory located in the JW-SEZ China-Pakistan Special Economic Zone in Lahore, Pakistan, with an annual production capacity of 50,000 vehicles, as well as access to JW’s established dealerships, distribution channels, and after-sales infrastructure throughout Pakistan. Additionally, JW has committed to facilitating the sale of no less than 50,000 our passenger and commercial vehicles over the four years after the closing of this transaction by allowing us access to its local sales networks.
In exchange, we will issue 10,000,000 restricted Class B ordinary shares to JW at a fixed price of US$1.41 per share. The restricted shares will be subject to a four-year lock-up period, with 25% of the shares becoming transferable at the end of each anniversary year following the closing of this transaction.
The closing of this transaction is contingent upon the satisfaction of certain conditions precedent, including JW’s delivery of executed factory access agreements and sales network cooperation agreements, which will be assigned to us, and proof of unencumbered title to the factory and access to sales and distribution network, as well as our receipt of board approval for the issuance of the restricted shares. Closing is expected to occur within 15 business days after satisfaction of these conditions. This agreement may be terminated by November 6, 2025. In addition, a material breach of certain key provisions confers a termination right if not cured within 60 days after notice.
As of the date of this annual report, this transaction has not been closed, and we have not issued any restricted shares to JW.
Joint Venture with JW Global Holding L.L.C-FZ and Ferox Investment L.L.C.
On September 4, 2025, we through our subsidiary, Roboai Investment L.L.C.-FZ, entered into a joint venture agreement with JW Global Holding L.L.C-FZ, a company incorporated in the United Arab Emirates, and Ferox Investment L.L.C., a company incorporated in the United Arab Emirates, to establish a limited liability company in the United Arab Emirates with a proposed corporate name of “Robo.AI Industrial City.” According to this agreement, the joint venture will leverage the strengths of all parties to create a collaborative and efficient industrial ecosystem. The authorized activities of the joint venture will include, but are not limited to, premium intelligent vehicles production and distribution, eVTOL production and distribution, production of smart logistics and delivery hardware, and development of other smart devices.
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Pursuant to this joint venture agreement, we through our subsidiary will hold 51% of equity interest in the joint venture through contribution of supply chain management, technology products and relevant intellectual property; JW Global Holding L.L.C-FZ will hold 24.5% of equity interest in the joint venture through contribution of land or plant or warehouse and local regulatory approval support; and Ferox Investment L.L.C. will hold 24.5% of equity interest in the joint venture through contribution of business development and marketing services. The joint venture’s board of directors will consist of five members, with three (including the Chairman) appointed by us and one by each of the other two partners. We will be entitled to appoint the chief executive officer and chief financial officer of the joint venture.
The joint venture agreement has a term of 20 years and may be renewed by mutual written consent. As of the date of this annual report, the joint venture has not yet been formally established.
Joint Venture with JW Global Holding L.L.C-FZ
On September 19, 2025, we through an affiliate entered into another joint venture agreement with JW Global Holding L.L.C-FZ to establish a joint venture in the United Arab Emirates under Abu Dhabi Global Market or Dubai International Financial Centre regulations under the proposed name “RJ Investment L.L.C.-FZ”, subject to regulatory approval. The joint venture will engage in the import, purchase, marketing, and sale of commercial vehicles (battery or internal combustion engine powered) and provision of related aftersales service within Pakistan, the Gulf, and Arabian Peninsula region.
Pursuant to the joint venture agreement, we through our affiliate will hold 51% of the joint venture’s equity interest and JW Global will hold 49%. we will contribute our commercial vehicle supply chain resources and network in China, while JW Global will contribute its commercial vehicle importation, distribution, sales, service resources, and network within the designated territory. We and JW Global also will make proportionate cash contributions as required to meet registered capital requirements and the need of initial seed funding in the amount of US$5,000. Future capital contribution will be subject to the approval of the board of directors of the joint venture.
The joint venture agreement further provides for the creation of a management equity incentive pool within 90 days after the incorporation of the joint venture, representing 20% of the fully diluted share capital, to be allocated from the parties’ equity, resulting in fully diluted holdings of 40.8% of the joint venture’s equity interest by our affiliate, 39.2% by JW Global, and 20% by the management. The vesting of management equity pool will be contingent upon the achievement of certain key performance indicators. All shareholder rights and obligations associated with the management equity pool are fully delegated to and will be exclusively exercised by our affiliate.
The board of the joint venture will comprise five members, of whom three (including the chairman) will be appointed by us and two by JW Global. The chief executive officer of the joint venture will be jointly appointed by both parties, while the chief financial officer will be appointed by us.
The joint venture agreement has a term of 20 years and may be renewed by mutual written consent. As of the date of this annual report, the joint venture has not yet been formally established.
Joint Venture with EVT Aerotechnics (Nanjing) Co., Ltd.
On September 6, 2025, we entered into a cooperation agreement with EVT Aerotechnics (Nanjing) Co., Ltd. (“EVT”), an eVTOL R&D and manufacturing enterprise in China, to establish a joint venture company in the United Arab Emirates. The joint venture will be engaged in (i) the global sales of eVTOL, (ii) the establishment of an eVTOL semi-knocked down or completely knocked down factory in the UAE, (iii) the global distribution of eVTOL aircraft under the “RoVtol” brand, and (iv) the localized development of eVTOL aircrafts based on existing products and tailored for the local market.
We will contribute assembly facilities, government relations resources, regulatory approval support, market access support, global market development, and ongoing research and development funding support. EVT will contribute an exclusive license (which is valid for five years) for eVTOL technology and products outside of mainland China, together with technical support and personnel training services. We and EVT will hold 51% and 49% of the equity interest in the joint venture, respectively.
Pursuant to the cooperation agreement, the board of directors of the joint venture shall consist of five members, of which we shall nominate three and EVT shall nominate two. In addition, we are entitled to appoint the chairman of the board and the chief financial officer and EVT has the right to nominate the chief executive officer, whose nomination is subject to the approval of the board of the joint venture.
We executed definitive agreements with EVT, including shareholder agreements, articles of association, technology license agreements and other relevant agreements that govern the joint venture’s formal establishment and operations on September 29, 2025.
The joint venture, Rovtol International Limited, was incorporated in the Cayman Islands effective October 13, 2025. We through our wholly-owned subsidiary, Rovtol Limited, holds 51% of the equity interest in the joint venture, and EVT holds the remaining 49%.
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Acquisitions
Strategic Investment in Aitos.io Pte. Ltd.
On September 18, 2025, we entered into a share purchase agreement with two shareholders of Aitos.io Pte. Ltd., a technology company focusing on the decentralized physical infrastructure networks, and Mobius Technology Limited, a company incorporated under the laws of British Virgin Islands which consists of the key executives and digital asset experts of Aitos.io Pte. Ltd. The two sellers are Mobius Technology Co., Limited, a company incorporated under the laws of Hong Kong SAR, and Dreamwork International Investments Ltd., a company incorporated under the laws of British Virgin Islands.
Pursuant to the purchase agreement, we agreed to purchase from the sellers an aggregate of 1,745 ordinary shares of Aitos.io Pte. Ltd., representing 16.58% of its issued and outstanding shares, for a total consideration of US$8.29 million, payable in 5,181,250 Class B ordinary shares of our company at US$1.6 per share, within fifteen business days from the execution of the purchase agreement. In addition, we agreed to issue 6,000,000 Class B ordinary shares to the core management team as performance incentives and retention bonus upon the closing. The shares issued thereunder are subject to transfer restrictions and will be unlocked in two tranches: 50% three months after the closing and the remaining 50% six months after the closing. We will receive 8.29% of Aitos.io’s issued and outstanding shares, on the date that is three months following the closing and the remaining 50% on the date that is six months following the closing.
We will be entitled to appoint one new director to Aitos.io’s board of directors within five business days after the Closing. As of the date of this annual report, this transaction has not been closed. We have issued 4,922,930 shares to Mobius Technology Co., Limited, 6,000,000 shares to Mobius Technology Limited, and 258,320 shares to Dreamwork International Investments Ltd.
Equity Acquisition Agreement with Astra Mobility Meta (Cayman Islands) Limited
On February 28, 2025, we entered into a share exchange acquisition agreement with Astra Mobility Meta (Cayman Islands) Limited (“Astra”), a Cayman Islands exempted company. On May 25, 2025, we, Astra, and its two shareholders, entered into a supplemental agreement to amend and supplement the original share exchange acquisition agreement. The two shareholders were Easymeta Journey Limited (British Virgin Islands), a business company incorporated in the British Virgin Islands holding 51% equity interests of Astra, and Planeter Future Holding Limited (British Virgin Islands), a business company incorporated in the British Virgin Islands holding 49% equity interests of Astra.
Pursuant to these agreements, we agreed to issue 15,000,000 Class B ordinary shares as consideration shares, each such share being valued at $1.00 per share, to the two Astra shareholders in exchange for all of their equity interest in Astra. The consideration shares are subject to a lock-up period commencing on the date of issuance and ending: (a) with respect to 50% of such shares, on the one-year anniversary of continued service of the Astra shareholders and the team under their management with Astra; and (b) with respect to the remaining 50% of such shares, on the two-year anniversary of the continued service of the Astra shareholders and the team under their management with Astra, subject in each case to the achievement of performance conditions to be determined by the our board of directors.
Upon our acceptance of an appraisal report of Astra, issued by a qualified third-party appraisal firm, (i) the Astra shareholders will transfer 100% of Astra equity interest to us and Astra will become our wholly-owned subsidiary and (ii) we will issue the consideration shares to an escrow account jointly controlled by us, Astra and the Astra shareholders. The shares shall be released from the escrow account to the Astra Shareholders upon the registration of Astra’s intellectual property with the relevant government authorities. In the event that Astra failed to complete the IP Registration within 18 months from the date of the supplemental agreement, the consideration shares shall be forfeited and returned to us. Pursuant to the Astra Agreement, the consideration shares may only be registered with the Securities and Exchange Commission upon our acceptance of appraisal report and IP Registration.
On August 29, 2025, the Astra Shareholders transferred all of their equity interest in Astra to us and Astra became our wholly-owned subsidiary. As of the date of this annual report, we have not issued any consideration shares to the two Astra shareholders as the issuance is subject to the achievement of performance conditions to be determined by our board of directors.
Acquisition of Chinasky Car Trading FZE
We entered into a share purchase agreement dated as of February 19, 2026 through our indirectly wholly owned subsidiary, Robo.ai Investments L.L.C.-FZ, with Yuntao Liu (the “Seller”), the 100% equity owner of Chinasky Car Trading FZE, (the “Target”), an automobile trading company incorporated in Dubai under the laws of United Arab Emirates.
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Pursuant to the share purchase agreement, Robo.ai Investments L.L.C.-FZ will acquire from the Seller 51% of the issued and outstanding shares of the Target, for a total consideration of US$1,000,000, payable in 7,388,799 Class B ordinary shares of the Company (the “Consideration Shares”). The Consideration Shares are subject to a lock-up period of 4 years commencing on the closing date and will be released in four equal annual tranches on each of the first four anniversaries of the closing date. Closing will occur on or before March 31, 2026 or on a later date as mutually agreed in writing, provided that all conditions precedent have been satisfied or waived. As of the date of this annual report, the transaction has not been closed.
Investment from Global Institutional Investors
Convertible Note Facility
On December 10, 2025, we entered into a securities purchase agreement with JAK Mobility Ventures II LLC (the “Securities Purchase Agreement”), pursuant to which we agreed to issue and sell, and JAK Mobility Ventures II LLC agreed to purchase, in multiple closings, subject to the satisfaction or waiver of certain closing conditions, Notes in an aggregate original principal amount of up to $80 million, which Notes are convertible into Class B ordinary shares at a purchase price of US$920 per US$1,000 of principal amount. Also on December 10, 2025, we completed the initial closing pursuant to the Securities Purchase Agreement in which we issued and sold to JAK Mobility Ventures II LLC a Note in the aggregate principal amount of US$8.5 million for a purchase price of US$7.82 million, which matures on December 10, 2027 and has an initial conversion price of US$0.58 per Class B ordinary share.
Equity Purchase Facility
On December 11, 2025, we entered into an equity purchase facility agreement (the “EPFA”), with SZOP Opportunities I LLC. Pursuant to the EPFA, we have the right, but not the obligation, to direct SZOP Opportunities I LLC to purchase up to US$100.0 million in newly issued Class B ordinary shares. During the term of the EPFA, we may, subject to the terms and conditions therein, direct SZOP Opportunities I LLC to purchase a certain portion of the commitment amount (“Advance”) by delivering a notice to SZOP Opportunities I LLC. We shall, in our sole discretion, select the amount of our requested Advance in each notice.
Joint Venture with DaBoss.AI Inc.
We entered into a joint venture agreement dated as of February 9, 2026 through our indirectly wholly owned subsidiary, Robo.ai Investments L.L.C.-FZ, with DaBoss.AI Inc. in connection with a proposed establishment of joint venture under the laws of the United Arab Emirates to establish an Embodied AI Data Collection Center within the territories of the Gulf Cooperation Counsil. Robo.ai Investments L.L.C.-FZ is responsible for all non-technical infrastructure and operational support, while DaBoss.AI Inc. is responsible for all technical and commercial operations of the joint venture’s core function.
Pursuant to the joint venture agreement, we will beneficially own 51% of the joint venture and thus will consolidate our financial results under U.S. GAAP. Both parties agree that additional shareholders may participate in the joint venture based on strategic business and operational development needs. The joint venture is expected to be established within 60 days after the execution of the joint venture agreement. As of the date of this annual report, the joint venture has not yet been formally established. The board of directors of the joint venture will consist of five people, three of whom will be appointed by Robo.ai Investments L.L.C.-FZ and two of whom will be appointed by DaBoss.AI Inc. The CEO of the joint venture company will be nominated by DaBoss.AI Inc., while the CFO will be nominated by Robo.ai Investments L.L.C.-FZ. Any single expenditure exceeding US$100,000 requires the joint signature of the CFO and an authorized representative of DaBoss.AI Inc., which will have real-time, read-only access to all financial systems. Certain reserved matters require the approval of shareholders representing at least two-thirds of the voting rights or the affirmative vote of the director appointed by DaBoss.AI Inc.
The first major project planned by the joint venture will be the deployment of an initial distributed data collection network within the United Arab Emirates.
All business opportunities involving data collection and annotation services utilizing robotic terminals or robotic arms in physical location in the Gulf Cooperation Counsil region must be executed exclusively by the joint venture, and any party diverting this business will be subject to financial penalties. The joint venture will serve as the preferred provider for data collection outside of the Gulf Cooperation Counsil region. However, DaBoss.AI Inc. maintains the sole and absolute discretion to route global orders based on specific scenario requirements, technical standards, and cost-efficiency across various regions.
As of the date of this annual report, the joint venture has not yet been formally established.
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Joint venture with Tachyon9 Corporation
We entered into a joint venture agreement dated as of January 28, 2026 through our indirectly wholly owned subsidiary, Robo.ai Investments L.L.C.-FZ, with Tachyon9 Corporation in connection with a proposed establishment of joint venture under the laws of the United Arab Emirates to invest in, develop, own, and operate data center facilities.
Pursuant to the joint venture agreement, we will beneficially own 51% of the joint venture and thus will consolidate our financial results under U.S. GAAP. The joint venture is expected to be established within 60 days after the execution of the joint venture agreement. As of the date of this annual report, the joint venture has not yet been formally established. The board of directors of the joint venture will consist of three people, two of whom will be appointed by Robo.ai Investments L.L.C.-FZ and one of whom will be appointed by the other joint venture party. The CEO of the joint venture company will be appointed by both joint venture parties, while the CFO will be appointed by Robo.ai Investments L.L.C.-FZ.
The first material project planned by the joint venture will be the development and operation of a data center facility with a target design capacity of approximately twenty megawatts (20 MW) of critical IT load. The planned project will be located within the Asia-Pacific or Middle East and North Africa regions, with the specific site to be mutually agreed upon by the joint venture parties based on a feasibility study to be commissioned by the joint venture.
As of the date of this annual report, the joint venture has not yet been formally established.
Disposition of ICONIQ Holding Limited
We entered into an agreement for the transfer of one ordinary share in our wholly-owned subsidiary, ICONIQ Holding Limited, dated as of February 5, 2026 (“Energy Plus Agreement”) with Energy Plus Management Limited, pursuant to which Energy Plus Management Limited agreed to acquire from us 100% of the issued and outstanding ordinary shares of ICONIQ Holding Limited for a purchase price of US1.00 in cash. In the Energy Plus Agreement, the Company and Energy Plus have made representations and warranties and have agreed to covenants relating to the transaction. The closing of the transaction took place in March 2026.
Corporate Events
Reverse Stock Split
We implemented a 1-for-20 reverse stock split of all classes of our ordinary shares on April 6, 2026 to regain compliance with the US$1.00 minimum bid price requirement for continued listing on the Nasdaq Capital Market with respect to our Class B ordinary shares. After the reverse stock split, the par value of Class A ordinary shares and Class B ordinary shares changed from US$0.0001 each to US$0.002 each.
Extraordinary General Meeting of Shareholders
We held an extraordinary general meeting of shareholders on October 23, 2025, where our shareholders adopted the share capital increase and the Fourth Amended and Restated Memorandum and Articles of Association to reflect the share capital increase, expand the power of the Board to effect any stock split and reverse stock split, and make other miscellaneous revisions. Effective October 23, 2025, our share capital was increased from US$50,000, divided into 500,000,000 shares comprising of (i) 100,000,000 Class A ordinary shares of a par value of US$0.0001 per share and (ii) 400,000,000 Class B ordinary shares, to US$400,000, divided into 4,000,000,000 shares comprising (i) 500,000,000 Class A ordinary shares and (ii) 3,500,000,000 Class B ordinary shares of a par value of US$0.0001 each.
We held an extraordinary general meeting of shareholders on August 12, 2025, where our shareholders adopted the name change from “NWTN Inc.” to “Robo.ai Inc.”, the appointment of Yehong Ji as our new independent director, and the Third Amended and Restated Memorandum and Articles of Association to reflect the change of our Company’s name. Our name change became effective on August 15, 2025.
Change in Our Certifying Accountant
Effective September 15, 2025, Assentsure PAC was dismissed as our independent registered public accounting firm and Onestop Assurance PAC was appointed as our independent registered accounting firm for the fiscal year ending December 31, 2025. See “Item 16F. Change in Registrant’s Certifying Accountant” for details.
Change of Board and Management Composition
Alan Nan Wu resigned as our Chief Executive Officer, effective May 13, 2025. Benjamin Bin Zhai transitioned from the role of Non-Executive Director of the Board and a member and Chairman of the Compensation Committee to the role of Chief Executive Officer and Executive Director of the Board, effective May 13, 2025. Jinming Dong resigned as our Chief Financial Officer effective July 2, 2025. On July 3, 2025, Adrian Wong was appointed as our Chief Financial Officer and John Chaoyin Xie was appointed as our Chief Operating Officer. On July 30, 2025, Joseph Levinson resigned as a member of the board of our directors. Yehong Ji was appointed as our independent director and a member of the audit committee effective August 12, 2025. Aaron Huainan Liao resigned as our director and Executive Global President, effective December 31, 2025. Michael S. Cashel and Alain Batty resigned from our Board of Directors, Nomination Committee, and Strategy and Environmental Social and Governance Committee, effective December 31, 2025.
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| B. | Business overview. |
Overview
Headquartered in Dubai, UAE, we strive to offer vehicles that embody a “passenger-centric” design philosophy. Our innovative vehicle designs integrate technologies such as digital connectivity and autonomous driving to deliver outstanding travel experience to passengers. Since our rebranding in August 2025, we have been strategically shifting into a decentralized, AI-powered intelligent asset platform that integrates smart vehicles, robotics, and blockchain. Our mission is to build a global AI asset platform that connects AI terminals across industries, empowers users with intelligent infrastructure, and reshapes how value is created and exchanged worldwide. Our vision is to pioneer an intelligent future with an AI-powered smart mobility, smart device, and smart asset ecosystem.
We have historically focused on the development of a portfolio of EVs, including MUSE and autonomous logistics vehicles, which are planned to be equipped with autonomous driving technology and digital connectivity through collaboration with strategic partners. The vehicles provide a unique insight into our design DNA and will help anchor our brand positioning as we progressively launch our vehicle portfolio. We envision each of the vehicles to be one enhanced with perception, reasoning, and actuating devices that enhance the riding experience. We are systematically expanding into the smart mobility solutions sector as part of our ongoing transition toward an AI-powered smart mobility ecosystem. Moreover, by partnering with automotive engineering service providers, we have adopted an asset-light manufacturing model, which we believe allows us to lower our initial capital expenditures and ramp up the production and commercialization of our products efficiently. Furthermore, we have established strategic collaborations to jointly develop and deploy electric and autonomous mobility and smart logistics solutions in key international markets to further support our transformation. See “Item 3. Key Information— Recent Development.” We continue to explore opportunities with new partners to enhance product features and to develop new models that can leverage economy of scale from our existing product platforms and technologies, which will help attract external resources, reinforce our brand, and generate additional revenue. See “Item 4. Information on the Company – B. Business Overview — Manufacturing — Our asset-light manufacturing model.”
We believe that in recent years, the demand growth in the global passenger vehicle markets has been fueled by increases in per capita income, adoption of electric vehicles, and significant advancement in technologies such as advanced driver assistance system. While electric vehicles remain an important part of our business, we are progressively broadening our focus to adjacent intelligent mobility areas such as autonomous logistics and eVTOLs, supported by our evolving AI and digital technology capabilities.
Our Products
MUSE
MUSE is planned to be a full-sized SPV which serves as our brand marquee model, with services to offer comprehensive passenger experience, Level 2.5 autonomous driving technology, and based on an advanced EV platform. In 2019, we and W Motors unveiled the Seven SPV, which was the predecessor of MUSE, as a collaborative project with a global community of automotive experts and visionaries. Since 2022, we have transformed the Seven SPV concept into MUSE to serve as a brand shaper for us. MUSE is planned to have several advanced features, including (i) innovative appearance with 1.42-meter-high ingress and egress which provides better passenger experience; (ii) luxurious interior with front swivel seat, double large screens and independent operating system, AI-NAS; (iii) holistic experience with multiple riding modes of work, health, meeting, entertainment and relaxation; and (iv) smart navigation with adaptability for future autonomous driving technology.
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We believe that, unlike certain other multi-purpose vehicles (“MPVs)” on the market, MUSE pays more attention to the passenger’s riding experience, and we believe it will perform better in terms of comfort, intelligence and personalized services. MUSE seeks to transform vehicles from a traditional travel machine into a mobile living space by breaking the internal design of the vehicle and equipping and accessorizing it with smartphone like functionalities. At the same time, we plan to cooperate with reputable suppliers to provide passengers with a top-notch riding experience that meets modern-day travel needs of both corporate and family customers.
We are currently in the concept A surface digital design and packaging feasibility phase for upper body and initial production intent design phase for underbody including chassis, high voltage and components, and body structure for the development of MUSE. See “— Manufacturing — Vehicle development and contract engineering process.” We are working with W Motors and others to complete MUSE design. MUSE will be our first mass-production SPV in the market. See also “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — Our ability to develop, manufacture, and deliver automobiles of high quality and appeal to customers, on schedule, and on a large scale is unproven and still evolving. Our vehicles may not perform in line with customer expectations.” and “Risk Factors — Risks Relating to Our Business — Any delays in the manufacturing and launch of the commercial production vehicles in our pipeline could have a material adverse effect on our business.”
GHIATH
We plan to create GHIATH, a purpose-built vehicle tailored to specific public service needs and law enforcements through a collaboration with Dubai Police expertise. Dubai aims to develop its own police vehicle fleet and technology solutions program.
As changing socioeconomics, demographics, and advancements in technology frame the future of law enforcement, Dubai Police responds in a resilient, sustainable, and innovative manner to such externalities. With the vision of police pioneering for a safe city, Dubai Police’s mission and strategic objectives encapsulate the wellbeing and happiness of the community within the safety and security aspect stretching policing efforts beyond traditional norms and outside the world of crime and justice. Such an exemplary model of policing creates a cycle of continuous innovation addressing myriad societal needs in a human-centric manner.
In line with the vision of UAE’s leadership, GHIATH strives to encapsulate the digital technologies brought forth by the 5th industrial revolution as well as optimize police operations to become the first vehicle to respond to all types of incidents.
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Autonomous Logistics Vehicle - Astra
We plan to launch Astra, a commercial-grade driverless vehicle, providing intelligent logistics, automatic delivery and shared travel solutions. Astra will combine AI and advanced sensing technology to achieve highly automated and safe driving. We will cooperate with governments, enterprises and smart city projects to promote the commercialization of driverless vehicles. Target markets for Astra include the Middle East, Asia and major smart transportation hubs around the world.
Astra’s mission is to make mobility delight your life. Its vision is to become a world top 10 AI Mobility Provider by 2030. To achieve this, Astra has a strategy of having over 100,000 Robo - vehicles in its B2B business by 2030. The brand is built on pillars, such as being AI driven, offering mobility as a service, and emphasizing efficiency.
Astra can reduce the costs of human drivers, enhance transportation efficiency, and cut down the long-term expenditures of logistics companies. Since they can operate around the clock without rest, they are able to optimize urban freight dispatch and reduce transportation delays. Meanwhile, with advanced perception and decision-making systems, human driving errors can be reduced, and the traffic accident rate can be lowered. Through intelligent route planning, traffic congestion can be alleviated, and the utilization rate of urban roads can be improved. By integrating new energy technologies, carbon emissions can be reduced, thus contributing to the development of green and intelligent logistics. In conclusion, the widespread use of Astra will promote the upgrading of intelligent logistics and urban transportation, bringing more efficient, safe and environmentally - friendly solutions to future urban freight.
SKD Project
Since 2022, we have forged ahead with a strategic partnership with leading mainstream OEMs within Mainland China. This collaboration has been far-reaching but significant, as it has enabled us to secure the exclusive rights for sales and joint development of specific vehicle models in the UAE region.
We capitalized on our robust local manufacturing capabilities in the UAE. We sourced complete sets of new-energy vehicle parts and components from within China. These components were then transported to the UAE. Subsequently, at our Abu Dhabi factory, the relevant vehicle models underwent SKD production.
Since 2023, we have increased the local production of the following vehicle models: NWONE (SUV) and RABDAN ONE (SUV) and RABDAN SEVEN (MPV) in the UAE by virtue of the SKD model.
We plan to shift our resources and capital to development of MUSE, GHIATH and Astra models.
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Our Technologies
We are developing an AI-NAS ecology which will focus on providing a passenger-centric ecosystem, integrating hardware and software, using on-board computing power and offering open cloud platform for various service providers, as illustrated in the diagram below.
Note: TTS: Text to Speech; ASR: Automatic Speech Recognition; NLP: Natural Language Processing; LBS: Location Based Services
Our AI-NAS ecology system seeks to transform a vehicle into a mobile living space based on (i) AI-NAS in cabin, which is planned to equip and accessorize the vehicle with smartphone like functionalities supported by independent systems for in-vehicle personalized and interactive experiences, (ii) smart devices with expandable functions which are planned to be seamlessly connected to in-cabin AI-NAS with abundance of software applications downloadable from third party application stores, and (iii) private cloud AI-NAS with expandable and upgradable service provided by us and our ecosystem partners, including video, music and game streaming, medical, online shopping and utilities service providers.
Additionally, we envision our AI-NAS ecology system to be complemented by a suite of innovative vehicle hardware, including:
| ● | Modular pure electric platform, which is planned to comprise a long wheelbase (3000 mm in the case of MUSE) chassis, electrified chassis solution (integrated four-in-one motor drive system), integrated thermal management solutions (battery storage system/electronic components), flexible and scalable battery storage system with standard and customized components, integrated crash functions, all of which are planned to offer a best-in-class ride and handling performance. |
| ● | High density battery pack system, planned to be capable of 600-800km NEDC (New European Driving Cycle) driving range with 0.31 draft coefficient and peak discharge power of 300kW. We also plan to have advanced thermal management technology to extend battery service life as well as innovative dry wet separation structure and advanced BMS (Battery Management System) and thermal management to ensure product safety in the whole vehicle life cycle. Moreover, we plan to conduct simulation analysis and test verification to ensure the reliability of our products. |
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Furthermore, we are in the process of developing new passenger experience enabled by modular-distributed design system and 5G network. Our goal is for our proprietary AI-NAS to allow our passengers to seamlessly enjoy their favorite application and digital value-add services in any of our vehicles worldwide. AI-NAS is designed to have characteristics of passenger-defined functionalities, autonomous driving-oriented design, integrated electric and electronic architecture and iterative R&D and upgrades. We believe AI-NAS will enrich passenger experience through:
| ● | Five Senses System, which is planned to cover (i) auditory system for global hearing, privacy hearing, etc., (ii) visual system for lighting, screen display, projection, AR, VR, etc., (iii) olfactory system for electronic fragrance system, etc., (iv) tactile system for contact tactile, air cooling and heating, etc. and (v) taste system for food refrigeration and heating; |
| ● | Comprehensive Data System, which is planned to cover (i) sensor collection system for temperature, humidity, gas content, etc., (ii) voice collection system for voice control, (iii) action collection system for gesture acquisition, eye tracking, whole body action acquisition, etc., (iv) physical input system for key, touch screen, etc. and (v) external visual collection system; and |
| ● | Cloud Control System, which is planned to cover mobility control, multiple vehicle coordination and vehicle and home connectivity. |
Additionally, in order to equip our SPVs with autonomous driving technology, we are developing an intelligent autonomous driving assistant, with powerful computing capability, advanced algorithms and multi-dimensional integrated sensors. We plan the core technologies to include:
| ● | Special domain controller for autonomous driving with high computing power and low power consumption. Aiming to achieve intelligent driving, the self-developed special domain controller for autonomous driving is planned to integrate various heterogeneous processors with customized peripheral sensor interfaces, meeting both the high-computing-power requirements of high-performance autonomous driving algorithms and the low-power-consumption requirements of vehicle components; |
| ● | Heterogeneous multi-sensor fusion sensing and positioning system. Our self-designed scheme is planned to integrate and deploy various heterogeneous sensors such as LiDAR (Light Detection And Ranging), camera, millimeter wave radar, GNSS (Global Navigation Satellite System) and IMU (Inertial Measurement Unit), so as to realize the fusion sensing of the data set and the stable sensing and positioning of the positioning algorithm in various complex scenes; |
| ● | Decision planning and control system based on reinforcement learning architecture. Our intelligent driving system is planned to use a decision-making and planning algorithm based on reinforcement learning, which is developed to complete the full coverage of urban, high-speed and rural scenes. The control algorithm is planned to carry self-adaptive capability for vehicle situation change and different travel scenes; |
| ● | Vehicle-infrastructure coordination solution. Utilizing 5G technology, the vehicle and infrastructure perception data is planned to be fused to realize the environment perception without blind area, the overall optimization of vehicle path planning will be realized through collaborative decision-making planning, and the global optimization of traffic system is planned to be realized through regional and global data fusion. Such autonomous driving capabilities is planned to allow the vehicles to be safer, more efficient and more intelligent as well as to form an intelligent transportation system together with road-side infrastructures. |
We plan to install different levels of autonomous driving technology on our vehicles. At product launch, we plan for MUSE to have level 2.5 autonomous driving system.
Furthermore, we plan to collaborate with a top-tier supplier, CATL, to develop our vehicles’ battery cells. MUSE is planned to use CATL’s 3rd Generation CTP (cell-to-pack) battery system, which uses a ternary lithium battery made of lithium nickel-cobalt-manganate with a high energy density. It is also planned to have an integrated isolation cooling system which physically achieve dry and wet separation. Additionally, the battery system is planned to carry a thermal diffusion safety design, which is intended to prevent single cell failure from compromising the whole pack and improve escape time. Moreover, we plan to equip it with a pyro fuse to reduce high voltage safety risk after collision.
Research and Development
Our R&D efforts are focused on vehicle design, product engineering, manufacturing engineering, intelligent seating design, intelligent network, vehicle body engineering, vehicle safety engineering, data and data security, supply quality engineering, CAD (computer-aided design) and supply chain management. In addition, we plan to work with our ecosystem partners to design and develop a rich portfolio of smart software and hardware. We are in the process of assembling a team of experienced experts and engineers to bring innovative and safe passenger vehicles to market. For the years ended December 31, 2023, 2024, and 2025, we invested US$24.4 million, US$4.5 million, and US$0.1 million in R&D activities, respectively, which accounted for 12.2%, 4.6%, and 0.04% of our total operating expenses, respectively. We expect to scale up both our in-house R&D and collaboration with external R&D partners in order to enhance and commercialize our products and technologies.
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In the field of autonomous driving, we are building a dedicated R&D team and recruiting experienced personnel to support our future need for such technology in our vehicles. We are also actively seeking external partners to co-develop or acquire autonomous driving technology.
See “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — Our inability to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which we may apply could have a material adverse effect on our business, results of operations or financial condition.”
Sales and Marketing
Our marketing and communications strategy is planned to initially focus on promoting the awareness of our brand which will represent a premium brand with high-quality vehicles and services in the Middle East and the Gulf Cooperation Council countries. We aim to engage in cost-effective branding activities by taking advantage of digital channels including social media and maintaining an “always on” online presence to build an online and offline ecosystem of users. We do not intend to invest in traditional mass-marketing, such as billboard and magazines, given its inefficiency and poor return-on-investment. In selected markets globally, we plan to adopt a partnership-driven marketing and distribution strategy for individual and corporate customers which focuses on products and brand, distribution and the establishment of an AI-NAS ecology system.
For individual customers, we plan to focus on building strong brand recognition and loyalty among our target demographics. We believe these customers pursue technological innovation, enjoy beautiful and intelligent design and yearn for an exclusive and luxurious life journey. We seek to reach mobile-internet savvy middle-class customers via endorsements from their key opinion leaders (KOLs). We also plan to offer fully-digitalized and personalized customer experience from VR showroom to mobile and online product customization, order placement and order tracking, including virtual assembly inspection, home delivery ceremony and owners’ club. Moreover, we plan to pursue selective co-branding with global luxury partners.
For corporate customers, we seek to offer smart mobility solutions through various commercial partnerships with, for example, travel companies, corporate fleets, luxury hotels and passenger service companies to meet the unique demands of corporate customers and travelers through tailor-made service packages. In the future, our integrated business service platform is planned to enable corporate clients to define and customize both hardware and software of their vehicle fleet with a broad range of value-add services at their disposal. Additionally, we believe our smart vehicle products are an ideal candidate for mobile vehicle pooling businesses and smart city public transportation.
For all customers, our sales network globally is planned to be asset-light, which we believe will provide an accelerated representation model that delivers both the brand and customer experience, sales performance and investment returns for our partners. We believe this will ensure all our customers globally can enjoy a consistently outstanding Robo.ai brand and ownership experience.
We are planning a balanced marketing and distribution model that uses the UAE as the foundation for our initial growth and accelerated development of relevant passenger technologies. However, over time we plan to expand our market presence to reduce our exposure to macroeconomic risks. Our international strategy will initially focus on the Middle East, Africa, Europe and Southeast Asia through reputable and influential local partners to cultivate both the consumer and the business demands for our products and services. We plan to further expand our global reach to the rest of the world, which will primarily be driven by our future sales and marketing strategy and partnerships.
See also “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — Our brand and reputation could be harmed by negative publicity or safety concerns regarding its products or the products of its competitors, which could materially and adversely affect our business, results of operations or financial condition.”
Pricing
We plan to adopt the same pricing strategy globally and price our products based on a variety of factors, such as product positioning, government subsidy policy, competitive landscape, spending patterns of target consumers and production costs.
Government Support
There are currently a number of national-level and municipal-level regulations and policies in major markets around the world that incentivize consumers to purchase EVs. Additionally, the United Kingdom government provides vehicles incentives such as purchase subsidies, exemption from the vehicle excise duty and London’s congestion charge. European Union countries such as Germany and France have also introduced a series of EV subsidies. These policies are subject to certain limits as well as changes that are beyond our control. Any uncertainty or delay in collection of the government subsidies may also have an adverse impact on our financial condition. For details, see “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — Our inability to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which we may apply could have a material adverse effect on our business, results of operations or financial condition.” Furthermore, we aim to further expand our production capacity in the UAE by cooperating with local government and entities.
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Comprehensive Services
Value-add services
We intend for our SPVs to have functions that synchronize with passenger’s smart devices such as smartphone, smart watch and other wearables to access their personal preference and information from other applications. Through these, we aim to provide our customers with various expandable services such as health monitoring and in-vehicle entertainment for our passengers. Moreover, we aim to allow passengers to be able to access a selected list of third-party games, subscriptions and lifestyle services on their mobile phones which can be synchronized with AI-NAS.
In addition to in-vehicle services offered to enhance passenger experience, we also aim to provide our customers with various value-add services for a full-quality passenger experience, including, for example, hotel VIP service, healthcare specialist hotline, online shopping privileges and airport and high-speed rail VIP service.
After-sale services and warranty
In Middle East, we plan to initially offer after-sale services through our importer and distributor partners and manage such network based on market requirements and our global representation standards.
Our vehicle electrical systems are planned to be monitored via PLM (product lifecycle management) system and industry 4.0 methodology to allow 100% real-time tracking of aftersales repair and warranty issues. All critical and valuable components are planned to be traceable on every vehicle in service, and we plan to monitor vehicle component quality issues and intervene remotely to prevent failure or initiate a service workshop visit to prevent a customer breakdown. Any major quality issues involving vehicle software is planned to be remedied primarily through updates, coupled with remote diagnosis of vehicles, data analysis, proactive repair of the relevant system to prevent failure and the addition of new features and functions.
We intend to provide product warranty as required under the relevant law of the markets where we operate and also evaluate our warranty terms based on different market requirements and competitive environment. Furthermore, we plan for the vehicle components we procure from suppliers and vehicles manufactured through our contract engineering arrangement with W Motors to all carry standard warranty provisions in line with industry standard. We will continue to provide warranty services as required by local laws. See also “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — We may be subject to product liability or warranty claims that could result in significant direct or indirect costs, including reputational harm, increased insurance premiums or the need to self-insure, which could adversely affect our business and operating results.”
Manufacturing
Our asset-light manufacturing model
We plan to pursue an asset-light manufacturing model through strategic partnerships.
In the first phase of our collaboration, we cooperate with other partners to design and manufacture MUSE in the manufacturing base in the UAE. The facility is planned to have full EV production capacity including stamping, body, painting, final assembly and battery pack, with a planned annual production capacity of 100,000 vehicles. We, together with other partners such as W Motors and other suppliers, develop all essential parts of MUSE vehicle, including body, interior, exterior, electrical architecture, powertrain, and perform early testing. For details of the contract engineering, see “— Vehicle development and contract engineering process.” Going forward, we plan to further expand our production capacity by cooperating with local governments and entities for SKD operations in the UAE as well as other locations. We have established a SKD facility for EV assembly in the UAE to manufacture and market our vehicles in the Middle East, Africa, Southeast Asia and Europe.
In the UAE, W Motors produces the Supersport under an exclusive license from us. Headquartered in Dubai, W Motors is a manufacturer of high-performance luxury hypercars in the Middle East. It specializes in automotive design, research and development, as well as vehicle engineering and manufacturing. In the first phase of our collaboration, production of the Supersport is to take place in W Motor’s SKD plant in Dubai with a planned production floor of 12,000 sqm, over 400 workers and an annual production capacity of 500 units. After 2025, in the second phase of collaboration, we plan to set up a joint venture with W Motors to construct a full production plant to expand the product portfolio and to serve the broader global markets.
We believe our strategic partnerships with W Motors and others allow us to substantially lower our overall capital expenditure and ramp up production in an efficient manner without dealing with complex labor and capacity management issues. By sharing respective platforms, technologies and resources with these industry leaders, we believe we are well-positioned for accelerated product development with reduced capital investment. See also “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business.”
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Vehicle development and contract engineering process
We believe we have strong in-house capabilities in vehicle design and engineering, covering the entire product development process which mainly involves concept feasibility review and approval, product design and engineering, product design validation, prototype production and validation, product launch and mass production. We believe we have assembled a team of vehicle development and manufacturing experts from leading automotive ESPs worldwide. The following diagram sets forth the standard product development flow of our vehicle products.
Currently, we are at the styling, surfacing and initial packaging phase for MUSE and are completing the platform and design integration. We have further begun detailed design of the vehicle’s body-in-white (BIW), interior and exterior, powertrain, battery and electrical architecture. We aim to develop a platform which is eventually capable of supporting Level 4 and above autonomous driving technology. For details, see “— Research and Development.”
We have paid certain fees to W Motors and bore certain costs as part of the preliminary development of the MUSE.
See also “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — Any delays in the manufacturing and launch of the commercial production vehicles in our pipeline could have a material adverse effect on our business.”
Quality control
We will implement full-cycle quality control, covering design, procurement, production, sales and after-sales services. Our quality assurance measures include:
| 1. | Design: We use tools such as APQP (Advanced Product Quality Planning), DFQ (Design for Quality), DFMEA (Design Failure Mode and Effect Analysis) and PFMEA (Design Failure Mode and Effect Analysis) to ensure that all critical product attributes are taken into account from design to after-market. Each critical attribute is defined and evaluated for potential failures. Failure modes are evaluated for risk and critical control plans are developed for high-risk items. We identify key customer attributes and develop perceivable quality standards that govern product performance, ease of use and connectivity. |
| 2. | Procurement: We implement PPAP (Production Parts Approval Process) to validate product and process capabilities of our supply base. We ensure that from the planning phase our suppliers are capable of making the right parts in the right quantity at the right quality level to meet our program requirements. Additionally, we plan to implement rigorous incoming quality inspection methodology which includes (i) on-site laboratory to validate material characteristics, (ii) checking fixtures to verify dimensional and appearance quality, and (iii) color matching processes to ensure painted parts received will match painted vehicles. |
| 3. | Production: Shanghai ICONIQ New Energy Development Co., Ltd. is planned to be responsible for defining the required quality standards and product performance specifications for MUSE. Jiangsu ICONIQ New Energy Manufacturing Co., Ltd. is planned to implement and manage vehicle and component quality control systems and processes in order to ensure that all technical performance and quality targets are fully achieved by MUSE vehicle’s target launch date. |
| 4. | Vehicle testing and calibration: Our ESP is intended to ensure that every finished vehicle undergoes extensive testing and quality assurance processes, including wheel alignment, brake force testing, AVMC (Around View Monitor Calibration) and ADAS calibration and testing, 100% water leakage testing and full electrical systems testing. All critical parts and systems specified are planned to be traceable by regulations, and are planned to be scanned and stored for ten years in our vehicle database. |
| 5. | Final vehicle quality control: We plan for each vehicle that has passed the testing and calibration process to be inspected by our quality experts to ensure that it meets all quality requirements before it is released for sales distribution. This is planned to include 100% test track validation, a complete visual quality inspection, electrical test revalidation and verification that any defects detected in previous operations have been satisfactorily eliminated. |
| 6. | After-sale warranty repair and problem rectification: See “— Comprehensive Services — After-sale services and warranty.” |
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Our Suppliers
During the year ended December 31, 2025, our major suppliers mainly included suppliers of lithium, interior and other automotive components. We procure components from both domestic and global suppliers. In our procurement process, we choose suppliers based on a variety of factors, such as technological expertise, product quality, manufacturing capacity, price and market reputation. We continuously seek to optimize our supply chain to improve cost efficiency and control supply chain risks. See also “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — We are dependent on our suppliers, some of which are single-source suppliers. Suppliers may fail to deliver necessary components of our vehicles according to our schedule and at prices, quality levels and volumes acceptable to us.”
Pursuant to our agreements with the key suppliers, we generally co-develop components with them for our SPVs, and then source such co-developed components from such suppliers. We believe such strategic partnerships offer us advantages in pricing, such as most favorable prices and volume based discounts as well as access to new technologies. We have co-developed technology solutions with certain suppliers, and we believe such collaboration demonstrates the suppliers’ confidence in our R&D capabilities and prospects.
We also collaborate with certain technology companies related to R&D for various key technologies. For details, see “— Research and Development.”
Logistics and Warehouse
Given that most of our products are still in the development stage, we do not own or lease warehouses at the moment. If and when we commence mass production of our vehicles, we plan to use the logistics and warehouse network of W Motors and our facilities in KEZAD for the delivery of such products to our customers. For aftersales services and support around the world, we plan to utilize appropriate global parts and logistics partners to minimize the impact on our operations during the initial phases of business growth while delivering expected services to our customers and retail partners.
Data Privacy and Security
We are committed to complying with data privacy laws and protecting the security of customer data, which is a key component of our core value around passenger experience. We mainly collect and store data through various smart devices within our vehicles to provide tailored in-vehicle services and enhance passenger experience. See also “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — Our business generates and processes a large amount of data, and we are required to comply with laws and regulations in jurisdictions relating to data privacy and security. The improper use or disclosure of data could have a material and adverse effect on our business and prospects.” We believe that our policies and practice with respect to data privacy and security are in compliance with applicable laws and prevalent industry practice in the markets where we operate. Our data and IT departments plan to formulate a company-wide policy on data compliance in accordance with ISO standards, to be monitored and reinforced by our internal compliance team. Our R&D team is actively recruiting talents with background in data security and is capable of providing technical support and resources to ensure the security of the intelligent operating systems of our vehicles. Aside from strictly limiting and monitoring employee access to customer data, we will also provide data privacy training to our employees and partners who are required to report any information security breach.
Moreover, we seek to cooperate with leading big data and cloud computing service suppliers to provide highly-effective data processing and safety services to further enhance the security of customer data. MUSE is planned to carry the AI-NAS system, which is equipped with a firewall that separates a vehicle’s entertainment system from its operation control system to ensure the safety of passengers. We are not aware of any material data leakage or security breach incidents during the year ended December 31, 2025. See “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — Our business generates and processes a large amount of data, and we are required to comply with laws and regulations in jurisdictions relating to data privacy and security. The improper use or disclosure of data could have a material and adverse effect on our business and prospects.”
Intellectual Property
Our intellectual property rights are importantly valuable to our business. We rely on a combination of intellectual property laws, trade secrets, confidentiality procedures and contractual provisions to protect our intellectual property. As of December 31, 2025, we had transferred over 60 patent rights from our PRC operating subsidiaries to our Dubai headquarters. We plan to leverage our asset-light strategy to focus more investment into the development of our intellectual property to support our passenger-centric strategy. For details, see “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — We rely on patents (including pending patent applications), unpatented proprietary know-how, trade secrets and contractual restrictions to protect some of our intellectual and other proprietary rights. Failure to adequately protect, enforce or otherwise obtain sufficient coverage of intellectual and other proprietary rights may undermine our competitive position and could materially and adversely affect our business, prospects, results of operations or financial condition.”
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Under our planned business model, all core vehicle intellectual property rights will belong exclusively to us. Any third-party services we utilize during the design phase are planned to be contractually obliged to ensure that any off-the-shelf technology adopted is free of intellectual property licensing fees or encumbrances. As of the date of this annual report, we have not been sued by any third party for infringement of intellectual property rights and we were unaware of any threatened material proceedings or claims against us relating to intellectual property rights. See “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — We may be subject to intellectual property infringement claims or other allegations, which may be time-consuming and result in substantial costs and removal of data or technology from our system.”
Competition
We primarily compete in the market for EVs and are subject to intense competition from traditional automotive OEMs, new EV brands and other technology companies entering the automotive market. Aside from existing players such as Tesla, Lucid and NIO, as a number of incumbent OEMs shift their focus towards the EV market, the competition may further intensify given their strong brand recognition, substantial financial resources, sophisticated engineering capabilities and established sales channels. For details, see “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — The global passenger vehicle market is highly competitive, and demand for EVs may be cyclical and volatile. We may not be successful in competing in this industry, which may materially and adversely affect our business, results of operations or financial condition.”
Insurance
We currently do not maintain business disruption insurance, which is available only to a limited extent in Mainland China. As a result, we face risks associated with not having business disruption insurance coverage. For details, see “Item 3. Key Information — D. Risk Factors — Risks Relating Our Business — Failure to carry adequate insurance coverage may have a material adverse effect on our business, results of operations or financial condition.” We will research and implement additional insurance as we expand our presence and operations globally.
Environmental and Social Matters
Environmental protection
As EVs increase their market penetration, more stringent rules, regulations and standards are being put in place by regulators who aim to reduce the overall carbon footprint of EVs during their whole lifecycle. We fully support the regulatory development for lifecycle carbon management and plan to implement second-life battery repurposing program from the very beginning of vehicle development, as well as through sales, marketing and after-sales services. We believe that this allows us to achieve not only environmental protection and green business governance but also supports cross-sector eco-system development and revenue growth.
From an environmental protection standpoint, without proper recovery and recycling systems, used/spent EV batteries may be wasted and even pose environmental risks. From a cross-sector eco-system development standpoint, used batteries from EVs are still capable of performing a wide range of less-demanding tasks such as electric two-wheelers, forklifts, AGVs, mobile charging facilities and wind/solar energy storage, all of which carry meaningful demand. From a revenue enhancement standpoint, we believe second-life battery repurposing provides us with a unique opportunity to monetize the battery asset which makes up to 30-40% of vehicle production cost. As the second-life repurposing technologies mature and second-life battery applications become more widely accepted, we believe the used battery packs can potentially generate additional revenue opportunities.
Corporate social responsibility
We are subject to various laws and regulations in respect of occupational health and safety, and are committed to complying with such regulatory requirements, preventing and reducing hazards and risks associated with our operation, and ensuring the health and safety of our employees and surrounding communities. During the year ended December 31, 2025, we had no material accidents in the course of our operation and we were unaware of any material claims for personal or property damages in connection with health and occupational safety.
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Legal Proceedings and Compliance
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. To our knowledge, except as disclosed below, as of the date of this annual report, the total exposure to all pending litigations against us was insignificant. We and our subsidiaries are taking appropriate measures to settle such cases, and we believe there are no legal proceedings pending or threatened against us or our directors that could, individually or in the aggregate, have a material adverse effect on our business, financial condition and results of operations. Regardless of outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained. See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business — We are subject to claims, disputes, lawsuits and other legal and administrative proceedings in the ordinary course of our business. If the outcomes of these proceedings are adverse, we could have a material adverse effect on our business, prospects, results of operations or financial condition.”
Yizhong Dispute
In December 2016 and February 2017, Tianjin Yizhong Jinshajiang Equity Investment Fund Partnership (“Yizhong”, Tianjin Tuoda Enterprise Management Service Co., Ltd. (“Tianjin Tuoda”) and Tianjin Tianqi Group Co., Ltd (“Tianqi Group”), our subsidiary, entered into two convertible debt contracts, under which Yizhong agreed to provide loans of $15.7 million (RMB 100 million) and $2.3 million (RMB 15 million) in cash respectively to Tianqi Group with an annual interest rate of 8% and a convertible term of one year. Yizhong could convert the principal without accrued interest into equity interest of Tianqi Group within one year from the date of signing the contracts. $15.7 million and $2.3 million were paid to Tianqi Group on December 27, 2016 and February 3, 2017, respectively. If Yizhong does not exercise the exchange right when the convertible term expires, Yizhong has the right to ask for Tianqi Group to pay the unpaid principal and interests accrued till the actual repayment date. As Yizhong did not exercise the debt-to-equity swap, Tianqi Group treated the $18.0 million principal in total as liability and continually accrued interest expense with an annual rate of 8% per year since the principal injection date.
Yizhong requested repayment from Tianqi Group on January 29, 2019 for repayment with no satisfactory response. On September 13, 2021, Yizhong filed an arbitration application to the China International Economic and Trade Arbitration Commission (the “CIETAC”), claiming that Tianqi Group shall pay $6.8 million (RMB43.5 million) interest accrued from cash injection date to Tianqi Group till August 31, 2021, $23.5 thousand (RMB0.2 million) legal fees, few other fees related to the lawsuit, and Tianqi Group shall bear the arbitration fee.
On November 16, 2021, Yizhong applied to CIETAC for preservation of Tianqi Group’s property with the same claimed amount of $6.9 million (RMB43.7 million), and CIETAC approved the preservation application on December 17, 2021 and decided to freeze Tianqi Group’s cash in one bank account with a restricted ceiling of $6.9 million with a one-year duration.
On February 18, 2022, CIETAC informed both parties this case would be heard on March 30, 2022. Affected by the COVID-19 outbreak, CIETAC approved to delay the case hearing to May 13, 2022. This case was heard online. Both parties submitted evidence, and no verdict concluded.
On August 29, 2022, Tianqi Group reached a settlement agreement with Yizhong regarding the disputed amount (the “Yizhong Settlement Agreement”). Under the Yizhong Settlement Agreement, Tianqi Group shall pay to Yizhong US$1.39 million, US$4.76 million, US$8.32 million and US$8.92 million as of August 31, 2022, December 31, 2022, June 30, 2023 and December 31, 2023, respectively. The timely payment of such amount shall release Tianqi Group from its obligations for the payment of the principal amount and accrued interest under the two convertible debt contracts.
Tianqi Group executed the instalment plan and repaid the accrued interests and part of the legal fees in the amount of US$6.1 million (RMB 41.4 million) for the year ended December 31, 2022. During 2023, Tianqi Group repaid in the amount of US$7.9 million (RMB56.0 million) according to the instalment plan, leaving a total of US$8.5 million (RMB60.0 million) in debt obligations to Yizhong outstanding. Before the Company’s divestiture of Tianqi Group, the Company accrued default interests of US$1.7 million and US$3.6 million as interest expense, net in 2024 and 2023.
Jinghong Dispute
On December 3, 2018, Tianjin Jinghong Investment Development Group Co., Ltd. (“Jinghong”) and Tianqi Group entered into a cooperation agreement (the “2018 Cooperation Agreement”), under which Jinghong agreed to acquire the 100% equity interest of Tianjin Tianqi Group Meiya Automobile Manufactory Co., Ltd. (“Meiya Automobile”) from Tianjin Benefo Machinery Equipment Group Co., Ltd. (“Tianjin Benefo”) with the consideration provided by Tianqi Group.
On May 21, 2019, Jinghong and Tianqi Group entered into an updated cooperation agreement (the “2019 Cooperation Agreement”), the purpose of which was partly to amend and restate some of the material terms of the 2018 Cooperation Agreement, under which Tianqi Group agreed to cooperate with Jinghong in the field of NEVs through a newly-established joint venture after Jinghong acquires the equity interest of Meiya Automobile. Under the same agreement, Tianqi Group agreed that after Jinghong signed an equity transfer agreement with Tianjin Benefo to acquire the 100% equity interest of Meiya Automobile (the “Equity Transfer Agreement”), Tianqi Group shall pay Jinghong the equity transfer price of RMB97 million and assume other obligations of Meiya Automobile. To the knowledge of Tianqi Group, Jinghong has acquired 100% equity of Meiya Automobile under the Equity Transfer Agreement.
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Jinghong demanded Tianqi Group pay for the RMB 97 million equity transfer price on August 21, 2019, which Tianqi Group did not comply. On April 14, 2021, Jinghong issued a notice to Tianqi Group to terminate the 2018 Cooperation Agreement and the 2019 Cooperation Agreement. On May 18, 2022, Jinghong filed a lawsuit to the People’s Court of Jinghai District, Tianjin City (the “Jinghai District Court”), which was amended on May 23, 2022. The amended complaint, which Tianqi Group received on June 10, 2022, requested that (i) the Jinghai District Court confirm that the 2018 Cooperation Agreement and the 2019 Cooperation Agreement were terminated on April 15, 2021; (ii) Tianqi Group pay (a) a total amount of RMB100 million to Jinghong for its various losses under the 2019 Cooperation Agreement, as well as (b) any amounts owed to Tianjin Benefo by Jinghong for its breach of the Equity Transfer Agreement; and (iii) Tianqi Group bear the litigation fee and all other relevant expenses. The amended complaint, which Tianqi Group received on June 10, 2022, requested that (i) the Jinghai District Court confirm that the 2018 Cooperation Agreement and the 2019 Cooperation Agreement were terminated on April 15, 2021; (ii) Tianqi Group pay (a) a total amount of RMB152.5 million to Jinghong for the equity transfer consideration and its various losses under the 2019 Cooperation Agreement, as well as (b) accrued interest at the loan prime rate of People’s Bank of China for the period from May 18, 2022 to the date Tianjin Group settle the payment; and (iii) Tianqi Group bear the litigation fee and all other relevant expenses.
Hearing of the lawsuit was held on May 12, 2023 and there was no verdict. The Company’s management believes that the allegations in the aforementioned lawsuit lack merit, and the Company intends to vigorously defend the action. Our management believes that the allegations in the aforementioned lawsuit lack merit, and we intend to vigorously defend the action.
As of August 23, 2023, the Tianjin Municipal People’s Court has ruled to terminate the current execution of the case.
China Renaissance Securities (Hong Kong) Limited Dispute
On February 12, 2022, the Company engaged China Renaissance Securities (Hong Kong) Limited (“CRS”) to act as a financial advisor in connection with the Business Combination. On February 17, 2023, CRS filed proceedings FSD 40 of 2023 in the Grand Court of the Cayman Islands, being a winding up petition to appoint official liquidators to the Company, on the ground that it is unable to pay its debts (the “CRS Petition”). The Petition was scheduled to be heard before the court on April 25, 2023. On March 27, 2023, the Company and CRS entered into a settlement agreement as a compromise of all and any disputed claims known or unknown between them. Pursuant to the agreement, CRS consents to the withdrawal from the proceedings with no order as to costs while the Company shall pay CRS the sum of $4.25 million on or before March 29, 2023. On March 28, 2023, the Company paid CRS the full settlement amount. The CRS Petition was cancelled on April 12, 2023.
Linklaters Dispute
On April 13, 2023, a winding up petition was brought by Linklaters LLP (“Linklaters”) against ICONIQ before the Cayman Grand Court. Linklaters claimed a total amount of US$2.1 million pursuant to an engagement letter dated February 25, 2022 and a supplemental agreement dated August 26, 2022. On May 15, 2023, the Company and Linklaters entered into a settlement agreement and the Company agreed to pay $1.7 million as final settlement on May 17, 2023. On May 16, 2023, the Company paid Linklaters the full settlement amount.
Loop Capital Dispute
On May 3, 2023, a winding up petition was brought by Loop Capital Markets LLC (“Loop Capital”) against ICONIQ before Cayman Grand Court (the “Loop Capital Petition”), claiming a total amount of US$10.1 million and warrants totaling 2 million units pursuant to an engagement letter dated February 11, 2022. The dispute was concluded in January 2025 and the Company was ordered by the arbitrator to pay a total of US$14.7 million to settle all claims and counterclaims.
Tiancheng Dispute
In January 2023, NWTN (Zhejiang) Motors Limited (“NWTN Zhejiang”), a subsidiary of the Company, invited the Tiancheng Coating System Changzhou Co., Ltd. (“Tiancheng”) to bid for the coating production line project, specifying technical requirements and payment terms. Tiancheng submitted bids, including a final offer of RMB296.8 million, and was orally notified of winning the bid in February 2023. Tiancheng fulfilled design obligations, completing over 4,200 drawings and achieving the second payment milestone (60% of the contract value) after sign-offs in April 2023. NWTN Zhejiang delayed contract signing and refused to pay the total amount plus interest of RMB94.7 million. Tiancheng argues a factual contract existed under Chinese law, citing bid documents, acceptance of performance, and legal precedents. The lawsuit demanding contract payment, interest, and litigation costs, filed on February 4, 2024.
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On June 30, 2025, the court of first instance rendered a judgment ordering NWTN Zhejiang to compensate Tiancheng for economic losses in the amount of RMB5 million. Tiancheng has since appealed the judgment, and the second-instance proceedings are currently in the second-instance litigation stage as of the date of this annual report.
Xingjing Dispute
Xingjing (Guangzhou) Technology Co., Ltd. (“Xingjing”) alleged that after signing a RMB2.6 million system development service contract in June 2023, NWTN Zhejiang paid only the first 30% installment but defaulted on subsequent payments totaling RMB2.1 million, including principal, liquidated damages, and legal fees. Xingjing claimed to have fulfilled deliverables for the second and third payment stages. Through court mediation on April 29, 2025, the parties agreed that NWTN Zhejiang would pay RMB1.7 million by September 30, 2025.
Longchuang Dispute
In January 2025, Shanghai Longchuang Automotive Design Co., Ltd. (“Longchuang”) filed a lawsuit against NWTN Zhejiang alleging a contract dispute over unpaid project fees. Longchuang claimed the NWTN Zhejiang owed RMB0.9 million for multiple agreements signed during June to November 2023, covering mold development and sample parts supply for vehicle models. After mediation on March 24, 2025, the parties reached a settlement that NWTN Zhejiang agreed to pay RMB0.9 million in three installments by September 30, 2025, November 30, 2025 and December 15, 2025.
Employee Disputes
As of December 31, 2025, a total of 26 employees had filed an arbitration against the Company, among whom, 26 had formally terminated the employment relationship with the Company. Settlement agreements were entered with those employees in 2022 and 2023.
Subsequent to the issuance of the audit report dated June 10, 2025, the Company became involved in a legal matter related to an employee arbitration award against Shanghai ZunYu Automotive Sales Ltd. In July 2025, the matter was referred to court-mediated pre-litigation proceedings. As of the date of this annual report, the case is in the second instance stage.
Compliance
During the year ended December 31, 2025, we had experienced the following non-compliance incidents:
| Non-compliance incidents | Reasons for non-compliance |
Legal consequences and potential maximum penalties |
Remedial measures taken and to be taken |
Any operational and financial impact | ||||
| The shareholding structure registered by Tianqi Group, our subsidiary, is different from the actual shareholding structure | In 2021, Guozhong Tianhong Asset Management (Tianjin) Co., Ltd. (“Guozhong”), Tianqi Group, Tianjin Tuoda Enterprise Management Service Co., Ltd and Shenzhen Yinghe Huicheng Investment Center (Limited Partnership) entered into a debt-for-equity swap agreement and intend to enter a supplementary agreement to debt-for-equity swap agreement (“Debt-for-Equity Agreements”), according to which Guozhong converted all of approximately US$173.0 million claims against Tianqi Group into certain equity interests in Tianqi Group. Tianqi Group has not registered such change of its shareholding structure at the competent administration for market regulation. | Tianqi Group may be ordered by the competent administration for market regulation to register such change. If Tianqi Group refuses to take corrective action in a timely manner, it shall be fined not less than RMB10,000 nor more than RMB100,000; and if the circumstances are serious, Tianqi Group’s business license shall be revoked. |
In 2024, we continuously communicated with Guozhong to complete the business license registration as soon as possible. Guozhong did not register the change of its shareholding structure at the competent administration for market regulation |
After consulting our Mainland China counsel, we believe that the failure to register such change of its shareholding structure at the competent administration for market regulation does not affect our status as a shareholder of Tianqi Group. The unregistered equity interest of Guozhong Tianhong accounted for only 0.44% of the equity interest of Tianqi Group as of December 31, 2022, while ICONIQ Tianjin actually held 73.72% of the equity interest of Tianqi Group. |
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| Non-compliance incidents | Reasons for non-compliance |
Legal consequences and potential maximum penalties |
Remedial measures taken and to be taken |
Any operational and financial impact | ||||
| 75% equity interests of Tianjin Automotive New Energy Automobile Co., Ltd. (“Tianqi New Energy”), an affiliate of our Group, held by Tianqi Group had been frozen. 100% equity interests of Shanghai ICONIQ New Energy Development Co., Ltd. (“Shanghai ICONIQ”), a subsidiary of our Group, held by Tianqi Group had been frozen. | The equity freezing of the registered capital of approximately US$118 million in Tianqi New Energy held by Tianqi Group arose from commercial disputes involving its approximately US$0.8 million service fees owed to its suppliers as Tianqi Group was unable to repay debts to such creditors due to its liquidity issue. The equity freezing of the registered capital of RMB 90.7 million in Shanghai ICONIQ held by Tianqi Group arose from commercial disputes between Tianqi Group and Jinghong. |
As result of the equity freezing, the disposal of such equity interests and the distribution of dividends and bonuses are restricted. | We are raising funds from various channels to gradually repay the arrears and solve the equity freeze issue. | While we believe that the impact of the equity freezing of the registered capital of Tianqi New Energy and Shanghai ICONIQ is limited as it has not affected our daily operation, we may continue to be subject to the risks involving the limitation on the disposal of such equity interests and the distribution of dividends and bonuses. |
As we established our headquarters in and moved our place of incorporation to Dubai, UAE on March 22, 2022, we are subject to the laws and regulations of the UAE onwards. For details, see “Risk Factors — Risks Relating to Our Business — Uncertainties with respect to the UAE legal system and changes in laws and regulations in the UAE, including with respect to licenses, approvals and taxes, could adversely affect our business.”
Regulations
Our operations in the United Arab Emirates are subject to UAE laws and regulations that affect our vehicle and parts import and sale business. Federal Law No. 36 of 2023 (the Commercial Agency Law) defines a commercial agent as any person who distributes or sells goods for the account of a principal and could be interpreted to apply to our business. Termination of any supply relationship could therefore give rise to a claim for compensation for goodwill. Conversely, we may lack legal standing to enforce exclusive distribution rights, if any. Federal Law No. 5 of 2023 on Consumer Protection treats us as a “supplier” and requires us to provide warranties, repairs, or refunds for defective vehicles regardless of manufacturer warranty obligations. The UAE Federal Customs Authority requires accurate HS code classification, country of origin declaration, and valuation for all imported vehicles. Post-clearance audits may result in penalties for misclassification. As a high-value vehicle seller, we are a Designated Non-Financial Business or Profession under UAE anti-money laundering regulations, requiring customer due diligence, record retention for five years, and filing of suspicious transaction reports with the UAE Financial Intelligence Unit. Non-compliance may result in penalties. Finally, we must comply with UAE sanctions obligations and, as a Nasdaq-listed issuer, with U.S. OFAC sanctions, including prohibitions on transactions with designated persons or sanctioned countries. Although we maintain compliance programs, the UAE regulatory environment may change, and we cannot assure investors that existing or future regulations will not adversely affect our business.
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C. Organizational structure.
The following diagram illustrates our corporate structure, including our principal and other subsidiaries as of the date of the annual report.
D. Property, plants and equipment.
As of December 31, 2025, we did not own any premises, and utilized the facilities under operating leases. Our workspaces totaled more than 1,000 rentable square meters as of December 31, 2025, including factory, offices, storages and vehicle display spaces. Given our asset-light business model, we believe that our facility arrangements are adequate to meet our current needs.
Item 4A. Unresolved Staff Comments
Not applicable.
Item 5. Operating and Financial Review and Prospects
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear in this annual report. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this annual report, particularly in “Risk Factors.”
A. Operating Results
Key Components of Results of Operations
Net Revenue
We generate revenues from (i) sales of smart electric vehicles, and (ii) sales of auto parts and materials.
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Cost of Revenues
Cost of vehicle sales primarily includes direct parts, materials, labor cost and manufacturing overheads (including depreciation of assets associated with production) and reserves for estimated warranty expenses. Cost of services and others primarily includes cost of direct parts, materials, depreciation of associated assets used for providing the services, labor costs and installment costs.
Operating Expenses
General and Administrative Expenses
Our general and administrative expenses mainly consist of (i) staff cost and depreciation related to general and administrative personnel, (ii) share-based compensation, (iii) professional service fees, (iv) allowance for expected credit losses, (v) properties rental fees, and (vi) other corporate expenses.
Selling Expenses
Our selling expenses mainly consist of freight, depreciation, vehicle, marketing, promotional and advertising expenses.
Research and Development Expenses
Our research and development expenses consist primarily of design and development expenses with new technology, payroll and related expenses for research and development professionals, materials and supplies, and other research and development related expenses. We expense all research and development costs as incurred.
Other Loss
Other income (expenses), net
Other income (expenses), net consists primarily of (i) the additional individual income tax expenses incurred due to our late payroll payment, (ii) contingent liabilities for litigation, (iii) expenses or gains incurred resulting from discrepancies in the enforcement payments, including exemption or overpayments, following the legal proceedings or negotiated settlements, (iv) government subsidies, and (v) disposal loss of property and equipment.
Interest expenses, net
Interest expenses, net consists primarily of (i) interest earned on cash deposits in banks, and (ii) interest accrued by us in arrears on various loans and others.
Financial expenses
Financial expenses represent the financial expenses accrued for PIPE Investor.
Impairment of property and equipment
Impairment of property and equipment is related to our certain property and equipment associated with vehicle manufacturing.
Loss of impairment on investments
Loss of impairment on investments is related to our long-term investment in Shanghai OBS Culture and Technology Co., Ltd. (“Shanghai OBS”).
Changes in fair value of warrant liabilities
Changes in fair value of warrant liabilities are primarily related to our warrant instruments.
Changes in fair value of convertible notes
Changes in fair value of convertible notes are primarily related to our convertible notes.
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Results of Operations
The following tables set forth a summary of our consolidated results of operations for the periods presented. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| (In USD in thousands) | ||||||||||||
| Net revenue | $ | 950 | $ | 11,995 | $ | 37,333 | ||||||
| Cost of revenues | (356 | ) | (9,327 | ) | (49,014 | ) | ||||||
| Gross profit (loss) | 594 | 2,668 | (11,681 | ) | ||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | (156,964 | ) | (90,956 | ) | (168,971 | ) | ||||||
| Selling expenses | (676 | ) | (2,609 | ) | (6,908 | ) | ||||||
| Research and development expenses | (64 | ) | (4,479 | ) | (24,434 | ) | ||||||
| Total operating expenses | (157,704 | ) | (98,044 | ) | (200,313 | ) | ||||||
| Loss from operations | (157,110 | ) | (95,376 | ) | (211,994 | ) | ||||||
| Other loss, net: | ||||||||||||
| Other income (expenses), net | 2,006 | (22,840 | ) | (18,482 | ) | |||||||
| Interest expenses, net | (9,802 | ) | (2,691 | ) | (3,248 | ) | ||||||
| Financial expenses | - | (36,137 | ) | (30,000 | ) | |||||||
| Impairment of property and equipment | - | - | (3,183 | ) | ||||||||
| Loss of impairment on investments | - | (15,918 | ) | - | ||||||||
| Changes in fair value of warrant liabilities | (35 | ) | 236 | 212 | ||||||||
| Change in fair value of convertible notes | (2,626 | ) | - | - | ||||||||
| Total other loss | (10,457 | ) | (77,350 | ) | (54,701 | ) | ||||||
| Loss before income tax provision | (167,567 | ) | (172,726 | ) | (266,695 | ) | ||||||
| Income tax provision | - | - | - | |||||||||
| Net loss | $ | (167,567 | ) | $ | (172,726 | ) | $ | (266,695 | ) | |||
Note:
| (1) | Share-based compensation expenses were allocated as follows: |
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| General and administrative expenses | $ | 117,036 | $ | - | $ | 23,338 | ||||||
| Total | $ | 117,036 | $ | - | $ | 23,338 | ||||||
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Year ended December 31, 2025 compared with year ended December 31, 2024
Net Revenue
Our net revenue decreased by US$11.0 million, or 92.1% from US$12.0 million in 2024 to US$1.0 in 2025. The significant decline was primarily attributable to the Company’s ongoing strategic transformation, under which it is repositioning its business to focus on the sectors of Smart city, smart mobility, and AI.
Cost of revenues
Our cost of revenues decreased by US$8.9 million, or 96.2% from US$9.3 million in 2024 to US$0.4 in 2025, primarily attributable to the decrease of revenue.
General and administrative expenses
Our general and administrative expenses increased by US$66.0 million, or 72.6% from US$91.0 million in 2024 to US$157.0 million in 2025. This increase was primarily attributable to an increase of US$117.0 in share-based compensation expenses, mainly due to equity incentives granted to employees for retention and performance, and equity-settled consideration for services from providers, and partially offset by: (i) a decrease of US$37.8 million in allowance for credit losses, (ii) a decreases of US$7.1 million, US$3.7 million and US$2.4 million in payroll expenses, professional services expenses and rental fees, respectively, driven by the reduction in operating scale.
Selling expenses
Our selling expenses significantly decreased by US$1.9 million, or 74.1% from US$2.6 million in 2024 to US$0.7 million in 2025 primarily attributable to our business downsizing in 2025 resulting in the decrease in freight expenses and marketing and promotional expenses.
Research and development expenses
Our research and development expenses decreased by US$4.4 million, or 98.6% from US$4.5 million in 2024 to US$0.1 million in 2025, primarily due to reduced vehicle development activities, as well as lower R&D related payroll expenses resulting from a decrease in R&D headcount during the year.
Other income (expenses), net
We recorded net other income of US$2.0 million in 2025, primarily due to US$2.5 million gain from the resolution of a legal dispute and a US$0.7 million gain from the disposal of R&D vehicles. These gains were partially offset by a US$1.2 million loss from disposal of obsolete or inadequately maintained property and equipment. In comparison, we recorded net other expenses of US$22.8 million in 2024, mainly due to contingent liabilities for litigation and expenses recognized in connection with legal disputes.
Interest expense, net
Our interest expense, net increased by US$7.1 million from US$2.7 million in 2024 to US$9.8 million in 2025, primarily due to interest accrued on overdue third-party loans and interest accrued on outstanding litigation-related payables.
Financial expenses
Our financial expenses were nil and US$36.1 million for the years ended December 31, 2025 and 2024, which represented a 15% guaranteed annual return on a PIPE investment that be obligated by our several shareholders. Please see Note 9 PIPE Escrow Account to our consolidated financial statements in this annual report for details.
Loss of impairment on investments
Loss of impairment on investment were nil and US$15.9 million for the year ended December 31, 2025 and 2024, which was primarily attributable to the full impairment of our long-term investment in W Motors due to the investee’s net liability position.
Net loss
As a result of the foregoing, we had a net loss of US$167.6 million in 2025 and US$172.7 million in 2024.
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Year ended December 31, 2024 compared with year ended December 31, 2023
Net Revenue
Our net revenue decreased by US$25.3 million, or 67.9% from US$37.3 million in 2023 to US$12.0 in 2024, primarily due to discontinuation of our Rabdan-branded vehicle line and intense market competition.
Cost of revenues
Our cost of revenues decreased by US$39.7 million, or 81.0% from US$49.0 million in 2023 to US$9.3 in 2024, primarily attributable to the decrease of revenue.
General and administrative expenses
Our general and administrative expenses decreased by US$78.0 million, or 46.2% from US$169.0 million in 2023 to US$91.0 million in 2024, primarily attributable to (i) an decrease of US$19.8 million in allowance for expected credit loss due to our expectation that the corresponding receivables and prepayments would not be recoverable, given our current operating conditions, and (ii) decreases of US$23.3 million, US$19.6 million, US$6.3 million, US$4.1 million and US$1.4 million in share-based compensation expenses, professional services expenses, directors’ and officers’ insurance expenses, business entertainment expenses and rental fees respectively, as a result of downsizing for discontinuation of our Rabdan-branded vehicle line during 2024.
Selling expenses
Our selling expenses significantly decreased by US$4.3 million, or 62.2% from US$6.9 million in 2023 to US$2.6 million in 2024 primarily attributable to our business downsizing in 2024 resulting in the decrease expenses in marketing and promotional activities.
Research and development expenses
Our research and development expenses decreased by US$19.9 million, or 81.7% from US$24.4 million in 2023 to US$4.5 million in 2024, primarily due to lower expenses related to vehicle development, as well as a decrease in R&D related payroll expenses as result of decrease in the number of R&D staffs during the year.
Other (expenses) income, net
Our net other expenses increased by US$4.3 million, or 23.6% from US$18.5 million in 2023 to US$22.8 million in 2024. The fluctuation was mainly contributed to (i) gains of US$3.6 million arising from certain exemption from discrepancies in the enforcement payments following legal proceedings or negotiated settlements expenses and US$1.6 million government subsidies in 2023, (ii) US$22.1 million increased by lawsuit provision for the closed and on-going lawsuits in 2024, and partially offset by (iii) a legal dispute that was resolved in 2023, resulting in a decrease of indemnification charge of US$23.0 million in 2024.
Interest expense, net
Our interest expense, net decreased by US$0.5 million from US$3.2 million in 2023 to US$2.7 million in 2024, primarily attributable to interest income decreased due to decrease of cash in bank, interest expense accrued on our loans from a third party that became overdue since 2023 and remained unpaid during 2024.
Financial expenses
Our financial expenses increased by US$6.1 million from US$30.0 million in 2023 to US$36.1 million in 2024, which was primarily attributable to the 15% guaranteed annual return on a PIPE investment that certain shareholders promised to an investor of us and a fund usage fee during 2024. Please see Note 9 PIPE Escrow Account to our consolidated financial statements in this annual report for details.
Loss of impairment on investments
Loss of impairment on investment was US$15.9 million for the year ended December 31, 2024, which was primarily attributable to the full impairment of our long-term investment in W Motors due to the investee’s net liability position.
Net loss
As a result of the foregoing, we had a net loss of US$172.7 million in 2024 and US$266.7 million in 2023.
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Taxation
Cayman Islands
We are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.
British Virgin Islands
Our subsidiaries incorporated in the BVI are not subject to tax on income or capital gains under current BVI law. In addition, upon payments of dividends by these entities to their shareholders, no BVI withholding tax will be imposed.
United Arab Emirates
Our subsidiaries incorporated in United Arab Emirates are currently not subject to taxation in United Arab Emirates, as companies operating in the designated free zones of the UAE and not conducting business activities in the UAE mainland are exempt from corporate taxes or customs duty.
Hong Kong
Our subsidiaries incorporated in Hong Kong are subjected to Hong Kong profits tax. With effect from April 1, 2018, a two-tiered profits tax rate regime applies. The profits tax rate for the first HKD 2 million of corporate profits is 8.25%, while the standard profits tax rate of 16.5% remains for profits exceeding HKD 2 million. If no election has been made, the whole of the taxpaying entity’s assessable profits will be chargeable to standard profits tax rate. Because the preferential tax treatment is not elected by us, the subsidiaries registered in Hong Kong are subject to income tax at a rate of 16.5%.
Mainland China
Generally, our WFOE and subsidiaries, which are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%.
United States
Our subsidiary, which incorporated in USA in 2022, is subject to statutory U.S. Federal corporate income tax at a rate of 21% for the years ended December 31, 2025, 2024 and 2023. U.S. does not believe it is more likely than not that the losses are realizable. There is no related tax provision other than state minimum taxes.
No income tax provision has been recognized for the years ended December 31, 2025, 2024 and 2023.
We do not file combined or consolidated tax returns, therefore, losses from our individual subsidiaries may not be used to offset other subsidiaries’ earnings within us. Valuation allowance is considered on each individual subsidiary basis. Full valuation allowance had been provided as of December 31, 2025 and 2024 respectively in respect of all deferred tax assets as it is considered more likely than not that the relevant deferred tax assets will not be realized in the foreseeable future.
PIPE ESCROW ACCOUNT
In September 2022, NWTN and Al Ataa Investment LLC (“PIPE Investor” or the “Pledgee”), a company incorporated in Abu Dhabi Global Market entered into a PIPE Subscription Agreement for PIPE Investor investing US$200 million into NWTN. Following the execution of PIPE Subscription Agreement, in September 2022, seven shareholders of ICONIQ (“Pledgor”), and PIPE Investor entered into a cash pledge agreement (the “Cash Pledge Agreement”). The Cash Pledge Agreement shall take effect and shall expire two years from November 14, 2023, the date the Pledgee transfers the full amount of US$200 million into NWTN. Pursuant to the Cash Pledge Agreement, the Pledgor agreed to pledge as following:
| (a) | To cover Pledgee’s PIPE investment in NWTN by reimbursing the Pledgee the difference between the sales price of Pledgee’s NWTN stocks in open market and the US$10.26 book value of Pledgee’s holding shares, if the sales price is lower than the US$10.26 book value, for a period of 24 months. |
| (b) | To award Pledgee’s PIPE investment in NWTN by guaranteeing the Pledgee a minimum 15% annual return on its remaining holding of NWTN shares for a period of 24 months, to be paid on a semi-annual basis. In the event of an investment exit by the Pledgee, any accrued annual 15% return payments must be paid to the Pledgee calculated up to the exit date. |
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In addition, NWTN, FIRST ABU DHABI BANK PJSC (the “Escrow Agent”), and an affiliate entity of PIPE Investor entered into an Escrow Agreement. Pursuant to the Escrow Agreement, NWTN agreed to open an account (the “Escrow Account”) and credit the sum of US$100 million (the “Escrow Amount”) into the Escrow Account as cash pledge for the disbursements stated in the agreements. Pledgor is the obligator of the following disbursements, if any. In 2022, the Escrow Account was opened in the name of a subsidiary of Al Ataa, and NWTN had disbursed US$100 million into the account, which presented as PIPE escrow account on the consolidated balance sheet for the presented period.
Key terms of Escrow Agreement were as follows:
| (a) | Escrow Account is a non-interest-bearing account. |
| (b) | Escrow Amount would be transferred a minimum 15% annual return to PIPE Investor on PIPE Investor’s holding of NWTN’s ordinary shares for a period of 24 months, to be disbursed on semi-annual basis. In the event of an investment exit by PIPE Investor, any accrued annual 15% return payments must be paid to the PIPE Investor calculated up to the exit date. |
| (c) | NWTN’s market share price (VWAP of 10 days,1 month, 3 months) and PIPE Investor’s share selling plan for the following 6 months, if any, is to be evaluated on a quarterly basis. At times of market price of NWTN’s shares drop below US$10.26 and the total difference between market price and US$10.26 (plus the shortage to make guaranteed 15%minimum annual return) exceeds the escrow account balance of US$100 million, NWTN should deposit additional funds to make up the difference. |
| (d) | 3 months after (b) above is executed, the escrow account will be reviewed. If the market value of NWTN’s shares has recovered, funds over the needed US$100 million escrow will be redirect back to NWTN’s business operating account. |
| (e) | Escrow Agent shall release the Escrow Amount and transfer such amount less any amounts which Escrow Agent is entitled to retain to NWTN in 3 business days after November 9, 2024. |
In accordance with Codification of Staff Accounting Bulletins Topic 5: Miscellaneous Accounting – T. Accounting for Expenses or Liabilities Paid by Principal Stockholder(s) (SAB 5T), as the Pledgor is obligated to pay the 15% annual return on a semi-annual basis to the Pledgee, which should be reflected as an expense in our financial statements with a corresponding credit to contributed (paid-in) capital. The minimum 15% guaranteed annual return on Al Ataa’s holding shares is recognized as financial expenses during the execution period and the actual disbursements to Al Ataa will be recognized as additional paid-in capital as incurred.
For the years ended December 31, 2025, 2024 and 2023, we incurred financial expenses related to the 15% guaranteed annual return totaling nil, US$6.1 million and US$30.0 million, respectively. During 2023 and early 2024, we made advance payments to the PIPE Investor amounting to US$15.0 million and US$45.0 million, respectively, on behalf of the Pledgors. As the Pledgors have not reimbursed us for these payments, we recorded amounts due from the Pledgors of US$15.0 million on August 29, 2023 and US$45.0 million on July 1, 2024, respectively, with corresponding credits to additional paid-in capital, reflecting a deemed capital contribution.
On September 7, 2023, Mr. Alan Wu, the former CEO of the Company, the Group, and the investor entered into a loan agreement under which we were permitted to withdraw $30 million from the account for a three-month period. The withdrawn amount bore an annualized interest rate of 10%, which was recognized as an interest expense in 2023.
On July 1, 2024, an addendum was signed to restructure the original loan agreement. Under the revised terms, we agreed to transfer $10 million to the investor, thereby terminating the loan agreement. We considered the $10 million as a fund usage fee and recognized it as a financial expense in 2024.
After evaluating the collectability of these amounts, we recorded a full provision for the amounts due from the Pledgors as of December 31, 2025 and 2024, respectively. See Note 24 in this annual report, Related Party Transactions, for further details.
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B. Liquidity and Going Concern
The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. For the years ended December 31, 2025, 2024 and 2023, we incurred significant and recurring operating losses of approximately US$157.1 million, US$95.4 million and US$212.0 million, respectively. Operating cash flows were negative at approximately US$5.1 million and US$138.0 million for the years ended December 31, 2025 and 2023, respectively, compared with a positive inflow of US$33.6 million for the year ended December 31, 2024. We reported working capital deficits of approximately US$116.6 million and US$70.7 million as of December 31, 2025 and 2024, respectively, and an accumulated deficit of approximately US$904.4 million as of December 31, 2025, compared to approximately US$737.0 million as of December 31, 2024. We are also exposed to unresolved litigation and guarantee obligations, which could further strain its limited financial resources. These conditions raise substantial doubt about our ability to continue as a going concern.
Historically, we have relied on financing from existing shareholders and third-party investors as its primary sources of liquidity. In order to address its liquidity needs and improve its financial position, management has implemented or plans to implement the following actions:
| 1. | Disposal of ICONIQ Holding Limited. In February 2026, we completed the disposal of ICONIQ Holding Limited, which management expects will eliminate historical liabilities and significant losses associated with that business. See Note 28 Subsequent Events for further details. |
| 2. | Potential financing arrangements. We have entered into an equity purchase facility with SZOP Opportunities I LLC and a convertible note facility with JAK Mobility Ventures II LLC in December 2025, providing potential access to up to US$100.0 million and US$80.0 million, respectively. However, our ability to obtain funding under these arrangements is subject to various conditions, including market conditions, regulatory requirements and contractual limitations, and there can be no assurance that we will be able to access such funding when needed. See Note 14 and Note 22 for further details. |
While management believes that the above actions may provide additional liquidity and improve our financial position, these plans are subject to significant uncertainties and conditions that are not entirely within our control. Accordingly, management cannot conclude that it is probable that these plans will effectively alleviate the substantial doubt about our ability to continue as a going concern within one year after the issuance date of these consolidated financial statements. Therefore, substantial doubt about our ability to continue as a going concern remains.
The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the ordinary course of business.
The following table sets forth a summary of our cash flows for the periods presented.
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| (In USD in thousands) | ||||||||||||
| Net cash (used in) provided by operating activities | $ | (5,066 | ) | $ | 33,577 | $ | (138,046 | ) | ||||
| Net cash provided by (used in) investing activities | 76 | (656 | ) | (21,229 | ) | |||||||
| Net cash provided by (used in) financing activities | 8,827 | (55,000 | ) | (26,979 | ) | |||||||
| Effect of exchange rate changes | 203 | (24 | ) | (2,366 | ) | |||||||
| Net increase/(decrease) in cash and cash equivalents | 4,040 | (22,103 | ) | (188,620 | ) | |||||||
| Cash and cash equivalents and restricted cash, at beginning of the period | 1,287 | 23,390 | 212,010 | |||||||||
| Cash and cash equivalents and restricted cash, at end of the period | $ | 5,327 | $ | 1,287 | $ | 23,390 | ||||||
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Operating Activities
Net cash used in operating activities was US$5.1 million in 2025, primarily due to net loss of US$167.6 million, adjusted for the positive non-cash items of US$155.8 million that primary consisted of: (i) impairment loss of advance to suppliers and prepaid expenses and other current assets of US$4.3 million, (ii) share-based compensation of US$117.0 million, (iii) change in fair value of convertible notes of US$2.6 million, (iv) interests on loans from a third party of US$1.8 million; and (v) allowance for expected credit losses of $23.7 million; and further adjusted for changes in operating assets and liabilities that have a positive effect on operating cash flow which were consisted primary of: (i) a decrease in inventories of US$1.8 million, (ii) an increase in accounts payable of US$3.8 million, and (iii) an increase in accrued expenses and other current liabilities of US$3.2 million primarily reflected accrued interest on litigation-related payables; partially offset by negative factors consisted mainly of (i) a decrease in operating lease payment of US$1.7 million primarily due to the termination of certain leases.
Net cash provided by operating activities was US$33.6 million in 2024, primarily attributable to net loss of US$172.7 million, adjusted for the positive non-cash items of US$145.8 million that primary consisted of: (i) allowance for expected credit loss of US$65.7 million, (ii) financial expenses on PIPE of US$36.1 million, (iii) loss of impairment on investments of US$15.9 million, (iv) lawsuit provision of US$22.1 million; and further adjusted for changes in operating assets and liabilities that have a positive effect on operating cash flow which were consisted primary of: (i) a decrease in PIPE escrow account of US$55.0 million as a result of the execution of several agreements (see Note 9 PIPE Escrow Account to our consolidated financial statements in this annual report for details), (ii) a decrease in inventories of US$28.9 million mainly due to current sales being heavily reliant on historical stock, (iii) an increase in accrued expenses and other current liabilities of US$2.8 million; partially offset by negative factors consisted mainly of (i) a decrease of US$24.3 million in accounts payable as a result of the lower purchase of vehicles and related materials and (ii) a decrease of US$3.0 million in operating lease due to the expiration of certain long-term office leases that were either not renewed or replaced with short-term leases.
Net cash used in operating activities was US$138.0 million in 2023, primarily attributable to net loss of US$266.7 million, adjusted for the positive non-cash items of US$167.1 million that primary consisted of: (i) allowance for expected credit loss of US$85.4 million, (ii) financial expenses on PIPE of US$30.0 million, (iii) share-based compensation of US$23.3 million, (iv) inventory write-downs of US$16.1 million; and further adjusted for changes in operating assets and liabilities that have a negative effect on operating cash flow which were consisted primary of: (i) an increase in accounts receivable of US$6.3 million as we started to generate revenues in 2023, (ii) an increase in prepaid expenses and other current assets of US$54.4 million mainly due to the increased amounts due from export agent in relation to our purchase of vehicles and our investments in Evergrande New Energy, partially offset by positive factors consisted mainly of (i) a decrease of US$15.0 million in PIPE escrow account as a result of the execution of several agreements (see Note 9 PIPE Escrow Account to our consolidated financial statements in this annual report for details), and (ii) a decrease of US$13.8 million in advances to suppliers due to the substantial inventory purchases made at the end of 2022 and throughout 2023.
Investing Activities
Net cash provided by investing activities was approximately nil in 2025.
Net cash used in investing activities was US$0.7 million in 2024, mainly due to loans to related parties of US$0.5 million.
Net cash used in investing activities was US$21.2 million in 2023, mainly due to loans to related parties of US$15.7 million and purchases of property and equipment of US$5.5 million.
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Financing Activities
Net cash flows provided by financing activities was US$8.8 million in 2025, primarily attributable to (i) proceeds from convertible notes of US$7.1 million, (ii) loan proceeds from related parties of US$1.1 million, and (iii) proceeds from shareholder contributions of US$0.8 million; partially offset by repayments of loan from a related party of US$0.2 million.
Net cash flows used in financing activities was US$55.0 million in 2024, primarily attributable to payments of US$55 million a PIPE investor for both the 15% guaranteed annual return and a fund usage fee on PIPE investment.
Net cash flows used in financing activities was US$27.0 million in 2023, primarily attributable to payments of US$15 million to a PIPE investor for the 15% guaranteed annual return on PIPE investment and repayments in the total amount of US$12.6 million of loans from a third party and related parties.
Contractual obligations and contingencies
Through the issuance date of our consolidated financial statements, we have been involved in certain legal proceedings and disputes arising in the ordinary course of business, as further described in Note 26 Commitments and contingencies to our consolidated financial statement in this annual report.
Except for the above, we are not aware of any other pending or threatened claims and litigation as of December 31, 2025 and through the issuance date of our consolidated financial statements.
Off-Balance Sheet Commitments and Arrangements
During the years ended December 31, 2025, 2024 and 2023, except as otherwise disclosed in this annual report, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.
C. Research and Development, Patent and Licenses, etc.
Please refer to “Item 4. Information on the Company - B. Business Overview - Research and Development” and “- Intellectual Property.”
D. Trend Information.
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
E. Critical Accounting Estimates.
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in the consolidated financial statements and accompanying footnotes. Out of our significant accounting policies, which are described in Note 3 — Summary of Significant Accounting Policies of our consolidated financial statements 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. We believe that the following critical accounting estimates involve the most significant judgments used in the preparation of our financial statements.
Fair value measurement of warrant liabilities
We does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
Management evaluates all of its financial instruments, including issued warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. In accordance with ASC 825-10 “Financial Instruments”, offering costs attributable to the issuance of the warrant liabilities are recognized in the consolidated statement of operations and comprehensive loss as incurred.
We issued 350,000 Private Warrants, 690,000 Representative Warrants and 13,800,000 Public Warrants in connection with its Transaction. The Public Warrants met the criteria for equity classification and are recorded as additional paid-in capital on the Consolidated Balance Sheet at the completion of the Business Combination. The Private Warrants contain exercise and settlement features that may change with a change in the holder, which precludes the Private Warrants from being indexed to our own stock. For Representative Warrants, net cash settlement is assumed under ASC 815-40 as we are required to deliver registered shares to the purchasers of Representative Warrants. Therefore, both the Private Warrants and the Representative Warrants are recognized as warrant liabilities on the Consolidated Balance Sheet at fair value, with subsequent changes in fair value recognized in the Consolidated Statement of Operations and Comprehensive Loss at each reporting date until exercised.
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Fair value measurement of convertible notes
Under the Fair Value Option Subsection of ASC Subtopic 825-10, Financial Instruments – Overall (“ASC 825”), we have an irrevocable option to designate certain financial assets and financial liabilities at fair value on an instrument-by-instrument basis, with changes in fair value reported in the statement of operations. Changes in fair value do not include accrued interest on debt instruments. Any changes in the fair value of liabilities resulting from changes in instrument-specific credit risk are reported in other comprehensive (loss) gain. We separately measure changes attributed to instrument-specific credit risk by calculating the difference between the overall change in the fair value of the instrument and the change attributed to fluctuations in the relevant risk-free.
We elected the fair value option for its convertible notes, and we believe the fair value option best reflects the economics of the underlying transaction. See Note 14 for details.
Current expected credit loss
On January 1, 2023, we adopted ASC 326, Financial Instruments—Credit Losses, which requires recognition of allowances upon origination or acquisition of financial assets at an estimate of expected credit losses over the contractual term of the financial assets (the current expected credit loss or the “CECL” model) using the modified retrospective transition method.
Our financial assets subject to the CECL model mainly include accounts receivable, amounts due from related parties and other current and non-current assets.
For accounts receivable, we estimate the loss rate based on historical experience, the age of the receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. For advances to suppliers, amounts due from related parties and prepaid expenses and other current assets, we review them on a periodic basis and make allowances on an individual basis when there is doubt as to the collectability. These amounts are written off after all collection efforts have been exhausted.
Allowance for expected credit loss of US$23.7 million, US$64.4 million, and US$22.8 million were recognized for the years ended December 31, 2025, 2024 and 2023, respectively.
Impairment loss of non-financial assets
Advance to suppliers and prepayments represent amounts paid in advance for goods or services to be received in the future. Such amounts do not represent financial assets as they do not give rise to a contractual right to receive cash or another financial instrument, and therefore are not within the scope of ASC 326 Financial Instruments—Credit Losses.
We evaluate the recoverability of advance to suppliers and prepayments at each reporting date. When events or changes in circumstances indicate that the carrying amount of prepayments may not be recoverable, we assess whether it is probable that the prepaid amounts will not be realized through the receipt of goods or services, or through refund.
The Company evaluates the recoverability of advance to suppliers and prepayments at each reporting date. When events or changes in circumstances indicate that the carrying amount of prepayments may not be recoverable, the Company assesses whether it is probable that the prepaid amounts will not be realized through the receipt of goods or services, or through refund.
Indicators of impairment may include, but are not limited to, significant financial difficulties of the counterparty, bankruptcy or insolvency, disputes regarding performance under the underlying agreements, cancellation or termination of contracts, or other adverse changes in the business environment that affect the counterparty’s ability to fulfill its obligations.
If it is determined that the carrying amount is not recoverable, an impairment loss is recognized in the amount by which the carrying value of the prepayments exceeds the amount expected to be recovered.
Estimates of recoverability involve significant judgment and are based on available information regarding the financial condition of counterparties and the status of the underlying arrangements.
We recognized impairment loss of US$4.3 million, US$1.2 million and US$62.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Inventory write-down
Inventories, consisting of smart electric vehicles and auto parts and materials purchased, are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Cost of inventory is determined using the weighted average cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged products, which is dependent upon factors such as historical and forecasted consumer demand, as well as the aging of inventory.
During the years ended December 31, 2025, 2024, and 2023, we recognized inventory write-downs of US$0.1 million, US$0.9 million and US$16.1 million, respectively, within cost of revenues.
Provision of income tax and valuation allowance for deferred tax asset
We account for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
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Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. Our operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB100,000 ($13,913). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.
We accrued income tax payable of US$9 as of December 31, 2025 and 2024. We did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of its consolidated statements of operations and comprehensive loss for the years ended December 31, 2025, 2024 and 2023 respectively. We do not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months.
Recent Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and result of operations is disclosed in Note 3 to our consolidated financial statements included elsewhere in this annual report.
Internal Control Over Financial Reporting
Prior to this business combination, we had been a private company with limited accounting personnel and other resources with which to address our internal control. In the course of auditing our consolidated financial statements included in this annual report, we identified four material weaknesses in our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified relate to (i) our company’s lack of sufficient competent financial reporting and accounting personnel with appropriate understanding of U.S. GAAP and financial reporting requirements set forth by the SEC to address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial statements, including disclosure notes, in accordance with U.S. GAAP and SEC financial reporting requirements, (ii) our company’s lack of period end financial closing policies and procedures for preparation of consolidated financial statements, including disclosure notes, which are in compliance with U.S. GAAP and relevant SEC financial reporting requirements, (iii) our company’s lack of internal file management procedures and an effective record management system which causes the deficiency in liability recording and cut-off evaluation process, and (iv) our company’s lack of sufficient approval process for expenditures. The deficiency may result in material errors going unnoticed or unauthorized transactions being processed.
To remediate our identified material weaknesses, we plan to adopt measures to improve our internal control over financial reporting, including, among others: (i) hiring additional qualified accounting and financial personnel with appropriate knowledge and experience in U.S. GAAP and SEC reporting requirements, (ii) organizing regular training for our accounting staffs, especially training related to U.S. GAAP and SEC reporting requirements, (iii) formulating U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed and updated, on a regular basis, to the latest U.S. GAAP accounting standards, (iv) establishing period end financial closing policies and procedures for preparation of consolidated financial statements, (v) establishing internal document management policies and systems, and (vi) continuing our efforts to implement necessary reviews and controls at relevant levels with all important documents and contracts submitted for proper and sufficient reviews,
However, we cannot assure you that all these measures will be sufficient to remediate our material weakness in time, or at all. See “Item 15. Controls and Procedures.”
Quantitative and Qualitative Disclosures about Market Risk
Foreign Currency Risk
We report financial results in U.S. dollars, and a material portion of its sales and operating costs are realized in currencies other than the U.S. dollar. As such, we are exposed to currency risk due to cash, trade and other receivables, borrowings and trade and other payables denominated in foreign currency, being primarily the U.S. dollar. If the value of any currencies in which sales are realized, particularly RMB and AED, depreciates relative to the U.S. dollar, our foreign currency revenue will decrease when translated to U.S. dollars for reporting purposes. In addition, any depreciation in foreign currencies could result in higher local prices, which may negatively impact local demand and have a material adverse effect on our business, results of operations or financial condition. Alternatively, if the value of any of the currencies in which operating costs are realized appreciates relative to the U.S. dollar, our operating costs will increase when translated to U.S. dollars for reporting purposes.
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Credit Risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. We are exposed to credit risk from our operating activities, deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
We have evaluated subsequent events through the date of issuance of the consolidated financial statements, and did not identify any subsequent events with material financial impacts on our consolidated financial statements except as disclosed in Note 28 Subsequent events.
Item 6. Directors, Senior Management and Employees
A. Directors and senior management.
The following table sets forth information regarding directors and our executive officers as of the date of this annual report.
| Name | Age | Position | ||
| Alan Nan Wu | 45 | Executive Chairman | ||
| Benjamin Bin Zhai | 58 | Chief Executive Officer and Executive Director | ||
| Elizabeth Ching Yee Chung | 55 | Independent Non-Executive Director | ||
| Jin He | 40 | Independent Non-Executive Director | ||
| Yehong Ji | 60 | Independent Non-Executive Director | ||
| Adrian Wong | 39 | Chief Financial Officer | ||
| John Chaoyin Xie | 34 | Chief Operating Officer |
Alan Nan Wu has served as our Executive Chairman of our board of directors since the consummation of the Business Combination in November 2022, and served as our Chief Executive Officer from November 2022 to May 2025. Mr. Wu was the founder of ICONIQ and has served as its executive director and CEO since 2016. Mr. Wu resigned as the Chief Executive Officer and continue to serve as the Executive Chairman of the Board on May 13, 2025. His area of experience includes traditional automobiles and electric vehicles. Concurrently with his positions at the Company, Mr. Wu also serves as the legal representative at My Car (Shenzhen) technology Ltd., which is a company that engages in technology development, service, consulting and EV sales, Tianjin Tuoda Management Service Ltd, which is a company that engages in enterprise consulting and service, and ICONIQ (Tianjiin) New Energy Technology Research Institute, which is a company that engages in new energy research and development. Prior to serving as director of ICONIQ Holding Limited, Mr. Wu served as head of China region at J C Horizon Ltd. Mr. Wu earned his bachelor’s degree in 2004 from Kennedy College of Technology in Canada.
Benjamin Bin Zhai has served as our Executive Director since May 2025 and our Chief Executive Officer since May 2025. From January 2025 to May 2025, Mr. Zhai served as an Independent Non-Executive Director of our board of directors and a member and Chairman of the Compensation Committee. He is the founder and Chairman of Hiland International Talent Group. Prior to that, Mr. Zhai has worked in various global and executive roles, including as Chief Executive Officer of Shenzhen Talent Group, Chief Executive Officer (China) of Canoo (GoEV), Global Managing Director of Russell Reynolds Associates, Global Partner of Egon Zehnder, and Principal of A. T. Kearney Management Consultants. He has been serving on the board of directors of DCITS, a fin-tech company listed in Shenzhen Stock Exchange (SZSE: 00555) as an independent director, since 2019. He has been a director of Geto New Material Group (SZSE: 300986) since November 2024. Mr. Zhai graduated from Wuhan University of Science and Technology, Australian National University and Harvard Business School. He is currently undertaking his Doctor of Business Administration study with Hong Kong University and Peking University.
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Elizabeth Ching Yee Chung has served as an Independent Non-Executive Director of our board of directors since January 2025. She has been the Chief Executive Officer and a director of Brillink Bank Corporation Limited, a digital bank specializing in supply chain finance, since March 2021. From July 2018 to July 2023, she was the Chief Executive Officer and a director of China Brilliant Global Ltd. (8026.HK). Ms. Chung has served an independent director of Star Plus Legend Holdings Ltd. (6683.HK) since April 2023. From January 2023 to May 2024, she was an independent director of InvesTech Holdings Ltd. (1087.HK). Ms. Chung was the Chief Executive Officer and a director of Paganini Milano (SG) PTE Ltd from January 2017 to July 2019. Prior to that, she was a director of Bank of China International from 2009 to 2017 and the Assistant Vice President of HSBC Broking Securities (Asia) Ltd from 2000 to 2009. Ms. Chung obtained a bachelor of science degree from Rutgers, The State University of New Jersey in October 1994.
Jin He has served as an Independent Non-Executive Director of our board of directors since January 2025. He has been the general manager of Foresight Capital, a venture capital and financial advisory firm, since January 2020. Prior to that, Mr. He was the Executive Director of Infinity Equity, an equity investment firm, from June 2013 to December 2019. From August 2006 to March 2008, Mr. He was an electrical engineer at Commercial Aircraft Corporation of China, Ltd., an aerospace manufacturer. Mr. He obtained a bachelor’s degree in electrical engineering from Nanchang Institute of Aviation Technology and an MBA degree from Fudan University.
Yehong Ji has served as an Independent Non-Executive Director of our board of directors since August 2025. He is currently a Senior Advisor at the Investment Banking Division of Barclays Singapore. He was the Vice Chairman of Greater China Banking of Barclays from March 2021 to June 2025. Prior to that, Mr. Ji served as the Managing Director and Co-Head of China Business Development at ICBC International, Hong Kong from September 2017 to March 2021. From June 2016 to September 2017, he was the Co-President of China Science & Merchant Investment Management. He served as Managing Director of China Investment Banking at JP Morgan Securities, Hong Kong from May 2011 to June 2016. Prior to that, he also worked at various financial institutions, including Credit Suisse, Citigroup Global Markets, Morgan Stanley and NM Rothschild, Jardine Fleming Securities. His earlier career experience includes roles at Beijing Huayuan Group, China Ministry of Foreign Economic Relations and Trade and Hangzhou Automotive Engine Plant. Mr. Ji obtained a bachelor’s degree in science in Applied Mechanics from Chongqing University and a bachelor’s degree of economics in international trade from the University of International Business and Economics in Beijing.
Adrian Wong has served as our Chief Financial Officer since July 2025, who brings nearly two decades of investment banking and strategy consulting experience to our Company, with particular expertise in advising high-growth technology and mobility companies. Most recently, Mr. Wong served as Managing Director at China Galaxy International Securities from March 2023 to June 2025, the investment banking arm of China Investment Corporation, where he led the industrial team. Previously, he spent eight years at Morgan Stanley’s Investment Banking Division from August 2015 to February 2023 as an Executive Director with expertise in industrial and mobility technology sector. His career began in consulting at Mercer Limited from July 2008 to May 2013. Mr. Wong holds an MBA from The Wharton School at the University of Pennsylvania and earned his bachelor’s degree in psychology from The Chinese University of Hong Kong.
John Chaoyin Xie has served as our Chief Operation Officer since July 2025. He has deep expertise in the new energy vehicle sector and a proven track record in ESG strategy development and execution. From February 2021 to September 2024, Mr. Xie served as Secretary-General of NIO Users Trust and concurrent Chairman of NIO Users Foundation, where he refined organizational management and strategic execution capabilities. Prior to that, he led the Innovation Business Unit in China, focusing on automotive strategy consulting and smart manufacturing solutions from December 2015 to January 2021. From July 2015 to December 2015, he started his career at BMW. Mr. Xie holds a Bachelor of Business Administration from Jilin University.
Family Relationship
There are no family relations among any of our officers or directors. There are no other arrangements or understandings pursuant to which our directors are selected or nominated.
B. Compensation.
Executive Compensation
Our board of directors has not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers. Currently, our board of directors determines the compensation to be paid to our executive officers based on our financial and operating performance and prospects, and contributions made by the officers to our success. Each of our named executive officers is measured by a series of performance criteria by the board of directors, or the compensation committee on a yearly basis. Such criteria are set forth based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance. The board of directors will make an independent evaluation of appropriate compensation to key employees, with input from management. The board of directors has oversight of executive compensation plans, policies and programs.
Cash Compensation
In the year ended December 31, 2025, we paid an aggregate of US$476 thousand as salaries, bonuses, and fees to our senior officers named in this annual report.
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Equity Awards
In the fiscal year ended December 31, 2025, 3,635,001 earnout shares was issued to Muse Limited (a company held by Mr. Alan Nan Wu, Executive Chairman of the Company). Please refer to Note 20 Share-Based Compensation for more details.
Employment Agreements
We have entered into employment agreements with the following executive officers.
Employment Agreement with Benjamin Bin Zhai
On May 9, 2025, the Company through its wholly-own subsidiary, ICONIQ Green and Mr. Zhai entered into an employment contract for Mr. Zhai’s services as the Chief Executive Officer of ICONIQ Green for a term of four years, commencing from May 13, 2025, with a base salary of US$20,000 per month. Mr. Zhai will be granted (i) 5,000,000 restricted Class B ordinary shares of the Company as of May 13, 2025 (the “Initial Grant”) pursuant to the 2022 Equity Incentive Plan of the Company (the “2022 Plan”) and (ii) up to 3,560,000 restricted Class B ordinary shares of the Company (together with the Initial Grant, the “Grants”) pursuant to the 2022 Plan upon achievement of certain key performance indicator and approval of the Board. 32% of granted shares will vest in a single batch six months after the grant date and the remaining 68% will vest in four equal annual installments of 17% each, with each installment vesting on the anniversary of the grant over four years, subject to Mr. Zhai’s continued service to the Company. However, if the granted shares have not been registered at the vesting date, such vesting date is automatically extended until 10 trading days after the registration of those shares with the Securities and Exchange Commission. Mr. Zhai has agreed to a non-compete and non-solicitation restriction for six months after the termination of the employment contract. The Employment Contact may be terminated by either party within a one-month advance written notice or immediately by ICONIQ Green in the event of Mr. Zhai’s breach of the employment contract or misconduct, negligence or breach of duty or trust. Mr. Zhai is entitled to payments on account of any end of service entitlement in line and payable under the UAE Labour Law 33 of 2021 and any amendments, notifications, and regulations thereof.
Employment Agreement with Alan Nan Wu
On March 1, 2022, Mr. Alan Nan Wu entered into a limited term employment contract with ICONIQ Green Technology FZCO, our wholly-owned subsidiary and Dubai headquarters entity, for Mr. Wu’s services as the Chief Executive Officer and Chairman of ICONIQ Green Technology FZCO for a term of three years from March 1, 2022 to February 28, 2025. Mr. Wu is entitled to wage in accordance with the regulations determined by Ministry of Human Resources & Emiratisation of UAE and participation in our employee stock ownership plan. The employment contract may be terminated by either party with a 30-day advance notice.
Employment Agreement with Howard Shixuan Yu
On March 1, 2022, Mr. Howard Shixuan Yu, our former Chief Technology Officer, entered into a limited term employment contract with ICONIQ Green Technology FZCO, our wholly-owned subsidiary and Dubai headquarters entity, for Mr. Yu’s services as the Chief Technology Officer of ICONIQ Green Technology FZCO for a term of three years from March 1, 2022 to February 28, 2025. Mr. Yu is entitled to wage in accordance with the regulations determined by Ministry of Human Resources & Emiratisation of UAE and participation in our employee stock ownership plan. The employment contract may be terminated by either party with a 30-day advance notice.
Employment Agreement with Huainan Liao
On February 21, 2023, Mr. Huainan Liao, our former Vice Chairman and Group Executive President, entered into a limited term employment contract with NWTN General Trading LLC, our wholly-owned subsidiary and Dubai headquarters entity, for Mr. Liao’s services as the Group Vice Chairman and Group Executive President of NWTN General Trading LLC for a term of two years from February 21, 2023 to February 20, 2025. Mr. Liao is entitled to wage in accordance with the regulations determined by Ministry of Human Resources & Emiratisation of UAE and participation in our employee stock ownership plan. The employment contract may be terminated by either party with a 30-day advance notice.
Employment Agreement with Adrian Wong
On July 3, 2025, Mr. Adrian Wong entered into a limited term employment contract with ICONIQ Green Technology FZCO, our wholly-owned subsidiary and Dubai headquarters entity, for Mr. Wong’s services as the Chief Financial Officer of the Company for a term of four years from July 3, 2025. Mr. Wong is entitled to wage in accordance with the regulations determined by Ministry of Human Resources & Emiratisation of UAE and participation in our employee stock ownership plan. The employment contract may be terminated by either party with a one-month advance notice.
Employment Agreement with John Chaoyin Xie
On July 3, 2025, Mr. John Chaoyin Xie entered into a limited term employment contract with ICONIQ Green Technology FZCO, our wholly-owned subsidiary and Dubai headquarters entity, for Mr. Xie’s services as the Chief Operating Officer of the Company for a term of four years from July 3, 2025. Mr. Xie is entitled to wage in accordance with the regulations determined by Ministry of Human Resources & Emiratisation of UAE and participation in our employee stock ownership plan. The employment contract may be terminated by either party with a one-month advance notice.
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Director Compensation
Officers are elected by and serve at the discretion of the board of directors. Employee directors do not receive any compensation for their services on the board of directors. Non-employee directors are entitled to receive $100,000 per year for serving as directors and may receive stock grants pursuant to our share incentive plans. In addition, non-employee directors are entitled to receive compensation for their actual travel expenses for each board of directors meeting attended.
Cash Compensation
During the fiscal year ended December 31, 2025, cash compensation of US$400 thousand was paid to our former non-executive directors.
Equity Awards
In the fiscal year ended December 31, 2025, 3,635,001 earnout shares was issued to Muse Limited (the company held by Mr. Alan Nan Wu, Executive Chairman of the Company). Please refer to Note 20 Share-Based Compensation for more details.
C. Board Practices.
See information provided in response to Item 6.A. above as to the current directors.
Composition of Board
Our board of directors consists of five members as of the date of this annual report and consisted of five members as of December 31, 2025. Officers are elected by and serve at the discretion of the board of directors.
If the number of directors changes, any increase or decrease will be apportioned so as to maintain the number of directors. Decreases in the number of directors will not shorten the term of any incumbent director. These board provisions could make it more difficult for third parties to gain control of our Company by making it difficult to replace members of the board of directors.
There are no membership qualifications for directors. Further, there are no share ownership qualifications for directors unless so fixed by us in a general meeting.
The board of directors maintains a majority of independent directors who are deemed to be independent under the definition of independence under Rule 5605(c)(2) of the Nasdaq Stock Market Rules and meet the independence standards under Rule 10A-3 under the Exchange Act, as amended.
There are no other arrangements or understandings pursuant to which our directors are selected or nominated. We do not have any service contacts with our directors that provide for benefits upon termination of employment.
Our board of directors plays a significant role in our risk oversight. The board of directors makes all relevant company decisions.
We have established a audit committee, nominating committee, compensation committee and Strategy and Environmental Social and Governance (ESG) Committee. Our directors will adopt a charter for each respective committee. The composition of each committee is set forth below.
Audit Committee
Our audit committee is composed of Elizabeth Ching Yee Chung, Jin He, and Yehong Ji, with Ms. Chung serving as chairperson, as of the date of this annual report. As of December 31, 2025, our audit committee was composed of Elizabeth Ching Yee Chung, Yehong Ji and Jin He, with Ms. Chung serving as chairperson. Our board of directors has determined that all such committee members meet the independence requirements under the Nasdaq Listing Rules and under Rule 10A-3 of the Exchange Act. Each member of the audit committee is financially literate, in accordance with Nasdaq audit committee requirements, and possesses prior experience sitting in auditing committees of publicly-listed companies. Ms. Chung qualifies as an “audit committee financial expert” as defined in the applicable SEC rules. In arriving at this determination, our board of directors examined each audit committee member’s scope of experience and the nature of their prior and/or current employment.
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Nomination Committee
Our nomination committee is composed of Alan Nan Wu, Elizabeth Ching Yee Chung, and Jin He, with Mr. Wu serving as chairperson, as of the date of this annual report, and was composed of Alan Nan Wu as of December 31, 2025. The nomination committee is responsible for the assessment of the performance of the board of directors, considering and making recommendations to the board with respect to the nominations or elections of directors and other governance issues.
Compensation Committee
Our compensation committee is composed of Elizabeth Ching Yee Chung, Jin He, and Yehong Ji, with Mr. He serving as chairperson, as of the date of this annual report. As of December 31, 2025, our compensation committee was composed of Elizabeth Ching Yee Chung and Jin He, with Mr. He serving as chairperson. The compensation committee is responsible for reviewing and making recommendations to the board of directors regarding its compensation policies for our officers and all forms of compensation. The compensation committee also administers our equity-based and incentive compensation plans and makes recommendations to the board of directors about amendments to such plans and the adoption of any new employee incentive compensation plans.
Strategy and Environmental Social and Governance (ESG) Committee
Our Strategy and ESG Committee is composed of Alan Nan Wu, Benjamin Bin Zhai, Yehong Ji, Elizabeth Ching Yee Chung, and Jin He, with Mr. Wu serving as chairperson, as of the date of this annual report, and was composed of Alan Nan Wu with Mr. Wu serving as chairperson, as of December 31, 2025. The Strategy and ESG Committee is responsible for reviewing and making recommendations to the board of directors regarding our strategic development, operational management, corporate sustainability, regulatory compliance, as well as environmental social and governance policies for our officers and employees.
Code of Ethics
We have adopted a Code of Ethics that applies to all of our employees, officers, and directors. This includes our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions. We intend to disclose on our website any future amendments of the Code of Ethics or waivers that exempt any principal executive officer, principal financial officer, principal accounting officer or controller, persons performing similar functions, or our directors from provisions in the Code of Ethics.
Shareholder Communication with the Board of Directors
Shareholders and other interested parties may communicate with the board of directors, including non-management directors, by sending a letter to us at Meydan Grandstand, 6th floor, Meydan Road, Nad AI Sheba, Dubai, United Arab Emirates for submission to the board of directors or committee or to any specific director to whom the correspondence is directed. Shareholders communicating through this means should include with the correspondence evidence, such as documentation from a brokerage firm, that the sender is a current record or beneficial stockholder of our securities. All communications received as set forth above will be opened by the Corporate Secretary or his or her designee for the sole purpose of determining whether the contents contain a message to one or more of our directors. Any contents that are not advertising materials, promotions of a product or service, patently offensive materials or matters deemed, using reasonable judgment, inappropriate for the board of directors will be forwarded promptly to the chairman of the board of directors, the appropriate committee or the specific director, as applicable.
D. Employees.
As of December 31, 2025, we had a total of 29 employees. Over 70% of our employees held bachelor degree or above. The number of our employees significantly decreased from 68 as of December 31, 2024 due to strategic transformation.
As required by regulations in Mainland China, we participate in various government statutory employee benefit plans, including social insurance, namely pension insurance, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance, and housing funds. We are required under laws in Mainland China to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government regulations from time to time. As of December 31, 2025, we had paid full social insurance contributions for certain employees.
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E. Share ownership.
The following tables show the beneficial ownership of ordinary shares as of April 27, 2026 by:
| ● | each person known by us to beneficially own more than 5% of the outstanding ordinary shares; |
| ● | each of our named executive officers and directors; and |
| ● | all of our named executive officers and directors as a group. |
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them. Except as otherwise noted herein, the number and percentage of ordinary shares beneficially owned is determined in accordance with Rule 13d-3 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, beneficial ownership includes any ordinary shares as to which the holder has sole or shared voting power or investment power and also any ordinary shares which the holder has the right to acquire within 60 days of April 27, 2026 through the exercise of any option, conversion or any other right. As of April 27, 2026, there were 19,783,529 ordinary shares issued and outstanding, consisting of 1,817,501 Class A ordinary shares and 17,966,028 Class B ordinary shares. Each Class A ordinary share is convertible into one (1) Class B ordinary share at any time at the option of the holder of such Class A ordinary share. Each Class A ordinary share is entitled to twenty-five (25) votes, while each Class B ordinary share is entitled to one vote.
Unless otherwise noted, the business address of each beneficial owner is c/o Meydan Grandstand, 6th floor, Meydan Road, Nad Al Sheba, Dubai, UAE.
The following table sets forth certain information with respect to the beneficial ownership of our ordinary shares as of April 27, 2026:
| Name and Address of Beneficial Owner | Number
of Class A Ordinary Shares Beneficially Owned | % of Class | Number
of Class B Ordinary Shares Beneficially Owned | % of Class | %
of Total Voting Power | |||||||||||||||
| Directors and Executive Officers | ||||||||||||||||||||
| Alan Nan Wu(1) | 1,817,501 | 100 | % | 426,941 | 2.4 | 72.3 | ||||||||||||||
| Benjamin Bin Zhai | — | — | 166,500 | * | * | |||||||||||||||
| Elizabeth Ching Yee Chung | — | — | 3,750 | * | * | |||||||||||||||
| Jin He | — | — | 3,750 | * | * | |||||||||||||||
| Yehong Ji | — | — | 13,088 | * | * | |||||||||||||||
| Adrian Wong | — | — | 82,500 | * | * | |||||||||||||||
| John Chaoyin Xie | — | — | 33,000 | * | * | |||||||||||||||
| All executive officers and directors as a group | 1,817,501 | 100 | % | 729,529 | 4.1 | 72.8 | ||||||||||||||
| Five Percent Holders | ||||||||||||||||||||
| MUSE LIMITED(2) | 1,817,501 | 100 | % | 8,622 | * | 71.7 | ||||||||||||||
| VISION PATH HOLDINGS LIMITED(3) | — | — | 2,062,164 | 11.5 | 3.3 | |||||||||||||||
| JAK MOBILITY VENTURES II LLC(4) | — | — | 1,796,603 | 10.0 | 2.8 | |||||||||||||||
| ICONIC INVESTMENT ONE SPV RSC LTD(5) | — | — | 1,535,463 | 8.6 | 2.4 | |||||||||||||||
| ZHEJIANG JINHUA JINYI NEW DISTRICT DEVELOPMENT GROUP CO., LTD(6) | — | — | 974,659 | 5.4 | 1.5 | |||||||||||||||
| * | Less than 1% of the total number of outstanding ordinary shares. |
| (1) | Represents 418,319 Class B ordinary shares held of record by Alan Nan Wu and 1,826,123 ordinary shares held of record by MUSE LIMITED. MUSE LIMITED is a company incorporated under the laws of British Virgin Islands, wholly owned by Alan Nan WU, Executive Chairman of our board of directors, with its business address at Sea Meadow House, P.O. Box 116 Road Town, Tortola, British Virgin Islands. |
| (2) | Represents 1,826,123 ordinary shares held of record by MUSE LIMITED, consisting of (i) 1,817,501 Class A ordinary shares, which will be automatically converted into an equal number of Class B ordinary shares on a one-for-one basis if sold in accordance with the Fourth Amended and Restated Memorandum and Articles of Association, and (ii) 8,622 Class B ordinary shares. MUSE LIMITED is a company incorporated under the laws of British Virgin Islands, wholly owned by Alan Nan WU, Executive Chairman of our board of directors, with its business address at Sea Meadow House, P.O. Box 116 Road Town, Tortola, British Virgin Islands. |
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| (3) | Represents 2,062,164 Class B ordinary shares held of record by VISION PATH HOLDINGS LIMITED. VISION PATH HOLDINGS LIMITED is a company incorporated under the laws of British Virgin Islands, whose ultimate beneficial owner is Zhifa DONG. The business address of VISION PATH HOLDINGS LIMITED is at Overseas Company Services Limited, UNIT 8, 3/F., Qwomar Trading Complex, Blackburne Road, Port Purcell, Road Town, Tortola VG 1110, British Virgin Islands. |
| (4) | Represents Class B ordinary shares issuable to JAK Mobility Ventures II LLC (“JAK Mobility”) upon conversion of the Initial Note, subject to the beneficial ownership limitation in the Initial Note, as reported by the Schedule 13G filed on December 30, 2025. JAK Mobility is managed by ATW Partners Opportunities Management LLC (the “Advisor”). Antonio Ruiz-Gimenez and Kerry Propper serve as the managing members of the Adviser (the “Managing Members”). JAK Mobility, the Adviser, and the Managing Members may be deemed to have shared voting and dispositive power with respect to the securities beneficially owned by JAK Mobility and each of JAK Mobility, the Adviser and the Managing Members disclaim beneficial ownership of the Company’s securities reported herein. The business address of each of the foregoing entities and individuals is c/o ATW Partners Opportunities Management LLC, ONE PENN, 1 Pennsylvania Plaza, Suite 4810, New York, New York 10119. |
| (5) | Represents 1,535,463 Class B ordinary shares held of record by ICONIC INVESTMENT ONE SPV RSC LTD. ICONIC INVESTMENT ONE SPV RSC LTD is a company incorporated under the laws of United Arab Emirates, whose ultimate beneficial owner is Al Ataa Investment LLC. The business address of ICONIC INVESTMENT ONE SPV RSC LTD is at 2427 Resco-work 03, 24, A1 Sila Tower, Abu Dhabi, Global Market Square, A1 Maryah Island, Abu Dhabi, United Arab Emirates. |
| (6) | Represents 974,659 Class B ordinary shares held of record by ZHEJIANG JINHUA JINYI NEW DISTRICT DEVELOPMENT GROUP CO., LTD. ZHEJIANG JINHUA JINYI NEW DISTRICT DEVELOPMENT GROUP CO., LTD is a company incorporated under the laws of China, which is wholly owned by Zhejiang Jinyi Holdings Group Co., Ltd. The business address of ZHEJIANG JINHUA JINYI NEW DISTRICT DEVELOPMENT GROUP CO., LTD is at Room 406, Jinshan Science and Innovation Park, No. 658 Jinshan Avenue, Xiaoshun Town, Jindong District, Jinhua City, Zhejiang Province, China. |
Record Holders
As of April 27, 2026, we had 1 holder of record of our Class A ordinary shares and 56 holders of record of our Class B ordinary shares. The number of holders of record and the shares they held is based exclusively upon the certified shareholder list provided by our transfer agent and does not address whether a share or shares may be held by the holder of record on behalf of more than one person or institution who may be deemed to be the beneficial owner of a share or shares in the Company.
2022 Equity Incentive Plan
Our 2022 Equity Incentive Plan, which we refer to herein as the “2022 Plan,” became effective upon the Closing of the Business Combination. The 2022 Plan allows us to provide equity awards as part of our compensation program, an important tool for motivating, attracting and retaining talented employees and for providing incentives that promote our business and increase shareholder value. These incentives will be provided through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, and performance awards as the administrator of the 2022 Plan may determine, as further described below.
Certain Key Plan Provisions
The 2022 Plan will continue until terminated by our board of directors or any committee authorized by the board of directors.
The 2022 Plan provides for the grant of stock options, both incentive stock options and non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards.
42,845,000 Class B ordinary shares equal to fifteen percent (15%) of the aggregate number of our ordinary shares issued and outstanding immediately after the Closing are authorized for issuance pursuant to awards under the 2022 Plan.
The 2022 Plan provides for an automatic share reserve increase feature, whereby the share reserve will be increased automatically on the first day of each fiscal year beginning with the 2023 fiscal year, in an amount equal to the lesser of (i) a number equal to 1.5% of the aggregate number of shares of our ordinary shares outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares as is determined by our board. The automatic share reserve feature and any provisions that are or would create a “formula” plan for purposes of the Nasdaq listing requirements will operate only until the ten-year anniversary of the earlier of the initial adoption of the 2022 Plan by our board or the approval of the 2022 Plan by our shareholders, and therefore no automatic share reserve increase will be added after the increase on the first day of our 2032 fiscal year.
The 2022 Plan is administered by our board of directors or any authorized by our board.
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Summary of the 2022 Plan and Implementation Status
The following paragraphs provide a summary of the principal features of the 2022 Plan and its operation. However, this summary is not a complete description of all of the provisions of the 2022 Plan and is qualified in its entirety by the specific language of the 2022 Plan.
Eligibility
The 2022 Plan permits the grant of incentive stock options, within the meaning of Section 422 of the Code, to our employees and any of our parent and subsidiary corporations’ employees, and the grant of non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights and performance awards to our employees, directors and consultants and employees, directors and consultants of any of our parents or subsidiaries.
For the avoidance of doubt, the administrator may grant awards to any of the foregoing service providers, including individuals who may be considered “related parties” under the Listing Rules of Nasdaq, including as consideration in a transaction or series of related transactions in which a related party has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in our company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions.
Authorized Shares
Subject to the adjustment provisions contained in the 2022 Plan and the evergreen provision described below, a total of Class B ordinary shares equal to fifteen percent (15%) of the aggregate number of ordinary shares issued and outstanding immediately after the Closing is reserved for issuance pursuant to the 2022 Plan. The number of shares available for issuance under the 2022 Plan also includes an automatic annual increase, or the evergreen feature, on the first day of each of our fiscal years, beginning with fiscal year 2023 and ceasing as described below, equal to the lesser of:
| ● | a number of shares equal to 1.5% of the total number of all outstanding shares of all classes of ordinary shares as of the last day of the immediately preceding fiscal year; or |
| ● | such number of shares as our board may determine. |
The evergreen feature and any provisions that are or would create a “formula” plan for purposes of the Nasdaq listing requirements will operate only until the ten year anniversary of the earlier of the initial adoption of the 2022 Plan by our board or the approval of the 2022 Plan by our shareholders, and therefore no automatic share reserve increase under the evergreen feature will be added after the increase on the first day of our 2031 fiscal year. Shares issuable under the 2022 Plan may be authorized, but unissued, or reacquired Class B ordinary shares. If an award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an exchange program (as described below, and other than to the extent the exchange program includes an exchange or transfer of previously granted restricted stock), or, with respect to restricted stock, restricted stock units, or performance awards, is forfeited to or repurchased due to failure to vest, the unpurchased shares (or, for awards other than stock options or stock appreciation rights, the forfeited or repurchased shares) will become available for future grant or sale under the 2022 Plan. With respect to stock appreciation rights, only the net shares actually issued will cease to be available under the 2022 Plan and all remaining shares under stock appreciation rights will remain available for future grant or sale under the 2022 Plan. Shares that actually have been issued under the 2022 Plan under any award will not be returned to the 2022 Plan; except if shares issued pursuant to awards of restricted stock, restricted stock units, or performance awards are repurchased or forfeited due to failure to vest, such shares will become available for future grant under the 2022 Plan. Shares subject to an award (other than a restricted stock award) withheld to pay the exercise price of an award or satisfy the tax liabilities or withholding obligations related to such award (which withholdings may be in amounts greater than the minimum statutory amount required to be withheld as determined by the administrator of the 2022 Plan) will become available for future grant or sale under the 2022 Plan. To the extent an award is paid out in cash rather than shares, such cash payment will not result in a reduction in the number of shares available for issuance under the 2022 Plan. Subject to the capitalization adjustment provisions included in the 2022 Plan, the maximum number of shares that may be issued upon the exercise of incentive stock options will equal to the aggregate number of Class B ordinary shares reserved for issuance under the 2022 Plan pursuant to the “Shares Subject to the Plan” section, plus the Class B ordinary shares that become available for issuance under the 2022 Plan pursuant to the annual evergreen feature.
In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation or any successor or replacement accounting standard) that causes the per share value of a Class B ordinary share to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through a large, nonrecurring cash dividend, the administrator of the 2022 Plan, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be provided under the 2022 Plan, will adjust the number and class of shares that may be delivered under the 2022 Plan; the number, class, and price of shares covered by each outstanding award; and the numerical share limits contained in the 2022 Plan. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation, such equitable adjustments described in the foregoing sentence may be made to the extent and in a manner as determined to be appropriate and equitable by the administrator to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the 2022 Plan. In either case, the decision of the administrator regarding any such adjustment shall be final, binding and conclusive.
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Plan Administration
Our board of directors or any committee authorized by our board will have authority to administer the 2022 Plan. In addition, to the extent it is desirable to qualify transactions under the 2022 Plan as exempt under Rule 16b-3 of the Exchange Act, the committee and such transactions will be structured to satisfy the requirements for exemption under Rule 16b-3. Subject to the provisions of the 2022 Plan, the administrator has the power to administer the 2022 Plan and make all determinations deemed necessary or advisable for administering the 2022 Plan, including but not limited to, the power to determine the fair market value of Class B ordinary shares, select the service providers to whom awards may be granted, determine the number of shares or dollar amounts covered by each award, approve forms of award agreements for use under the 2022 Plan, determine the terms and conditions of awards (including, but not limited to, the exercise price, the time or times at which awards may be exercised, any vesting acceleration or waiver or forfeiture restrictions and any restriction or limitation regarding any award or the shares relating thereto), construe and interpret the terms of the 2022 Plan and awards granted under it, prescribe, amend and rescind rules and regulations relating to the 2022 Plan, including creating sub-plans, modify or amend each award, and allow a participant to defer the receipt of payment of cash or the delivery of shares that otherwise would be due to such participant under an award. For the avoidance of doubt under the Nasdaq listing rules, the administrator has authority to grant awards under the 2022 Plan to any eligible individual, which awards may cover in excess of five percent (5%) of the number of all our classes of ordinary shares and/or five percent (5%) of the voting power of Robo.ai Inc. outstanding before the issuance of the applicable award. The administrator has the power, to the extent permitted by applicable laws, to delegate functions to subcommittees comprised of members of our board or other individuals satisfying applicable laws (which may include employees). Without obtaining the consent of the applicable participant or approval by our shareholders, the administrator also has the authority to allow participants the opportunity under an exchange program to transfer outstanding awards granted under the 2022 Plan to a financial institution or other person or entity selected by the administrator, and to institute an exchange program by which outstanding awards granted under the 2022 Plan may be surrendered or cancelled in exchange for awards of the same type, which may have a higher or lower exercise price and/or different terms, awards of a different type and/or cash, or by which the exercise price of an outstanding award granted under the 2022 Plan is increased or reduced. The administrator’s decisions, interpretations and other actions are final and binding on all participants and other parties and will be given the maximum deference permitted by applicable law.
Stock Options
Stock options may be granted under the 2022 Plan. Except with respect to substitute awards granted in connection with certain corporate transactions, the per share exercise price of options granted under the 2022 Plan must be equal to at least 100% of the fair market value of a Class B ordinary share on the date of grant. The term of an option may not exceed ten years. With respect to any participant who owns more than 10% of the voting power of all classes of Robo.ai Inc.’s (or any of our parents’ or subsidiaries’) outstanding shares, the term of an incentive stock option granted to such participant must not exceed five years and the per share exercise price must equal at least 110% of the fair market value of our Class B ordinary share on the grant date. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, Class B ordinary shares or other shares of another class of our ordinary shares, cashless exercise, net exercise, as well as other types of consideration permitted by applicable law. After the cessation of service of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in his or her option agreement. In the absence of a specified time in an award agreement, if such cessation is due to death or disability, the vested portion of the option will remain exercisable for six months; if such cessation is due to termination of service for cause, the shares covered by the option (including both the vested and the unvested portion of the option) will immediately revert to the 2022 Plan on the date of such termination. In all other cases, in the absence of a specified time in an award agreement, the vested portion of the option will remain exercisable for three months following the cessation of service. An option, however, may not be exercised later than the expiration of its term. Subject to the provisions of the 2022 Plan, the administrator determines the terms of options. Until the ordinary shares are issued (as evidenced by the appropriate entry in our Register of Members or on our books or of our duly authorized transfer agent), the participant will not have any right to vote or receive dividends or have any other rights as a shareholder with respect to such shares, and no adjustment will be made for a dividend or other right for which the record date is before the date such shares are issued, except as provided in the 2022 Plan, as summarized further above. The exercise of any option under the 2022 Plan shall be subject to Robo.ai Inc. having a sufficient number of authorized shares available to cover such exercise, including that our shareholders shall have approved, in accordance with applicable laws.
Stock Appreciation Rights
Stock appreciation rights may be granted under the 2022 Plan. Stock appreciation rights allow the recipient to receive the appreciation in the fair market value of our Class B ordinary shares between the exercise date and the date of grant. The term of a stock appreciation right may not exceed ten years. After the cessation of service of an employee, director or consultant, he or she may exercise his or her stock appreciation right for the period of time stated in his or her stock appreciation rights agreement. In the absence of a specified time in an award agreement, if such cessation is due to death or disability, the vested stock appreciation rights will remain exercisable for six months following the cessation of service. In all other cases, in the absence of a specified time in an award agreement, the vested stock appreciation rights will remain exercisable for three months following the cessation of service. However, in no event may a stock appreciation right be exercised later than the expiration of its term. Subject to the provisions of the 2022 Plan, the administrator determines the terms of stock appreciation rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with Class B ordinary shares, or a combination of both. Except with respect to substitute awards granted in connection with certain corporate transactions, the per share exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant. Until shares are issued under a stock appreciation right, the participant will not have any right to vote or receive dividends or have any other rights as a shareholder with respect to such shares, and no adjustment will be made for a dividend or other right for which the record date is before the date such shares are issued, except as provided in the 2022 Plan, as summarized further above.
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Restricted Stock
Restricted stock may be granted under the 2022 Plan. Restricted stock awards are grants of Class B ordinary shares that may have vesting requirements under any such terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee, director or consultant and, subject to the provisions of the 2022 Plan, will determine the terms and conditions of such awards, although the consideration paid by the recipient for the restricted stock will be at least the par value of the shares. The administrator may impose whatever restrictions on transferability, forfeiture provisions or other restrictions or vesting conditions (if any) it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us). The administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. The administrator may determine that an award of restricted stock will be fully vested and will not be subject to any period of restriction or other vesting or restriction requirement or provision, and/or that consideration for such award is paid for by past services rendered as a service provider. Recipients of restricted stock awards generally will have voting rights and rights to dividends and other distributions with respect to such shares upon grant, unless the administrator provides otherwise. If such dividends or distributions are paid in shares, the shares will be subject to the same restrictions on transferability and forfeitability as the share of restricted stock with respect to which they were paid. Shares of restricted stock that do not vest are subject to the right of repurchase or forfeiture.
Restricted Stock Units
Restricted stock units may be granted under the 2022 Plan. Each restricted stock unit is a bookkeeping entry representing an amount equal to the fair market value of one Class B ordinary share. Subject to the provisions of the 2022 Plan, the administrator determines the terms and conditions of restricted stock units, including any vesting criteria and the form and timing of payment, although the consideration paid by the recipient for payment of the restricted stock units will be at least the par value of the shares to be paid to the individual. The administrator may set vesting criteria based upon the achievement of company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service), or any other basis determined by the administrator in its discretion. The administrator, in its sole discretion, may pay earned restricted stock units in the form of cash, shares, or a combination of both. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.
Performance Awards
Performance awards may be granted under the 2022 Plan. Performance awards are awards that may be earned in whole or in part on the attainment of performance goals or other vesting criteria that the administrator may determine, and that may be denominated in cash or shares. Each performance award will have an initial value that is determined by the administrator. Subject to the terms and conditions of the 2022 Plan, the administrator determines the terms and conditions of performance awards, including any vesting criteria and form and timing of payment. The administrator may set vesting criteria based upon the achievement of company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service) or any other basis determined by the administrator in its discretion. The administrator, in its sole discretion, may pay earned performance awards in the form of cash, shares, or a combination of both, as set forth in the award agreement. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.
Non-Employee Directors
All outside (non-employee) directors will be eligible to receive all types of awards (except for incentive stock options) under the 2022 Plan. The 2022 Plan provides that in any given fiscal year, no outside director may be granted any equity awards (including equity awards under the 2022 Plan) (the value of which will be based on their grant date fair value) and be provided any cash retainers for service as an outside director in amounts that, in the aggregate, exceed $750,000, provided that in the fiscal year of the individual’s initial service as a non-employee director, such amount is increased to $1,000,000. For the purposes of this maximum limit provision, the grant date fair values of awards granted under the 2022 Plan will be determined according to U.S. GAAP. Any awards or other compensation provided to an individual for his or her services as an employee or a consultant (other than an outside director), or prior to the effective date of our Registration Statement on Form 8-A, will not count toward this limit. This maximum limit provision does not reflect the intended size of any potential grants or a commitment to make grants to the outside directors under the 2022 Plan in the future.
Non-Transferability of Awards
Unless the administrator provides otherwise, the 2022 Plan generally will not allow for the transfer of awards other than by will or the laws of descent and distribution, and only the recipient of an award may exercise an award during his or her lifetime. If the administrator makes an award transferable, such award will contain such additional terms and conditions as the administrator deems appropriate.
Dissolution or Liquidation
If there is a proposed liquidation or dissolution of Robo.ai Inc., the administrator will notify participants at such time before the effective date of such event as the administrator determines and all awards, to the extent that they have not been previously exercised, will terminate immediately before the consummation of such event.
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Merger or Change in Control
The 2022 Plan provides that in the event of a merger of Robo.ai Inc. with or into another corporation or entity or a “change in control” (as defined in the 2022 Plan), each outstanding award will be treated as the administrator (as constituted prior to the merger or change in control) determines, without a participant’s consent. The administrator may provide that awards granted under the 2022 Plan will be assumed or substituted by substantially equivalent awards, be terminated immediately before the merger or change in control, become vested and exercisable or payable and be terminated in connection with the merger or change in control, be terminated in exchange for cash, other property or other consideration, or any combination of the above. The administrator is not required to treat all awards, all awards held by a participant, all portions of awards, or all awards of the same type, similarly.
If a successor corporation does not so assume or substitute a substantially equivalent award for any outstanding award (or a portion of such award), then such award (or its applicable portion) will fully vest, all restrictions on such award (or its applicable portion) will lapse, all performance goals or other vesting criteria applicable to such award (or its applicable portion) will be deemed achieved at 100% of target levels and such award (or its applicable portion) will become fully exercisable, if applicable, for a specified period before the transaction, unless specifically provided otherwise under the applicable award agreement or other written agreement with the participant authorized by the administrator. The award (or its applicable portion) will then terminate upon the expiration of the specified period of time. If an option or stock appreciation right is not assumed or substituted, the administrator will notify the participant that such option or stock appreciation right will be exercisable for a period of time determined by the administrator in its sole discretion and the option or stock appreciation right will terminate upon the expiration of such period.
With respect to awards granted to an outside director while such individual was an outside director that, in the event of a change in control, are assumed or substituted for equity awards of the acquirer, if on the date of or following such assumption or substitution the participant’s status as a director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the participant (unless such resignation is at the request of the acquirer), then the participant will fully vest in and have the right to exercise outstanding options and/or stock appreciation rights as to all of the shares underlying such award, including those shares which otherwise would not be vested or exercisable, all restrictions on other outstanding awards will lapse, and, with respect to awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met, unless specifically provided otherwise under the applicable award agreement, a Robo.ai policy related to director compensation, or other written agreement authorized by the administrator.
Forfeiture and Clawback
Awards will be subject to any clawback policy adopted by us and in effect as of the date of grant or any clawback policy of which we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by applicable laws. The administrator also may specify in an award agreement that the participant’s rights, payments and benefits with respect to an award will be subject to reduction, cancellation, forfeiture, recoupment, reimbursement, or reacquisition upon the occurrence of certain specified events. The administrator may require a participant to forfeit or return to us or reimburse us for all or a portion of the award and any amounts paid under the award in order to comply with any clawback policy as described in the first sentence of this paragraph or with applicable laws.
Amendment or Termination
The 2022 Plan will continue in effect until terminated by the administrator. However, no incentive stock options may be granted after the ten-year anniversary of the earlier of the adoption of the 2022 Plan by our board or the approval of the 2022 Plan by our shareholders, and the evergreen feature of the 2022 Plan will terminate on the ten-year anniversary of the earlier of the adoption of the 2022 Plan by our board or the approval of the 2022 Plan by our shareholders. In addition, the administrator will have the authority to amend, suspend, or terminate the 2022 Plan or any part of the 2022 Plan, at any time and for any reason, but such action generally may not materially impair the rights of any participant without his or her written consent.
2026 Equity Incentive Plan
Our 2026 Equity Incentive Plan, which we refer to herein as the “2026 Plan,” became effective upon the Board approval on February 27, 2026. The 2026 Plan is materially the same as the 2022 Plan, except for the major revisions on authorized shares described below.
Subject to the adjustment provisions and the evergreen provision in the 2026 Plan, a total of Class B ordinary shares equal to fifteen percent (15%) of the aggregate number of ordinary shares issued and outstanding as of February 27, 2026 plus a number of Class A ordinary shares equal to fifty percent (50%) of the aggregate number of ordinary shares issued and outstanding as of February 27, 2026 are reserved for issuance pursuant to the 2026 Plan.
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Summary of U.S. Federal Income Tax Consequences
The following summary is intended only as a general guide to the material U.S. federal income tax consequences of participation in the 2022 Plan and the 2026 Plan. There can be no assurance that those laws and regulations will not change in the future (including retroactively). The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the income tax laws of any municipality, state or non U.S. jurisdiction in which the participant may reside. As a result, tax consequences for any particular participant may vary based on individual circumstances. This summary is not intended as tax advice to participants, who should consult their own tax advisors.
Incentive Stock Options
A participant generally recognizes no taxable income for ordinary income tax purposes as a result of the grant or exercise of an option that qualifies as an incentive stock option under Section 422 of the Code, except for purposes of the alternative minimum tax with respect to option exercises. If a participant exercises the option and then later sells or otherwise disposes of the shares acquired through the exercise of the option after both the two-year anniversary of the date the option was granted and the one-year anniversary of the date of exercise of the option, the participant will recognize a capital gain or loss equal to the difference between the sale price of the shares and the exercise price.
However, if the participant disposes of such shares either on or before the two-year anniversary of the date of grant or on or before the one-year anniversary of the date of exercise of the option (a “disqualifying disposition”), any gain up to the excess of the fair market value of the shares on the date of exercise over the exercise price generally will be taxed as ordinary income, unless the shares are disposed of in a transaction in which the participant would not recognize a gain (such as a gift). Any gain in excess of that amount will be a capital gain. If a loss is recognized with respect to the share disposition, there will be no ordinary income, and such loss will be a capital loss.
For purposes of the alternative minimum tax, the difference between the option exercise price and the fair market value of the shares on the date of exercise of the option is treated as an adjustment item in computing the participant’s alternative minimum taxable income in the year of exercise (unless the shares are disposed of in the same year as the option exercise). In addition, special alternative minimum tax rules may apply to certain subsequent disqualifying dispositions of the shares or provide certain basis adjustments or tax credits.
Non-statutory Stock Options
A participant generally recognizes no taxable income for ordinary income tax purposes as a result of the grant of such an option. However, upon exercising the option, the participant generally recognizes ordinary income equal to the amount that the fair market value of the shares on such date exceeds the exercise price. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale or other disposition of the shares acquired by the exercise of a non-statutory stock option, any gain or loss (based on the difference between the sale price and the fair market value on the exercise date) will be taxed as capital gain or loss.
Stock Appreciation Rights
In general, no taxable income for ordinary income tax purposes is reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant generally will recognize ordinary income in an amount equal to the fair market value of any shares received or any cash delivered to the participant. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.
Restricted Stock Awards
A participant acquiring shares of restricted stock generally will recognize ordinary income at the time the restrictions (if any) constituting a substantial risk of forfeiture lapse in an amount equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for those shares. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The participant, pursuant to Section 83(b) of the Code, may elect to accelerate the ordinary income tax event to the date of acquisition of the shares by filing an election with the IRS generally no later than thirty days after the date the shares are acquired. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.
Restricted Stock Units and Performance Awards
There generally are no immediate tax consequences of receiving an award of restricted stock units or a performance award. A participant who is granted restricted stock units or performance awards generally will be required to recognize ordinary income in an amount equal to the fair market value of shares issued and the amount of any cash paid to such participant at the time of settlement of the award following vesting. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Any additional gain or loss recognized upon any later disposition of any shares received would be capital gain or loss.
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Section 409A; Section 457A
Section 409A of the Code (“Section 409A”) provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Awards with a deferral feature granted under the 2022 Plan and the 2026 Plan to a participant subject to U.S. income tax will be subject to the requirements of Section 409A. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income (including amounts payable under any aggregate arrangements), as well as interest on such deferred compensation. In addition, Section 457A of the Code generally provides that any compensation that is deferred under a nonqualified deferred compensation plan sponsored by certain entities that are considered to be a nonqualified entity is includible in gross income when there is no substantial risk of forfeiture of the rights to such compensation.
Medicare Surtax
In addition, a participant’s annual “net investment income,” as defined in Section 1411 of the Code, may be subject to a 3.8% U.S. federal surtax. Net investment income may include capital gain and/or loss arising from the disposition of our ordinary shares issued pursuant to awards under the 2022 Plan and the 2026 Plan. Whether a participant’s net investment income will be subject to this surtax will depend on the participant’s level of annual income and other factors.
Tax Effect
We generally will be entitled to a tax deduction in connection with an award under the 2022 Plan and the 2026 Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a non-statutory stock option) except to the extent such deduction is limited by applicable provisions of the Code. Special rules limit the deductibility of compensation paid to our chief executive officer and certain current and former “covered employees” as determined under Section 162(m) of the Code and applicable guidance. Under Section 162(m) of the Code, the annual compensation paid to any of these specified individuals will be deductible only to the extent that it does not exceed $1,000,000.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION UPON PARTICIPANTS AND ROBO.AI INC. WITH RESPECT TO AWARDS UNDER THE 2022 PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE IMPACT OF EMPLOYMENT OR OTHER TAX REQUIREMENTS, THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH, OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE, OR NON-U.S. JURISDICTION IN WHICH THE PARTICIPANT MAY RESIDE.
F. Disclosure of a registrant’s action to recover erroneously awarded compensation.
Not applicable.
Item 7. Major Shareholders and Related Party Transactions
| A. | Major shareholders. |
Please refer to “Item 6. Directors, Senior Management and Employees - E. Share Ownership.”
| B. | Related party transactions. |
(a) The table below sets forth the related parties and their relationships with us:
| No. | Name of Related Parties | Relationship | ||
| 1 | ICONIQ (Tianjin) New Energy Technology Research Institute (“ICONIQ Institute”) | Controlled by the Company’s Executive Chairman, Mr. Alan Nan Wu (100%) | ||
| 2 | Shenzhen Yinghehuicheng Investment Center (Limited Partnership) (“Shenzhen Yinghehuicheng”) | A company controlled by a shareholder of the Company, and also a non-controlling shareholder of Tianqi Group | ||
| 3 | Tianjin Tuoda Enterprise Management Service Co., Ltd. (“Tianjin Tuoda”) | A company controlled by a group of shareholders of the Company, and also a non-controlling shareholder of Tianqi Group | ||
| 4 | Mr. Alan Nan Wu | Shareholder and Executive Chairman of the Company | ||
| 5 | Vision Path Holdings Limited (“Vision Path”) * | Shareholder of the Company | ||
| 6 | Shanghai OBS Culture and Technology Co., Ltd. (“Shanghai OBS”) | A company in which the Group holds a 20% equity interest. Mr. Aaron Huainan Liao, the Company’s Vice Chairman & Executive Global President, is the Chief Executive Officer of Shanghai OBS. | ||
| 7 | Al Ataa | Shareholder of the Company | ||
| 8 | Muse Limited | A company 100% held by Mr. Alan Nan Wu | ||
| 9 | Mr. Benjamin Zhai | Chief Executive Officer and Executive Director of the Company | ||
| 10 | My Car (Shenzhen) Technology Co., Ltd. (“My Car”) | A company which Mr. Alan Nan Wu held 25.3% and nil equity interest as of June 26, 2023 and June 30, 2023, respectively | ||
| 11 | Long Hope Holdings Limited (Long Hope) * | Shareholder of the Company |
| * | Vision Path and Long Hope were added as additional guarantors and jointly undertook joint and several guarantee obligations in respect of the Puluo Debt. See Note 26 Commitments and Contingencies to our consolidated financial statements in this annual report for details. |
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(b) We had the following significant related party transactions for the years ended December 31, 2025, 2024, and 2023:
| For the years ended December 31, | ||||||||||||
| Nature | 2025 | 2024 | 2023 | |||||||||
| Expense paid by a related party on behalf of the Group | ||||||||||||
| – Mr. Benjamin Zhai (i) | $ | 205 | $ | - | $ | - | ||||||
| – Mr. Alan Nan Wu (ii) | - | (54 | ) | (53 | ) | |||||||
| Technical service provided by a related party | ||||||||||||
| – Shanghai OBS | - | - | 380 | |||||||||
| Loan proceeds from related parties | ||||||||||||
| – Mr. Benjamin Zhai (i) | 95 | - | - | |||||||||
| – Mr. Alan Nan Wu (ii) | 1,034 | - | - | |||||||||
| Repayments to a related party | ||||||||||||
| – Mr. Alan Nan Wu (ii) | 188 | 480 | 4,658 | |||||||||
| Repayments of Mr.Nan Wu loan by Tianjin Tuoda | ||||||||||||
| – Mr. Alan Nan Wu (iii) | - | - | 1,592 | |||||||||
| Loan to related parties | ||||||||||||
| – Shanghai OBS | 16 | 63 | - | |||||||||
| – Tianjin Tuoda (iii) | 95 | - | 15,679 | |||||||||
| Interest expenses of loan from a related party | ||||||||||||
| – Mr. Benjamin Zhai (i) | 150 | - | - | |||||||||
| Accrued financial expenses to PIPE Investor | ||||||||||||
| – Al Ataa (see Note 9 PIPE escrow account for details) | - | (36,137 | ) | (30,000 | ) | |||||||
| Share-based compensation | ||||||||||||
| – Muse Limited (see Note 20 share-based compensation for details) | - | - | 23,338 | |||||||||
| – Vision Path (see Note 20 share-based compensation for details) | 32,560 | - | - | |||||||||
| – Long Hope (see Note 20 share-based compensation for details) | $ | 13,600 | $ | - | $ | - | ||||||
(c) We had the following related party balances with the related parties mentioned above:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Amounts due from related parties: | ||||||||
| – Tianjin Tuoda (iii) | $ | 14,326 | $ | 13,662 | ||||
| – Mr. Alan Nan Wu (ii) | 287 | 1,569 | ||||||
| – Shanghai OBS | 81 | 62 | ||||||
| – The Pledgor (see Note 9 PIPE escrow account for details) | 60,000 | 60,000 | ||||||
| Subtotal | $ | 74,694 | $ | 75,293 | ||||
| Less: Allowance for expected credit loss (see Note 9 PIPE escrow account for details) | (74,694 | ) | (75,293 | ) | ||||
| Amount due from related parties, net | $ | - | $ | - | ||||
| Amounts due to related parties, current: | ||||||||
| – Vision Path (iv) | $ | 4,855 | $ | 4,651 | ||||
| – Shenzhen Yinghehuicheng | 672 | 644 | ||||||
| – Mr. Benjamin Zhai (i) | 450 | - | ||||||
| Total | $ | 5,977 | $ | 5,295 | ||||
| (i) | On April 16, 2025, the Group entered into a loan agreement with the Mr. Benjamin Zhai, pursuant to provide a loan in the principal amount of US$300. The loan has a term of 12 months from the date the funds are received by the Group. Under the terms of the agreement, the Company is required to repay a total amount of US$450 upon maturity, representing principal of US$300 and total interest of US$150. The effective annual interest rate is approximately 50%. Of the total loan proceeds, approximately US$95 was remitted directly to the Group, and the remaining US$205 was paid by Mr. Benjamin Zhai on behalf of the Group to settle audit service fees. |
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| (ii) | In 2022, My Car paid loan and expenses on behalf of the Group totaled US$5.5 million, which were interest-free and repayable on demand, and the Group repaid US$5.8 million. The Group provided loan to My Car of US$1.5 million which was transferred to Mr. Nan Wu from My Car, as a result, the balance of amounts due from My Car as of December 31, 2025 and 2024 was nil. |
In 2022, Mr. Nan Wu paid loan and expenses on behalf of the Group totaled US$3.8 million, net off the expenses the Group paid for Mr. Nan Wu. Mr. Nan Wu also provided interest-free loans of US$2.9 million to the Group for ordinary operations in 2022, which was repayable on demand. In 2023, the Group had repaid the amount in full to Mr. Alan Nan Wu.
In 2024, the Group made repayments to Mr. Nan Wu of US$0.5 million. In 2025, the Group received interest-free loans of US$1.0 million from Mr. Nan Wu and made repayments of US$0.2 million.
| (iii) | In April 2022, Tianjin Tuoda and the Group entered into a financing service agreement that Tianjin Tuoda would provide financing service for a 6.5% commission fee. In 2022, a PIPE amounted to US$200 million wired into the Group as permanent equity, which was associated with Tianjin Tuoda’s financing service. As a result, the commission fee payable to Tianjin Tuoda was US$13 million, which was recognized as additional paid-in capital in the consolidated financial statements. |
The Group paid US$6.1 million of expenses on behalf of Tianjin Tuoda, of which US$3,792 remained due to Tianjin Tuoda as of December 31, 2022.
During the six months ended June 30, 2023, the Group provided interest-free loans totaled US$1.6 million to Tianjin Tuoda to support its normal operations, which was repayable on demand. In June 2023, the Group’s claim on Tianjin Tuoda was transferred to Mr. Alan Nan Wu, resulting in the balance of amounts due from Tianjin Tuoda was nil, and the balance of amounts due from Mr. Alan Nan Wu was US$320 as of June 30, 2023.
In the second half of 2023, the Group continued to provide a series interest-free loans amounting to US$15.7 million to Tianjin Tuoda to support its normal operations. In 2025, the Group continued to provide a series interest-free loans amounting to US$0.1 million to Tianjin Tuoda. As of December 31, 2025 and 2024, US$14.3 and US$13.7 million remains outstanding.
| (iv) | In August 2022, Vision Path, the Group and Hainan Union Management Co., Ltd (“Hainan Union”) entered into a share transfer agreement. Under the agreement, Vision Path would sell its shares of the Group to Hainan Union with an amount of US$5.0 million and provided the amount to the Group as an interest-free loan for two years to support the Group’s normal operations. Among them, US$3.0 million would be due on August 24, 2024 and the rest would be due on September 27, 2024. In 2025, the Group negotiated with Vision Path and consented to have an extension of payment of the total loan to extend the repayment date to December 31, 2026. As of December 31, 2025 and 2024, US$4.7 million is due and in default and the Group does not make any payment to Vision Path. |
As of December 31, 2025, the Group recorded full credit losses for amounts due from related parties based on the management’ estimation of the collectability.
| C. | Interests of Experts and Counsel |
Not applicable.
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Item 8. Financial Information
| A. | Consolidated Statements and Other Financial Information. |
The financial statements required by this item may be found at the end of this report on 20-F, beginning on page F-1.
Legal and Administrative Proceedings
See “Item 4.B. Business Overview – Legal and Administrative Proceedings” for a description of our currently involved legal proceedings.
Dividend Policy
We have never declared or paid any cash dividend on our ordinary shares. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. Any further determination to pay dividends on our ordinary shares would be at the discretion of our board of directors, subject to applicable laws, and would depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our board of directors may deem relevant.
| B. | Significant Changes. |
Except as otherwise disclosed in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included herein.
Item 9. The Offer and Listing
| A. | Offer and listing details. |
Our Class B ordinary shares and warrants commenced trading on The Nasdaq Capital Market on November 14, 2022 under the ticker symbols “NWTN” and “NWTNW,” respectively. We changed the trading symbol for our Class B ordinary shares from “NWTN” to “AIIO,” and the trading symbol for our warrants from “NWTNW” to “AIIOW,” both effective on August 26, 2025.
| B. | Plan of distribution. |
Not applicable.
| C. | Markets |
Our Class B ordinary shares and warrants are listed on the Nasdaq Capital Market under the symbols “AIIO” and “AIIOW,” respectively.
| D. | Selling shareholders. |
Not applicable.
| E. | Dilution. |
Not applicable.
Item 10. Additional Information
| A. | Share capital. |
Not applicable.
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| B. | Memorandum and articles of association. |
We incorporate by reference the description of our memorandum and articles of association, as amended and currently in effect in the Cayman Islands, set forth in our registration statement on Form F-1, as amended, declared effective on January 12, 2026 (File No. 333- 292526).
| C. | Material contracts. |
Al Ataa Agreements
In September 2022, Robo.ai Inc. and one of the PIPE Investors, Al Ataa Investment LLC (“Al Ataa”), entered into a PIPE Subscription Agreement for US$200 million into Robo.ai Inc. Following the execution of PIPE Subscription Agreement, in September 2022, seven shareholders of ICONIQ (“Pledgors”) and Al Ataa entered into a Cash Pledge Agreement, pursuant to which, The Pledgors have agreed to cover Al Ataa’s PIPE investment in Robo.ai Inc. by reimbursing Al Ataa for the difference between the sales price of Al Atta’s holding of Robo.ai Inc. stocks in open market and the US$10.26 book value of Al Atta’s holding shares, if the sales price is lower than the US$10.26 book value, for a period of 24 months. The Pledgors have also agreed to award Al Ataa’s PIPE investment in Robo.ai Inc. by guaranteeing Al Ataa with a minimum 15% annual return on its remaining holding of Robo.ai Inc. shares for a period of 24 months, to be paid on a semi-annual basis. In the event of an investment exit by Al Ataa, any accrued annual 15% return payments must be paid to Al Ataa calculated up to the exit date.
In addition, Robo.ai Inc., First Abu Dhabi Bank PJSC, as escrow agent, and an affiliate entity of Al Ataa entered into an Escrow Agreement for US$100 million as cash pledge for the disbursements stated in the Cash Pledge Agreement in a non-interest-bearing account.
For the years ended December 31, 2023, 2024, and 2025, we incurred financial expenses related to the 15% guaranteed annual return totaling US$30.0 million, US$26.1 million, and nil, respectively. During 2023 and early 2024, we made advance payments to the PIPE Investor amounting to US$15.0 million and US$45.0 million, respectively, on behalf of the Pledgors. As the Pledgors have not reimbursed us for these payments, we recorded amounts due from the Pledgors of US$15.0 million on August 29, 2023 and US$45.0 million on July 1, 2024, respectively, with corresponding credits to additional paid-in capital, reflecting a deemed capital contribution.
Other than those set forth above and those described elsewhere in this annual report, we did not have any other material contracts during the two years immediately preceding the date of this annual report.
| D. | Exchange controls. |
There are a number of regulations governing foreign currency exchange in Mainland China. According to the Notice of the State Administration of Foreign Exchange on Issues Relating to Foreign Exchange Control for Overseas Investment and Financing and Roundtripping by PRC Residents through Special Purpose Vehicles (“SAFE Circular 37”) in July 2014, PRC residents are required to register with the local SAFE branch prior to the establishment or control of an offshore special purpose vehicle (SPV). According to the Notice on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment released in February 2015 by SAFE, as amended in December 2019 (“SAFE Circular 13”), local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendment registration.
Pursuant to the Administrative Measures for the Outbound Investment by Enterprises (the “Outbound Investment Measures”), investors making “outbound investments”, which means investment activities to obtain overseas ownership, right of control, business management right, and other related rights and interests by an enterprise located within the territory of Mainland China, shall go through formalities such as obtaining the relevant approval or filing of the outbound investment project, reporting the relevant information, and cooperating with the NDRC in the supervision and inspection over the outbound investment. With regard to outbound investment projects that are not sensitive project stipulated in the Outbound Investment Measures, only filing is required, and a notice of filing would be issued by the NDRC after completion of filing. According to the Administrative Measures on Overseas Investments, Ministry of Commerce (“MOFCOM”) and the local commerce authorities shall be responsible for implementing administration and supervision of overseas investments. Outbound investments not involving sensitive countries, regions or industries are only subject to filing requirement with the MOFCOM, and enterprises carrying out such outbound investments will obtain the Certificate of Overseas Investments of Enterprises issued by the local MOFCOM after completion of filing.
Based on the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors, or the SAFE Circular 21, the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.
| E. | Taxation. |
Cayman Islands Tax Considerations
The following is a discussion on certain Cayman Islands income tax consequences of an investment in the securities of Robo.ai Inc. The discussion is a general summary of present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor’s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.
Under Existing Cayman Islands Laws
Payments of dividends and capital in respect of our securities will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of the securities nor will gains derived from the disposal of the securities be subject to Cayman Islands income or corporate tax. The Cayman Islands currently has no income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax.
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands companies save for those which hold interests in land in the Cayman Islands. An instrument of transfer in respect of a warrant or Robo.ai Inc. ordinary shares is stampable if executed in or brought into the Cayman Islands.
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The Company has been incorporated under the laws of the Cayman Islands as an exempted company with limited liability and, as such, has applied for and received an undertaking from the Financial Secretary of the Cayman Islands in the following form:
The Tax Concessions Act
(As Revised)
Undertaking as to Tax Concessions
In accordance with the provision of Section 6 of The Tax Concessions Act (As Revised), Robo.ai Inc. (the “Company”) has obtained an undertaking from the Financial Secretary that:
| (1) | no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciations shall apply to the Company or its operations; and |
| (2) | no tax be levied on profits, income gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable by the Company: |
| (a) | on or in respect of the shares, debentures or other obligations of the Company; or |
| (b) | by way of the withholding in whole or part, of any relevant payment as defined in Section 6(3) of the Tax Concessions Act (As Revised). |
The undertaking for the Company is for a period of 20 years from April 28, 2026.
British Virgin Islands
Our subsidiaries incorporated in the British Virgin Islands are not subject to tax on income or capital gains under current BVI law. In addition, upon payments of dividends by these entities to their shareholders, no BVI withholding tax will be imposed.
Dubai
Our subsidiaries incorporated in Dubai are currently not subject to taxation in Dubai, as companies operating in the designated free zones of the UAE and not conducting business activities in the UAE mainland are exempt from corporate taxes or customs duty. See also “Item 3. Key Information — D. Risk Factors — Risks Relating to the Regions in Which We Operate — Uncertainties with respect to the UAE legal system and changes in laws and regulations in the UAE, including with respect to licenses, approvals and taxes, could adversely affect our business.”
Hong Kong
Our subsidiaries incorporated in Hong Kong are subjected to Hong Kong profits tax. With effect from April 1, 2018, a two-tiered profits tax rate regime applies. The profits tax rate for the first HKD 2 million of corporate profits is 8.25%, while the standard profits tax rate of 16.5% remains for profits exceeding HKD 2 million. If no election has been made, the whole of the taxpaying entity’s assessable profits will be chargeable to standard profits tax rate. Because the preferential tax treatment is not elected by the Company, the subsidiary registered in Hong Kong is subject to income tax at a rate of 16.5%.
Mainland China
Generally, our wholly-foreign owned entities and subsidiaries, which are considered Mainland China resident enterprises under tax law in Mainland China, are subject to enterprise income tax on their worldwide taxable income as determined under tax laws in Mainland China and accounting standards at a rate of 25%.
We did not recognize any income tax benefit for the years ended December 31, 2023, 2024, and 2025.
We do not file combined or consolidated tax returns, therefore, losses from individual subsidiaries of the Company may not be used to offset other subsidiaries’ earnings within the Company. Valuation allowance is considered on each individual subsidiary basis. Full valuation allowance had been provided as of December 31, 2023, 2024, and 2025, respectively, in respect of all deferred tax assets as it is considered more likely than not that the relevant deferred tax assets will not be realized in the foreseeable future.
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Material United States Federal Income Tax Considerations
The following discussion is a summary of certain material U.S. federal income tax considerations to U.S. Holders and Non-U.S. Holders (each as defined below) of the ownership and disposition of our Class B ordinary shares and warrants. This discussion applies only to Class B ordinary shares and warrants, as the case may be, that are held as “capital assets” within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) (generally, property held for investment).
The following does not purport to be a complete analysis of all potential tax considerations arising in connection with the ownership and disposal of Class B ordinary shares and warrants. The effects and considerations of other U.S. federal tax laws, such as estate and gift tax laws, alternative minimum or Medicare contribution tax consequences and any applicable state, local or non-U.S. tax laws are not discussed. This discussion is based on the Code, Treasury regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”), in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect the tax consequences discussed below. The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, made significant changes to the U.S. international tax rules, including renaming “global intangible low-taxed income” (GILTI) as “net CFC tested income” (NCTI) and renaming “foreign-derived intangible income” (FDII) as “foreign-derived deduction eligible income” (FDDEI), effective for taxable years beginning after December 31, 2025, and we cannot assure investors as to the impact of these changes on U.S. Holders. Robo.ai Inc. has not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS will not take or a court will not sustain a contrary position to that discussed below regarding the tax consequences discussed below.
This discussion does not address all U.S. federal income tax consequences relevant to a holder’s particular circumstances. In addition, it does not address consequences relevant to holders subject to special rules, including, without limitation:
| ● | regulated investment companies and real estate investment trusts; |
| ● | brokers, dealers or traders in securities; |
| ● | traders in securities that elect to mark to market interested party transactions that require shareholder approval; |
| ● | tax-exempt organizations or governmental organizations; |
| ● | U.S. expatriates and former citizens or long-term residents of the United States; |
| ● | persons holding ordinary shares and/or warrants, as the case may be, as part of a hedge, straddle, constructive sale, or other risk reduction strategy or as part of a conversion transaction or other integrated investment; |
| ● | persons subject to special tax accounting rules as a result of any item of gross income with respect to ordinary shares and/or warrants, as the case may be, being taken into account in an applicable financial statement; |
| ● | persons that actually or constructively own 5% or more (by vote or value) of the ordinary shares; |
| ● | “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; |
| ● | S corporations, partnerships or other entities or arrangements treated as partnerships or other flow-through entities for U.S. federal income tax purposes (and investors therein); |
| ● | U.S. Holders having a functional currency other than the U.S. dollar; |
| ● | persons who hold or received ordinary shares and/or warrants, as the case may be, pursuant to the exercise of any employee stock option or otherwise as compensation; and |
| ● | tax-qualified retirement plans. |
For purposes of this discussion, a “U.S. Holder” is any beneficial owner of Class B ordinary shares and/or warrants, as the case may be, that is for U.S. federal income tax purposes:
| ● | an individual who is a citizen or resident of the United States; |
| ● | a corporation (or other entity taxable as a corporation) created or organized under the laws of the United States, any state thereof, or the District of Columbia; |
| ● | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or; |
| ● | a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (2) has a valid election in effect to be treated as a “United States person” (within the meaning of Section 7701(a)(30) of the Code) for U.S. federal income tax purposes. |
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If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds Class B ordinary shares and/or warrants, the tax treatment of an owner of such entity will depend on the status of the owners, the activities of the entity or arrangement and certain determinations made at the owner level. Accordingly, entities or arrangements treated as partnerships for U.S. federal income tax purposes and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES APPLICABLE TO HOLDERS OF CLASS B ORDINARY SHARES AND WARRANTS WILL DEPEND ON EACH HOLDER’S PARTICULAR TAX CIRCUMSTANCES. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, AND LOCAL, AND NON-U.S. INCOME AND OTHER TAX CONSEQUENCES TO YOU, IN LIGHT OF YOUR PARTICULAR INVESTMENT OR TAX CIRCUMSTANCES, OF ACQUIRING, HOLDING, AND DISPOSING OF CLASS B ORDINARY SHARES AND WARRANTS.
U.S. Holders
Distributions on Class B Ordinary Shares
If Robo.ai Inc. makes distributions of cash or property on the Class B ordinary shares, the gross amount of such distributions (including any amount of foreign taxes withheld) will be treated for U.S. federal income tax purposes first as a dividend to the extent of Robo.ai Inc.’s current and accumulated earnings and profits (as determined for U.S. federal income tax purposes), and then as a tax-free return of capital to the extent of the U.S. Holder’s tax basis, with any excess treated as capital gain from the sale or exchange of the shares. If Robo.ai Inc. does not provide calculations of its earnings and profits under U.S. federal income tax principles, a U.S. Holder should expect all cash distributions to be reported as dividends for U.S. federal income tax purposes. Any dividend will not be eligible for the dividends received deduction allowed to corporations in respect of dividends received from U.S. corporations.
Subject to the discussion below under “— Passive Foreign Investment Company Rules,” dividends received by certain non-corporate U.S. Holders (including individuals) may be “qualified dividend income,” which is taxed at the lower applicable capital gains rate, provided that:
| ● | either (a) the shares are readily tradable on an established securities market in the United States, or (b) Robo.ai Inc. is eligible for the benefits of a qualifying income tax treaty with the United States that includes an exchange of information program; |
| ● | Robo.ai Inc. is neither a PFIC (as discussed below”— Passive Foreign Investment Company Rules”) nor treated as such with respect to the U.S. Holder for Robo.ai Inc.’s in any taxable year in which the dividend is paid or the preceding taxable year; |
| ● | the U.S. Holder satisfies certain holding period requirements; and |
| ● | the U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. |
It is not expected that Robo.ai Inc. will be eligible for benefits of an applicable comprehensive income tax treaty with the United States. In addition, there also can be no assurance that Class B ordinary shares will be considered “readily tradable” on an established securities market in the United States in accordance with applicable legal authorities. Furthermore, Robo.ai Inc. will not constitute a “qualified foreign corporation” for purposes of these rules if it is a PFIC for the taxable year in which it pays a dividend or for the preceding taxable year. See “— Passive Foreign Investment Company Rules.” U.S. Holders should consult their own tax advisors regarding the availability of the lower rate for dividends paid with respect to Class B ordinary shares. Subject to certain exceptions, dividends on Class B ordinary shares will constitute foreign source income for foreign tax credit limitation purposes. If such dividends are qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will be limited to the gross amount of the dividend, multiplied by a fraction, the numerator of which is the reduced rate applicable to qualified dividend income and the denominator of which is the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by Robo.ai Inc. with respect to the Class B ordinary shares generally will constitute “passive category income” but could, in the case of certain U.S. Holders, constitute “general category income.”
Sale, Exchange, Redemption or Other Taxable Disposition of Class B Ordinary Shares and Warrants
Subject to the discussion below under “— Passive Foreign Investment Company Rules,” a U.S. Holder generally will recognize gain or loss on any sale, exchange, redemption or other taxable disposition of Class B ordinary shares or warrants in an amount equal to the difference between (i) the amount realized on the disposition and (ii) such U.S. Holder’s adjusted tax basis in such ordinary shares and/or warrants. Any gain or loss recognized by a U.S. Holder on a taxable disposition of Class B ordinary shares or warrants generally will be capital gain or loss. A non-corporate U.S. Holder, including an individual, who has held the Class B ordinary shares and/or warrants for more than one year generally will be eligible for reduced tax rates for such long-term capital gains. The deductibility of capital losses is subject to limitations.
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Exercise or Lapse of a Warrant
Except as discussed below with respect to the cashless exercise of a warrant, a U.S. Holder generally will not recognize gain or loss upon the acquisition of a Class B ordinary share on the exercise of a warrant for cash. A U.S. Holder’s tax basis in Class B ordinary shares received upon exercise of the warrant generally should be an amount equal to the sum of the U.S. Holder’s tax basis in the warrant received therefore and the exercise price. The U.S. Holder’s holding period for a Class B ordinary share received upon exercise of the warrant will begin on the date following the date of exercise (or possibly the date of exercise) of the warrant and will not include the period during which the U.S. Holder held the warrant. If a warrant is allowed to lapse unexercised, a U.S. Holder that has otherwise received no proceeds with respect to such warrant generally will recognize a capital loss equal to such U.S. Holder’s tax basis in the warrant.
The tax consequences of a cashless exercise of a warrant are not clear under current U.S. federal income tax law. A cashless exercise may be tax-deferred, either because the exercise is not a realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either situation, a U.S. Holder’s basis in the Class B ordinary shares received would equal the U.S. Holder’s basis in the warrants exercised therefore. If the cashless exercise is not treated as a realization event, a U.S. Holder’s holding period in the Class B ordinary shares would be treated as commencing on the date following the date of exercise (or possibly the date of exercise) of the warrants. If the cashless exercise were treated as a recapitalization, the holding period of the Class B ordinary shares would include the holding period of the warrants exercised therefor.
It is also possible that a cashless exercise of a warrant could be treated in part as a taxable exchange in which gain or loss would be recognized in the manner set forth above under “— Sale, Exchange, Redemption or Other Taxable Disposition of Class B Ordinary Shares and Warrants.” In such event, a U.S. Holder could be deemed to have surrendered warrants equal to the number of ordinary shares having an aggregate fair market value equal to the exercise price for the total number of warrants to be exercised. The U.S. Holder would recognize capital gain or loss in an amount generally equal to the difference between (i) the fair market value of the warrants deemed surrendered and (ii) the U.S. Holder’s tax basis in such warrants deemed surrendered. In this case, a U.S. Holder’s tax basis in the Class B ordinary shares received would equal the sum of (i) U.S. Holder’s tax basis in the warrants deemed exercised and (ii) the exercise price of such warrants. A U.S. Holder’s holding period for the Class B ordinary shares received in such case generally would commence on the date following the date of exercise (or possibly the date of exercise) of the warrants.
Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise of warrants, there can be no assurance which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. Holders should consult their own tax advisors regarding the tax consequences of a cashless exercise of warrants.
Possible Constructive Distributions
The terms of each warrant provide for an adjustment to the number of Class B ordinary shares for which the warrant may be exercised or to the exercise price of the warrant in certain events, as discussed under “Description of Warrants.” An adjustment which has the effect of preventing dilution generally is not taxable. A U.S. Holder of a warrant would, however, be treated as receiving a constructive distribution from Robo.ai Inc. if, for example, the adjustment increases the holder’s proportionate interest in Robo.ai Inc.’s assets or earnings and profits (for instance, through an increase in the number of Class B ordinary shares that would be obtained upon exercise of such warrant) as a result of a distribution of cash or other property such as other securities to the holders of the Class B ordinary shares which is taxable to the holders of such shares as described under “— Distributions on Class B Ordinary Shares” above. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. Holder of such warrant received a cash distribution from Robo.ai Inc. equal to the fair market value of such increased interest.
Passive Foreign Investment Company Rules
The treatment of U.S. Holders of the Class B ordinary shares could be materially different from that described above, if Robo.ai Inc. is treated as a PFIC for U.S. federal income tax purposes. A non-U.S. entity treated as a corporation for U.S. federal income tax purposes generally will be a PFIC for U.S. federal income tax purposes for any taxable year if either:
| ● | at least 75% of its gross income for such year is passive income; or |
| ● | at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income. |
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For this purpose, Robo.ai Inc. will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other entity treated as a corporation for U.S. federal income tax purposes in which Robo.ai Inc. owns, directly or indirectly, 25% or more (by value) of the stock.
Based on the current and anticipated composition of the income, assets and operations of Robo.ai Inc. and its subsidiaries, there is a risk Robo.ai Inc. may be treated as a PFIC for the current taxable year. However, there can be no assurances in this regard, nor can there be any assurances that Robo.ai Inc. will not be treated as a PFIC in any future taxable year. Moreover, the application of the PFIC rules is subject to uncertainty in several respects, and Robo.ai Inc. can make no assurances that the IRS will not take a contrary position or that a court will not sustain such a challenge by the IRS.
Whether Robo.ai Inc. or any of its subsidiaries is treated as a PFIC is determined on an annual basis. The determination of whether Robo.ai Inc. or any of its subsidiaries is a PFIC is a factual determination that depends on, among other things, the composition of Robo.ai Inc.’s income and assets, and the market value of its and its subsidiaries’ shares and assets. Changes in the composition of Robo.ai Inc.’s or any of its subsidiaries’ income or composition of Robo.ai Inc.’s or any of its subsidiaries’ assets may cause it to be or become a PFIC for the current or subsequent taxable years. Under the PFIC rules, if Robo.ai Inc. were considered a PFIC at any time that a U.S. Holder owns ordinary shares or warrants, Robo.ai Inc. would continue to be treated as a PFIC with respect to such investment unless (i) it ceased to be a PFIC and (ii) the U.S. Holder made a “deemed sale” election under the PFIC rules. If such election is made, a U.S. Holder will be deemed to have sold its Class B ordinary shares or warrants at their fair market value on the last day of the last taxable year in which Robo.ai Inc. is classified as a PFIC, and any gain from such deemed sale would be subject to the consequences described below. After the deemed sale election, the Class B ordinary shares or warrants with respect to which the deemed sale election was made will not be treated as shares in a PFIC unless Robo.ai Inc. subsequently becomes a PFIC.
For each taxable year that Robo.ai Inc. is treated as a PFIC with respect to a U.S. Holder’s Class B ordinary shares or warrants, the U.S. Holder will be subject to special tax rules with respect to any “excess distribution” (as defined below) received and any gain realized from a sale or disposition (including a pledge) of its Class B ordinary shares (collectively the “Excess Distribution Rules”), unless the U.S. Holder makes a valid QEF election or mark-to-market election as discussed below. Distributions received by a U.S. Holder in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or the U.S. Holder’s holding period for the Class B ordinary shares will be treated as excess distributions. Under these special tax rules:
| ● | the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the Class B ordinary shares; |
| ● | the amount allocated to the current taxable year, and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which Robo.ai Inc. is a PFIC, will be treated as ordinary income; and |
| ● | the amount allocated to each other taxable year will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for each such year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year. |
Under the Excess Distribution Rules, the tax liability for amounts allocated to taxable years prior to the year of disposition or excess distribution cannot be offset by any net operating losses, and gains (but not losses) realized on the sale of the Class B ordinary shares or warrants cannot be treated as capital gains, even though the U.S. Holder holds the Class B ordinary shares or warrants as capital assets.
Certain of the PFIC rules may impact U.S. Holders with respect to equity interests in subsidiaries and other entities which Robo.ai Inc. may hold, directly or indirectly, that are PFICs (collectively, “Lower-Tier PFICs”). There can be no assurance, however, that Robo.ai Inc. does not own, or will not in the future acquire, an interest in a subsidiary or other entity that is or would be treated as a Lower-Tier PFIC. U.S. Holders should consult their own tax advisors regarding the application of the PFIC rules to any of Robo.ai Inc.’s subsidiaries.
If Robo.ai Inc. is a PFIC, a U.S. Holder of Class B ordinary shares (but not warrants) may avoid taxation under the Excess Distribution Rules described above by making a “qualified electing fund” (“QEF”) election. However, a U.S. Holder may make a QEF election with respect to its Class B ordinary shares only if Robo.ai Inc. provides U.S. Holders on an annual basis with certain financial information specified under applicable U.S. Treasury regulations. Robo.ai Inc. will endeavor to provide U.S. Holders with the required information on an annual basis to allow U.S. Holders to make a QEF election with respect to the Class B ordinary shares in the event Robo.ai Inc. is treated as a PFIC for any taxable year. There can be no assurance, however, that Robo.ai Inc. will timely provide such information for the current year or subsequent years. The failure to provide such information on an annual basis could prevent a U.S. Holder from making a QEF election or result in the invalidation or termination of a U.S. Holder’s prior QEF election. In addition, U.S. Holders of warrants will not be able to make a QEF election with respect to their warrants.
In the event Robo.ai Inc. is a PFIC, a U.S. Holder that makes a QEF election with respect to its Class B ordinary shares would generally be required to include in income for each year that Robo.ai Inc. is treated as a PFIC the U.S. Holder’s pro rata share of Robo.ai Inc.’s ordinary earnings for the year (which would be subject to tax as ordinary income) and net capital gains for the year (which would be subject to tax at the rates applicable to long-term capital gains), without regard to the amount of any distributions made in respect of the Class B ordinary shares. Any net deficits or net capital losses of Robo.ai Inc. for a taxable year would not be passed through and included on the tax return of the U.S. Holder, however. A U.S. Holder’s basis in the Class B ordinary shares would be increased by the amount of income inclusions under the qualified electing fund rules. Dividends actually paid on the Class B ordinary shares generally would not be subject to U.S. federal income tax to the extent of prior income inclusions and would reduce the U.S. Holder’s basis in the Class B ordinary shares by a corresponding amount.
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If Robo.ai Inc. owns any interests in a Lower-Tier PFIC, a U.S. Holder generally must make a separate QEF election for each Lower-Tier PFIC, subject to Robo.ai Inc. providing the relevant tax information for each Lower-Tier PFIC on an annual basis.
If a U.S. Holder does not make a QEF election (or a mark-to-market election, as discussed below) effective from the first taxable year of a U.S. Holder’s holding period for the ordinary shares in which Robo.ai Inc. is a PFIC, then the Class B ordinary shares will generally continue to be treated as an interest in a PFIC, and the U.S. Holder generally will remain subject to the Excess Distribution Rules. A U.S. Holder that first makes a QEF election in a later year may avoid the continued application of the Excess Distribution Rules to its Class B ordinary shares by making a “deemed sale” election. In that case, the U.S. Holder will be deemed to have sold the Class B ordinary shares at their fair market value on the first day of the taxable year in which the QEF election becomes effective, and any gain from such deemed sale would be subject to the Excess Distribution Rules described above. A U.S. Holder that is eligible to make a QEF election with respect to its Class B ordinary shares generally may do so by providing the appropriate information to the IRS in the U.S. Holder’s timely filed tax return for the year in which the election becomes effective.
U.S. Holders should consult their own tax advisors as to the availability and desirability of a QEF election.
Alternatively, a U.S. Holder of “marketable stock” (as defined below) may make a mark-to-market election for its Class B ordinary shares to elect out of the Excess Distribution Rules discussed above if Robo.ai Inc. is treated as a PFIC. If a U.S. Holder makes a mark-to-market election with respect to its Class B ordinary shares, such U.S. Holder will include in income for each year that Robo.ai Inc. is treated as a PFIC with respect to such Class B ordinary shares an amount equal to the excess, if any, of the fair market value of the Class B ordinary shares as of the close of the U.S. Holder’s taxable year over the adjusted basis in the Class B ordinary shares. A U.S. Holder will be allowed a deduction for the excess, if any, of the adjusted basis of the Class B ordinary shares over their fair market value as of the close of the taxable year. However, deductions will be allowed only to the extent of any net mark-to-market gains on the Class B ordinary shares included in the U.S. Holder’s income for prior taxable years. Amounts included in income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Class B ordinary shares, will be treated as ordinary income. Ordinary loss treatment will also apply to the deductible portion of any mark-to-market loss on the Class B ordinary shares, as well as to any loss realized on the actual sale or disposition of the Class B ordinary shares, to the extent the amount of such loss does not exceed the net mark-to-market gains for such ordinary shares previously included in income. A U.S. Holder’s basis in the Class B ordinary shares will be adjusted to reflect any mark-to-market income or loss. If a U.S. Holder makes a mark-to-market election, any distributions Robo.ai Inc. makes would generally be subject to the rules discussed above under “— Distributions on Class B Ordinary Shares,” except the lower rates applicable to qualified dividend income would not apply. U.S. Holders of warrants will not be able to make a mark-to-market election with respect to their warrants.
The mark-to-market election is available only for “marketable stock,” which is stock that is regularly traded on a qualified exchange or other market, as defined in applicable U.S. Treasury regulations. The Class B ordinary shares, which are listed on Nasdaq, are expected to qualify as marketable stock for purposes of the PFIC rules, but there can be no assurance that Class B ordinary shares will be “regularly traded” for purposes of these rules. Because a mark-to-market election cannot be made for equity interests in any Lower-Tier PFICs, a U.S. Holder that does not make the applicable QEF elections generally will continue to be subject to the Excess Distribution Rules with respect to its indirect interest in any Lower-Tier PFICs as described above, even if a mark-to-market election is made for Robo.ai Inc.
If a U.S. Holder does not make a mark-to-market election (or a QEF election, as discussed above) effective from the first taxable year of a U.S. Holder’s holding period for the Class B ordinary shares in which Robo.ai Inc. is a PFIC, then the U.S. Holder generally will remain subject to the Excess Distribution Rules. A U.S. Holder that first makes a mark-to-market election with respect to the Class B ordinary shares in a later year will continue to be subject to the Excess Distribution Rules during the taxable year for which the mark-to-market election becomes effective, including with respect to any mark-to-market gain recognized at the end of that year. In subsequent years for which a valid mark-to-mark election remains in effect, the Excess Distribution Rules generally will not apply. A U.S. Holder that is eligible to make a mark-to-market with respect to its Class B ordinary shares may do so by providing the appropriate information on IRS Form 8621 and timely filing that form with the U.S. Holder’s tax return for the year in which the election becomes effective. U.S. Holders should consult their own tax advisors as to the availability and desirability of a mark-to-market election, as well as the impact of such election on interests in any Lower-Tier PFICs.
A U.S. Holder of a PFIC may be required to file an IRS Form 8621 on an annual basis. U.S. Holders should consult their own tax advisors regarding any reporting requirements that may apply to them if Robo.ai Inc. is a PFIC.
U.S. Holders are strongly encouraged to consult their tax advisors regarding the application of the PFIC rules to their particular circumstances.
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Non-U.S. Holders
This section applies to Non-U.S. Holders of Class B ordinary shares and warrants. For purposes of this discussion, a Non-U.S. Holder means a beneficial owner (other than a partnership or an entity or arrangement so characterized for U.S. federal income tax purposes) of Class B ordinary shares or warrants that is not a U.S. Holder, including:
| ● | a nonresident alien individual, other than certain former citizens and residents of the United States; |
| ● | a foreign corporation; or |
| ● | a foreign estate or trust. |
U.S. Federal Income Tax Consequences of the Ownership and Disposition of Class B Ordinary Shares and Warrants to Non-U.S. Holders
Any (i) distributions of cash or property paid to a Non-U.S. Holders in respect of Class B ordinary shares or (ii) gain realized upon the sale or other taxable disposition of ordinary shares and/or warrants generally will not be subject to U.S. federal income taxation unless:
| ● | the gain or distribution is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such gain is attributable); or |
| ● | in the case of any gain, the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met. |
Gain or distributions described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular rates. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.
Gain described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of the Non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.
The U.S. federal income tax treatment of a Non-U.S. Holder’s exercise of a warrant, or the lapse of a warrant held by a Non-U.S. Holder, generally will correspond to the U.S. federal income tax treatment of the exercise or lapse of a warrant by a U.S. Holder, as described under “— U.S. Holders-Exercise or Lapse of a warrant,” above, although to the extent a cashless exercise or lapse results in a taxable exchange, the consequences would be similar to those described in the preceding paragraphs above for a Non-U.S. Holder’s gain on the sale or other disposition of the Class B ordinary shares and warrants.
Non-U.S. Holders should consult their own tax advisors regarding potentially applicable income tax treaties that may provide for different rules.
Information Reporting and Backup Withholding
Information reporting requirements may apply to distributions received by U.S. Holders of Class B ordinary shares, and the proceeds received on sale or other taxable disposition of Class B ordinary shares or warrants effected within the United States (and, in certain cases, outside the United States), in each case other than U.S. Holders that are exempt recipients (such as corporations). Backup withholding (currently at a rate of 24%) may apply to such amounts if the U.S. Holder fails to provide an accurate taxpayer identification number (generally on an IRS Form W-9 provided to the paying agent of the U.S. Holder’s broker) or is otherwise subject to backup withholding. Any distributions with respect to Class B ordinary shares and proceeds from the sale, exchange, redemption or other disposition of Class B ordinary shares or warrants may be subject to information reporting to the IRS and possible U.S. backup withholding. U.S. Holders should consult their own tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Information returns may be filed with the IRS in connection with, and Non-U.S. Holders may be subject to backup withholding on amounts received in respect of, a Non-U.S. Holder’s Class B ordinary shares or warrants, unless the Non-U.S. Holder furnishes to the applicable withholding agent the required certification as to its non-U.S. status, such as by providing a valid IRS Form W-8BEN, IRS Form W-8BEN-E or IRS Form W-8ECI, as applicable, or the Non-U.S. Holder otherwise establishes an exemption. Distributions paid with respect to Class B ordinary shares and proceeds from the sale of other disposition of Class B ordinary shares or warrants received in the United States by a Non-U.S. Holder through certain U.S.-related financial intermediaries may be subject to information reporting and backup withholding unless such Non-U.S. Holder provides proof of an applicable exemption or complies with certain certification procedures described above, and otherwise complies with the applicable requirements of the backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding generally may be credited against the taxpayer’s U.S. federal income tax liability, and a taxpayer may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for a refund with the IRS and furnishing any required information.
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| F. | Dividends and paying agents. |
Not applicable.
| G. | Statement by experts. |
Not applicable.
| H. | Documents on display. |
We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers, and are required to file reports and other information with the SEC. Specifically, we are required to file annually an annual report on Form 20-F within four months after the end of each fiscal year, which is December 31. All information filed with the SEC can be obtained over the internet at the SEC’s website at www.sec.gov. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
In accordance with Nasdaq Stock Market Rule 5250(d), we will post this annual report on Form 20-F on our website at www.roboai.io. In addition, we will provide hard copies of our annual report free of charge to shareholders upon request.
| I. | Subsidiary information. |
Not applicable.
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Risk
We report financial results in U.S. dollars, and a material portion of its sales and operating costs are realized in currencies other than the U.S. dollar. As such, we are exposed to currency risk due to cash, trade and other receivables, borrowings and trade and other payables denominated in foreign currency, being primarily the U.S. dollar. If the value of any currencies in which sales are realized, particularly Renminbi, depreciates relative to the U.S. dollar, our foreign currency revenue will decrease when translated to U.S. dollars for reporting purposes. In addition, any depreciation in foreign currencies could result in higher local prices, which may negatively impact local demand and have a material adverse effect on our business, results of operations or financial condition. Alternatively, if the value of any of the currencies in which operating costs are realized appreciates relative to the U.S. dollar, our operating costs will increase when translated to U.S. dollars for reporting purposes.
Item 12. Description of Securities Other Than Equity Securities
A. Debt Securities
Not applicable.
B. Warrants and Rights
Public and Private Warrants
As of April 27, 2026, there were 12,874,392 outstanding warrants of the Company. Each warrant (other than the Representative’s Warrants, as defined and described below) represents the right to purchase one-half (1/2) of one Class B ordinary share at a price of $11.50 per share, subject to adjustment as discussed below, until November 14, 2027. No public warrants are exercisable for cash unless we have an effective and current registration statement covering the ordinary shares issuable upon exercise of such warrants and a current prospectus relating to such ordinary shares. Pursuant to the Amendment to Warrant Agreement that we entered into in connection with the consummation of the Business Combination, a copy of which is filed as Exhibit 10.1 to our Form 6-K filed with the SEC on November 21, 2022, and incorporated herein by reference, Robo.ai Inc. will bear all fees and expenses attendant to registering the securities, other than underwriting commissions, which will be paid for by the holders themselves. Notwithstanding the foregoing, if a registration statement covering the shares issuable upon exercise of such warrants is not effective within a specified period following the Closing of the Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period during which we have failed to maintain an effective registration statement, exercise warrants on a cashless basis in the same manner as if we had called the warrants for redemption and required all holders to exercise their warrants on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose will mean the average reported last sale price of our ordinary shares for the ten (10) trading days ending on the trading day prior to the date of exercise. The public warrants will become exercisable on the later of the Closing Date and 12 months from February 24, 2021 and will expire on the fifth (5th) anniversary of the Closing Date.
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Our private warrants are identical to the public warrants, except that such private warrants are be exercisable for cash (even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective) or on a cashless basis, at the holder’s option, and are not redeemable by us, in each case so long as they are still held by the initial purchasers or their affiliates. In addition, for as long as the private warrants are held by I-Bankers or their respective designees or affiliates, they may not be exercised after February 19, 2025.
The Representative’s Warrants (as defined below) are identical to our public warrants, except that each Representative Warrant is exercisable to purchase one full Class B ordinary share at $12.00 per share. Such warrants are not redeemable for as long as they are held by I-Bankers or their respective designees or affiliates, and they may not be exercised after February 24, 2025.
We may call the warrants for redemption (excluding the private warrants and the Representative’s Warrants), in whole and not in part, at a price of $0.01 per warrant,
| ● | at any time while the warrants are exercisable; |
| ● | upon not less than 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption. |
The right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such warrant.
The redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants.
If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. In this case, the “fair market value” will mean the average reported last sale price of the ordinary shares traded in the form of Class B ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of our Class B ordinary shares at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive stock issuances.
The exercise price and number of Class B ordinary shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below their respective exercise prices.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of ordinary shares and any voting rights until they exercise their warrants and receive ordinary shares. After the issuance of ordinary shares upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.
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Warrant holders may elect to be subject to a restriction on the exercise of their warrants such that an electing warrant holder would not be able to exercise their warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% (or such other amount specified by the holder) of the ordinary shares outstanding.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up or down to the nearest whole number the number of ordinary shares to be issued to the warrant holder.
Representative’s Warrants
On February 24, 2020, East Stone issued an aggregate of 690,000 warrants of East Stone (“Representative’s Warrants”), exercisable at $12.00 per full share, to I-Bankers and EarlyBird, in connection with their services as underwriters for East Stone’s IPO. In connection with the Closing of the Business Combination, each outstanding Representative’s Warrant was converted into one warrant of Robo.ai Inc. that entitles the holder thereof to purchase one full Class B ordinary share of Robo.ai Inc. in lieu of one ordinary share of East Stone. The Representative’s Warrants may be exercised for cash or on a cashless basis, at the holder’s option, at any time during the period commencing on the later of the first anniversary of the effective date of the IPO registration statement of East Stone and the closing of East Stone’s initial business combination and terminating on the fifth anniversary of such effectiveness date. The underwriters have each agreed that neither it nor its designees will be permitted to exercise the warrants after the five-year anniversary of the effective date of the registration statement.
The Representative’s Warrants and such shares purchased pursuant to the Representative’s Warrants have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 360 days immediately following the date of the effectiveness of the IPO registration statement of East Stone pursuant to FINRA Rule 5110(g)(1). Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 360 days immediately following the effective date of the registration statement, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 360 days immediately following the effective date of the IPO registration statement of East Stone except to any underwriter and selected dealer participating in the IPO and their bona fide officers or partners. The Representative’s Warrants grant to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the effective date of the IPO registration statement of East Stone with respect to the registration under the Securities Act of the ordinary shares issuable upon exercise of the Representative’s Warrants. The exercise price and number of ordinary shares issuable upon exercise of the Representative’s Warrants may be adjusted in certain circumstances including in the event of a share dividend, or Robo.ai Inc.’s recapitalization, reorganization, merger or consolidation. However, the Representative’s Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price.
C. Other Securities
Not applicable.
D. American Depositary Shares
Not applicable.
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PART II
Item 13. Defaults, Dividends Arrearages and Delinquencies
None.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Material Modifications to the Rights of Security Holders
See “Item 10. Additional Information – B. Memorandum and Articles of Association” for a description of the rights of securities holders, which remain unchanged.
Use of Proceeds
Not applicable.
Item 15. Controls and Procedures
| (a) | Disclosure Controls and Procedures. |
As of December 31, 2025 (the “Evaluation Date”), the Company, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were ineffective due to the existence of a material weakness, which is further described below.
| (b) | Management’s Annual Report on Internal Control over Financial Reporting. |
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of our chief executive officer and chief financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purpose in accordance with U.S. GAAP.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the framework set forth in the report Internal Control – Integrated framework issued in 2013 by the Committee of Sponsoring Organization of the Treadway Commission, or COSO. The COSO framework summarizes each of the components of a company’s internal control system, including (1) the control environment, (2) risk assessment, (3) control activities, (4) information and communication and (5) monitoring.
Based on that evaluation, management concluded that these controls were ineffective at December 31, 2025 due to certain material weaknesses. The material weaknesses identified relate to (i) our Company’s lack of sufficient competent financial reporting and accounting personnel with appropriate understanding of U.S. GAAP and financial reporting requirements set forth by the SEC to address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial statements, including disclosure notes, in accordance with U.S. GAAP and SEC financial reporting requirements, (ii) our Company’s lack of period end financial closing policies and procedures for preparation of consolidated financial statements, including disclosure notes, which are in compliance with U.S. GAAP and relevant SEC financial reporting requirements, (iii) our Company’s lack of internal file management procedures and an effective record management system which causes the deficiency in liability recording and cut-off evaluation process, and (iv) our Company’s lack of sufficient approval process for expenditures. The deficiency may result in material errors going unnoticed or unauthorized transactions being processed.
To remediate our identified material weaknesses, we plan to adopt measures to improve our internal control over financial reporting, including, among others: (i) hiring additional qualified accounting and financial personnel with appropriate knowledge and experience in U.S. GAAP and SEC reporting requirements, (ii) organizing regular training for our accounting staffs, especially training related to U.S. GAAP and SEC reporting requirements, (iii) formulating U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed and updated, on a regular basis, to the latest U.S. GAAP accounting standards, (iv) establishing period end financial closing policies and procedures for preparation of consolidated financial statements, (v) establishing internal document management policies and systems, and (vi) continuing our efforts to implement necessary reviews and controls at relevant levels with all important documents and contracts submitted for proper and sufficient reviews.
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| (c) | Attestation report of the registered public accounting firm. |
Not applicable.
| (d) | Changes in internal control over financial reporting. |
Management continues to focus on internal control over financial reporting. Following the identification of the material weaknesses and control deficiencies, we have taken remedial measures, including (i) hiring external financial consultants with experience in U.S. GAAP and SEC reporting obligations; and (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel. We plan to continue implementing the following remedial initiatives including engaging more qualified accounting personnel and consultants with relevant U.S. GAAP and SEC reporting experience and qualification to strengthen the financial reporting and U.S. GAAP training and to set up a financial and system control framework.
Other than as described above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16.
Item 16A. Audit committee financial expert
The Company’s board of directors has determined that Elizabeth Ching Yee Chung qualifies as an “audit committee financial expert” in accordance with applicable Nasdaq standards. The Company’s board of directors has also determined that Elizabeth Ching Yee Chung and the other members of the Audit Committee are all “independent” in accordance with the applicable Nasdaq standards.
Item 16B. Code of Ethics
We have adopted a Code of Ethics that applies to all of our employees, officers, and directors. This includes our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions. We intend to disclose on our website any future amendments of the Code of Ethics or waivers that exempt any principal executive officer, principal financial officer, principal accounting officer or controller, persons performing similar functions, or our directors from provisions in the Code of Ethics.
Item 16C. Principal Accountant Fees
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered and billed by Assentsure PAC (“Assentsure”), our independent registered public accounting firm, for the periods indicated.
| For the Year Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| US$ | US$ | |||||||
| (in thousands) | ||||||||
| Audit fees(1) | 450 | — | ||||||
| Audit related fees(2) | — | — | ||||||
| Tax fees(3) | — | — | ||||||
| Other fees(4) | — | — | ||||||
| Total | 450 | — | ||||||
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered and billed by Onestop Assurance PAC (“Onestop”), our independent registered public accounting firm, for the periods indicated.
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| For the Year Ended December 31, | ||||||||
| 2024 | 2025 | |||||||
| US$ | US$ | |||||||
| (in thousands) | ||||||||
| Audit fees(1) | — | 215 | ||||||
| Audit related fees(2) | — | — | ||||||
| Tax fees(3) | — | — | ||||||
| Other fees(4) | — | — | ||||||
| Total | — | 215 | ||||||
Note:
| (1) | “Audit fees” means the aggregate fees billed for professional services rendered by our principal external auditor, including the audits of our annual financial statements and our internal controls over financial reporting and the quarterly reviews of our condensed consolidated financial information, statutory audits for certain of our subsidiaries, and provision of comfort letters, consents and other professional services in relation to our equity and debt offering, Hong Kong listing and Singapore listing. |
| (2) | “Audit related fees” means the aggregate fees billed for professional services rendered by our principal external auditor that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit fees.” |
| (3) | “Tax fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal external auditor for tax compliance, tax advice and tax planning. |
| (4) | “All other fees” means the aggregate fees billed for professional services rendered by our principal external auditor associated with other advisory services. |
The policy of our audit committee is to pre-approve all audit and other services provided by Assentsure, Onestop, and their affiliates, including audit services, tax services and other services described above, other than those for de minimis services which are approved by the Audit Committee prior to the completion of the audit.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not Applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 16F. Change in Registrant’s Certifying Accountant
On January 9, 2025, the audit committee of the Company dismissed Marcum Asia CPAs LLP (“Marcum Asia”) as its independent registered public accounting firm. Marcum Asia’s report on the financial statements for the years end December 31, 2022 and 2021 did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principle, except for an explanatory paragraph regarding the change in accounting principles. However, as described below, the financial statements on which the report was issued contained errors and should not be relied upon.
During the two most recent fiscal years ended December 31, 2022 and through the subsequent Interim Period up to and including the date of Marcum Asia’s dismissal, there were no “disagreements” (as that term is defined in Item 16F(a)(1)(iv) of Form 20-F) between the Company and Marcum Asia on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which, if not resolved to the satisfaction of Marcum Asia, would have caused them to make reference to the subject matter of the disagreement in connection with their report on the Company’s financial statements for those periods. Other than as described below, there were no reportable events (as that term is described in Item 16F(a)(1)(v) of Form 20-F) during the two fiscal years ended December 31, 2022 and 2021 or in the subsequent period up to and including the date of Marcum Asia’s dismissal.
As disclosed in the Company’s report on Form 6-K filed on July 22, 2024, the audit committee and the management of the Company, after discussion with Marcum Asia, concluded that the audited financial statements for the year ended December 31, 2022, which were included in the Original Form 20-F, and the unaudited financial statements for the six months ended June 30, 2023 should no longer be relied upon and should be restated to reflect the appropriate accounting treatment for seven shareholders’ borrowings from the Company to satisfy their guarantee obligations at the Affected Periods under the Al Ataa Agreements.
Additionally, Marcum advised the Company that it would need to support that the shareholders’ borrowings discussed in the preceding paragraph was permitted under SOX 402(b). A review by a legal firm retained by the audit committee has not been completed as of the date hereof.
The Company had material weaknesses in its internal controls over financial reporting relating to (i) a lack of full-time accounting and financial reporting personnel with appropriate knowledge of U.S. GAAP and the SEC reporting and compliance requirements and (ii) a lack of an effective review by management for the year end accounting close and reporting. The errors in the Company’s financial statements for the Affected Periods were largely attributable to weak controls at the time when the Al Ataa Agreements became effective. The Company has also determined that its internal control over financial reporting was not effective as of December 31, 2023 and is in the process of implementing a remediation plan to address its control deficiencies.
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The Company has provided a copy of the foregoing disclosures to Marcum Asia and requested that Marcum Asia furnish it with a letter addressed to the SEC stating whether Marcum Asia agrees with the above statements. A copy of Marcum Asia’s letter, dated January 13, 2025, was filed as Exhibit 16.1 to the Company’s report on Form 6-K filed with the SEC on January 14, 2025.
On January 9, 2025, the audit committee of the Company approved the appointment of AssentSure as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2023, 2022 and 2021 and interim six-month periods ended June 30, 2024 and 2023, subject to completion of its standard client acceptance procedures. During the two most recent fiscal years and in the subsequent interim period through the appointment of AssentSure, the Company has not consulted with AssentSure with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that would have been rendered on the Company’s consolidated financial statements, or any other matters set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
On September 24, 2025, the Company announced the dismissal of Assentsure PAC and appointment of Onestop Assurance PAC as the Company’s independent registered accounting firm for the fiscal year ending December 31, 2025, effective September 15, 2025. The appointment of Onestop and decision not to re-engage Assentsure PAC have been approved by the audit committee and the board of directors of the Company.
Assentsure PAC’s reports on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2024 and 2023 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2024 and 2023 and the subsequent interim period through September 15, 2025, (i) there were no disagreements as that term is defined in Item 16F(a)(1)(iv) of Form 20-F, between the Company and Assentsure PAC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, any of which that, if not resolved to Assentsure PAC’s satisfaction, would have caused Assentsure PAC to make reference to the subject matter of any such disagreement in connection with its reports for such years and interim period, and (ii) there were no reportable events within the meaning of Item 16F(a)(1)(v) of Form 20-F.
The Company has provided a copy of the foregoing disclosures to Assentsure PAC and requested that Assentsure PAC furnish them with a letter addressed to the SEC stating whether Assentsure PAC agrees with the above statements. A copy of Assentsure PAC’s letter, dated September 24, 2025, was filed as Exhibit 16.1 to the Company’s report on Form 6-K filed with the SEC on September 24, 2025.
During the Company’s fiscal years ended December 31, 2024 and December 31, 2023 and the subsequent interim period through September 15, 2025, neither the Company nor anyone on its behalf has consulted with Onestop regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that Onestop concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, (ii) any matter that was the subject of a disagreement as that term is defined in Item 16F(a)(1)(iv) of Form 20-F, or (iii) any reportable event within the meaning of Item 16F(a)(1)(v) of Form 20-F.
Item 16G. Corporate Governance
Our Class B ordinary shares and warrants are listed on the Nasdaq Capital Market. As such, we are subject to corporate governance requirements imposed by Nasdaq. Under Nasdaq rules, listed non-US companies such as ourselves may, in general, follow their home country corporate governance practices in lieu of some of the Nasdaq corporate governance requirements.
Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. The following summarizes some significant ways in which our corporate governance practices may differ from those followed by domestic companies under the listing standards of the Nasdaq.
Pursuant to the home country rule exemption set forth under Nasdaq Listing Rule 5615(a)(3)(A), which provides (with certain exceptions not relevant to the conclusions expressed herein) that a foreign private issuer may follow its home country practice in lieu of the requirements of the Nasdaq Marketplace Rule 5600 Series, we elected to be exempt from the requirements as follows:
| (i) | Nasdaq Listing Rule 5620 which provides that (a) (with certain exceptions not relevant to the conclusions expressed herein) each company listing common stock or voting preferred stock, and their equivalents, shall hold an annual meeting of shareholders no later than one year after the end of the company’s fiscal year-end; (b) each Company that is not a limited partnership shall solicit proxies and provide proxy statements for all meetings of Shareholders and shall provide copies of such proxy solicitation to Nasdaq; and (c) quorum requirements for the shareholders’ meeting; |
| (ii) | Nasdaq Listing Rule 5635 which sets forth (A) the circumstances under which shareholder approval is required prior to an issuance of securities in connection with: (a) the acquisition of the stock or assets of another company, (b) equity-based compensation of officers, directors, employees or consultants, (c) a change of control, and (d) transactions other than public offerings; (B) general provisions relating to shareholder approval; and (C) the financial viability exception to the shareholder approval requirement; and |
| (iii) | Nasdaq Listing Rule 5250(b)(3) which sets forth the requirement to disclose third party director and nominee compensation; and |
| (iv) | Nasdaq Listing Rule 5250(d) which sets forth the requirement to distribute annual and interim reports. |
96
We will make appropriate disclosures of any noncompliant practice in our filings with the SEC or our website as required by Nasdaq.
Except for the foregoing, there is no significant difference between our corporate governance practices and what the Nasdaq requires of domestic U.S. companies.
Item 16H. Mine Safety Disclosure
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 16J. Insider Trading Policies
On January 26, 2024, we
The foregoing description of the Insider Trading Policy does not purport to be complete and is qualified in its entirety by the terms and conditions of the Insider Trading Policy, a copy of which is attached hereto as Exhibit 11.2 and is incorporated herein by reference.
Item 16K. Cybersecurity
The Company has established and maintains a cybersecurity
risk management policy, mainly comprising procedures and regulations for website and email security and management, responsibilities and
authorities for relevant departments, and rewards and penalties measures aimed at mitigating risks.
Risk assessments are conducted periodically or adjusted based on evolving business needs, covering risks that could hinder the Company’s objectives and those specifically related to data security compromises. Each identified risk is evaluated based on its impact and likelihood of occurrence, with high-scoring risks receiving prompt attention. Risks are analyzed to determine whether they meet the Company’s risk acceptance criteria for toleration or require a mitigation plan.
Cybersecurity threat oversight is led by the Chief Executive Officer, who is responsible for providing solutions if any cybersecurity incidents occur.
The
As of the date of this annual report, there are
97
PART III
Item 17. Financial Statements
We have elected to provide financial statements pursuant to Item 18.
Item 18. Financial Statements
The consolidated financial statements of Robo.ai Inc. are included at the end of this annual report, beginning with page F-1.
Item 19. Exhibits
98
| * | Filed herewith. |
| ** | Furnished herewith. |
99
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| Robo.ai Inc. | ||
| By: | /s/ Benjamin Bin Zhai | |
| Benjamin Bin Zhai | ||
| Chief Executive Officer | ||
Date: April 30, 2026
100
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Robo.ai Inc. (formerly known as NWTN Inc.)
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Robo.ai Inc. and its subsidiaries (collectively, the “Group”) as of December 31, 2025, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity (deficit), and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Material Uncertainty relating to Going Concern
The accompanying consolidated financial statements have been prepared assuming that Robo.ai Inc. (the “Company”) will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred recurring losses from operations, including a net loss of approximately US$167.6 million for the year ended December 31, 2025, and has experienced negative operating cash flows of approximately US$5.1 million for the same period. As of December 31, 2025, the Company also has a net working capital deficit of approximately US$116.6 million. These conditions, together with other matters described in Note 2, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
We have served as the Company’s auditor since 2025
April 30, 2026
F-2
 |
Assentsure PAC |
| UEN – 201816648N | |
| 180B Bencoolen Street #03-01 | |
| The Bencoolen Singapore 189648 | |
| http://www.assentsure.com.sg |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of NWTN Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of NWTN Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in shareholders’ (deficit) equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph - Going Concern
The accompanying consolidated financial statements have been prepared assuming that NWTN Inc. (the “Company”) will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred recurring operating losses and has an accumulated deficit of approximately $737.0 million as of December 31, 2024. Although the Company reported positive cash flows from operating activities during 2024, it continued to experience significant financial strain, including a substantial decline in unrestricted cash to approximately $0.1 million at year-end. The Company remains highly dependent on external financing and is also subject to litigation and guarantee obligations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in accordance with the auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Assentsure PAC
Singapore
June 10, 2025
We have served as the Company’s auditor since
2025.
PCAOB ID Number 6783
F-3
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
CONSOLIDATED BALANCE SHEETS
(In U.S. dollars in thousands, except for share and per share data, or otherwise noted)
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Advance to suppliers, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other current assets, net | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Advance from customers | ||||||||
| Loans from a third party | ||||||||
| Warrant liabilities | ||||||||
| Amounts due to related parties | ||||||||
| Convertible notes | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Lease liabilities, current | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Lease liabilities, non-current | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| Shareholders’ deficit | ||||||||
| Class A Ordinary shares* (par value of US$ | ||||||||
| Class B Ordinary Shares* (par value of US$ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Robo.ai Shareholders’ deficit | ) | ( | ) | |||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| Total Shareholders’ deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
ROBO.AI INC.
(FORMERLY
KNOWN AS NWTN Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In U.S. dollars in thousands, except for share and per share data, or otherwise noted)
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Net revenue | $ | $ | $ | |||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit (loss) | ( | ) | ||||||||||
| Operating expenses: | ||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Selling expenses | ( | ) | ( | ) | ( | ) | ||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Other loss: | ||||||||||||
| Other income (expenses), net | ( | ) | ( | ) | ||||||||
| Interest expenses, net | ( | ) | ( | ) | ( | ) | ||||||
| Financial expenses | ( | ) | ( | ) | ||||||||
| Impairment of property and equipment | ( | ) | ||||||||||
| Loss of impairment on investments | ( | ) | ||||||||||
| Changes in fair value of warrant liabilities | ( | ) | ||||||||||
| Change in fair value of convertible notes | ( | ) | ||||||||||
| Total other loss | ( | ) | ( | ) | ( | ) | ||||||
| Loss before income tax provision | ( | ) | ( | ) | ( | ) | ||||||
| Income tax provision | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Less: Net loss contributed to noncontrolling interests | ( | ) | ( | ) | ( | ) | ||||||
| Net loss attributable to Robo.ai’ s shareholders | ( | ) | ( | ) | ( | ) | ||||||
| Other comprehensive (loss) gain | ||||||||||||
| Foreign currency translation (loss) gain | ( | ) | ( | ) | ||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Loss per ordinary share attributable to shareholders | ||||||||||||
| Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Weighted average number of ordinary shares outstanding* | ||||||||||||
| Basic and Diluted | ||||||||||||
Note:
(1) Share-based compensation expenses were allocated as follows:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| General and administrative expenses | $ | $ | $ | |||||||||
| Total | $ | $ | $ | |||||||||
| * | Earnings per share have been retrospectively restated to reflect the effect of reverse stock split effective on April 1, 2026 (see Note 28). |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
(In U.S. dollars in thousands, except for share and per share data, or otherwise noted)
| Class A Ordinary shares* | Class B Ordinary shares* | Subscription | Additional paid-in | Accumulated | Accumulated other comprehensive | Total Company’s equity | Non-controlling | Total shareholders’ equity | ||||||||||||||||||||||||||||||||||||
| Share | Amount | Share | Amount | receivables | capital | deficit | Loss | (deficit) | interests | (deficit) | ||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Liabilities obligated by shareholders (Note 9) | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Execution of warrants to ordinary shares | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares** | ** | |||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | | $ | ( | ) | $ | |||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Liabilities obligated by shareholders (Note 9) | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ( | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||
| Net loss | - | - | ) | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for debt extinguishment | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares to acquire | ||||||||||||||||||||||||||||||||||||||||||||
| Contribution from shareholders | ||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||
| * | |
| ** | |
| *** |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
ROBO.AI INC.
(FORMERLY
KNOWN AS NWTN Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars in thousands, except for share and per share data, or otherwise noted)
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Amortization of operating lease right-of-use asset | ||||||||||||
| Changes in fair value of warrant liabilities | ( | ) | ( | ) | ||||||||
| Change in fair value of convertible notes | ||||||||||||
| Issuance costs and discount on convertible notes | ||||||||||||
| Loss of impairment on investments | ||||||||||||
| Impairment of property and equipment | ||||||||||||
| Disposal loss of property and equipment | ||||||||||||
| Lawsuit provision | ||||||||||||
| Inventory write-down | ||||||||||||
| Inventory write-off | ||||||||||||
| Allowance for expected credit losses | ||||||||||||
| Impairment loss of advance to suppliers and prepaid expenses and other current assets | ||||||||||||
| Financial expenses on PIPE | ||||||||||||
| Gain from dissolution of a subsidiary | ||||||||||||
| Interests on loans from a third party | ||||||||||||
| Interests on loans from a related party | ||||||||||||
| Expense paid by the related parties on behalf of the Group | ||||||||||||
| Share-based compensation | ||||||||||||
| Accounts payable exemption treated as capital injection | ||||||||||||
| Loss on early termination of operating lease | ||||||||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts receivable, current | ( | ) | ||||||||||
| Advance to supplier | ( | ) | ||||||||||
| Inventories | ||||||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||||||
| Accounts receivable, non-current | ( | ) | ||||||||||
| Amounts due from/due to related parties | ||||||||||||
| PIPE escrow account | ||||||||||||
| Operating lease | ( | ) | ( | ) | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||||||
| Advance from customers | ( | ) | ( | ) | ||||||||
| Accrued expenses and other current liabilities | ||||||||||||
| Net cash (used in) provided by operating activities | ( | ) | ( | ) | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||||||
| Purchases of intangible asset | ( | ) | ( | ) | ( | ) | ||||||
| Proceeds from disposal of property and equipment | ||||||||||||
| Loan to a related party | ( | ) | ( | ) | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Loan proceeds from related parties | ||||||||||||
| Repayments of loan from a related party | ( | ) | ( | ) | ||||||||
| Repayments of loan from third parties | ( | ) | ||||||||||
| Proceeds from convertible notes | ||||||||||||
| Proceeds from shareholder contributions | ||||||||||||
| Payments of financial expenses | ( | ) | ( | ) | ||||||||
| Proceeds from execution of warrants | ||||||||||||
| Net cash provided by (used in) financing activities | ( | ) | ( | ) | ||||||||
| Effect of exchange rate changes | ( | ) | ( | ) | ||||||||
| Net increase/(decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents and restricted cash, at beginning of the period | ||||||||||||
| Cash and cash equivalents and restricted cash, at end of the period | $ | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURE OF NON CASH FLOW INFORMATION: | ||||||||||||
| Expenses paid by related parties on behalf of the Company | $ | $ | $ | |||||||||
| Issuance of shares to acquire16.58% equity interest in Aitos (Note 7 and Note 22) | $ | $ | $ | |||||||||
| Issuance of shares for debt extinguishment | $ | $ | $ | |||||||||
| Issuance of shares to settle employee compensation liabilities | $ | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
| Interest paid | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
ICONIQ HOLDING LIMITED (“ICONIQ”) was incorporated under the laws of the Cayman Islands on March 11, 2021 as an exempted company with limited liability.
On April 15, 2022, ICONIQ entered into a business combination agreement, as amended on September 28, 2022 (the “Business Combination Agreement”), with (i) East Stone Acquisition Corporation, a British Virgin Islands business company (“East Stone” or the “Purchaser”), (ii) Navy Sail International Limited, a British Virgin Islands company, in the capacity as the representative of East Stone and the shareholders of East Stone immediately prior to Closing from and after the Closing (the “Purchaser Representative”), (iii) Robo.ai Inc. (“Robo.ai,” formerly known as NWTN Inc. prior to August 15, 2025, the “Company” or “Pubco”), an exempted company incorporated with limited liability in the Cayman Islands, (iv) Muse Merger Sub I Limited, an exempted company incorporated with limited liability in the Cayman Islands and a wholly-owned subsidiary of the Pubco (the “First Merger Sub”), and (v) Muse Merger Sub II Limited, a British Virgin Islands business company and a wholly-owned subsidiary of Pubco (the “Second Merger Sub”).
Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination Agreement (the “Closing”), (a) the First Merger Sub will merge with and into the Company (the “First Merger”), with the Company surviving the First Merger as a wholly-owned subsidiary of Pubco and the outstanding shares of the Company being converted into the right to receive shares of Pubco; and (b) the Second Merger Sub will merge with and into East Stone (the “Second Merger”, and together with the First Merger, the “Mergers”), with East Stone surviving the Second Merger as a wholly-owned subsidiary of the Pubco and the outstanding securities of East Stone being converted into the right to receive substantially equivalent securities of the Pubco (the Mergers together with the other transactions contemplated by the Business Combination Agreement and other ancillary documents, the “Transactions”).
The Company and its subsidiaries primarily engage in smart electric vehicles design and development through its direct or indirectly owned subsidiaries (collectively, the “Group”) in the People’s Republic of China (“PRC” or “China”).
Reverse recapitalization
On November 11, 2022 (the “Closing Date”), East stone and NWTN consummated the closing of the Transaction of East Stone and NWTN, following the approval at a Special Meeting of the shareholders on November 10, 2022. Following the consummation of the Transaction, ICONIQ as a wholly-owned subsidiary of NWTN and the outstanding shares of ICONIQ being converted into the right to receive shares of NWTN, the combined company will retain the NWTN name.
ICONIQ was determined to be the accounting acquirer
given ICONIQ effectively controlled the combined entity after the transaction. The transaction is not a business combination because East
Stone was not a business. The transaction is accounted for as a reverse recapitalization, which is equivalent to the issuance of shares
by ICONIQ for the net monetary assets of the Company, accompanied by a recapitalization. ICONIQ is determined as the accounting acquirer
and the historical financial statements of ICONIQ became the Company’s historical financial statements, with retrospective adjustments
to give effect of the reverse recapitalization. All of the Class A ordinary shares of ICONIQ that were issued and outstanding immediately
prior to the First Merger were cancelled and converted into an aggregate of
The par value of ordinary shares remained US$
F-8
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN
Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
1. ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)
History of the Group and Reorganization
The Company commenced its operation through Tianjin Tianqi Group Co., Ltd (“Tianqi Group”) since 2017.
In preparation for its IPO, the Group completed a reorganization (the “Reorganization”) on January 19, 2022, which involved the following steps:
| ● | Formation of ICONIQ, ICONIQ Motors Limited, ICONIQ Global Limited, ICONIQ (Tianjin) Investment Co. Ltd (“WFOE”), ICONIQ Green Technology FZCO (“FZCO”), ICONIQ (Tianjin) Motors Ltd. |
| ● | WFOE obtained |
The shareholders and their respective equity interests in the entities remain similar immediately before and after the capital injection in Tianqi Group. Accordingly, the combination has been treated as a corporate restructuring (reorganization) of entities under common control and thus the current capital structure has been retroactively presented in prior periods as if such structure existed at that time, the entities under common control are presented on a combined basis for all periods to which such entities were under common control (“Reorganization”). Since all of the subsidiaries were under common control for the entirety of the years ended December 31, 2025, 2024 and 2023, the results of these subsidiaries are included in the financial statements for both periods, and the equity has been restated to reflect the change as well.
As of December 31, 2025, the details of the Company’s subsidiaries are as follows.
| Name | Date of Incorporation | Place of incorporation | Percentage of ownership | Principal Activities | ||||
| ICONIQ | ||||||||
| FZCO | ||||||||
| NWTN Technology USA INC. | ||||||||
| NWTN Automobile Cars Trading Sole Proprietary LLC | ||||||||
| NWTN Technologies Industries Solo Proprietorship L.L.C. | ||||||||
| ICONIQ Motors Limited | ||||||||
| ICONIQ Global Limited | ||||||||
| Suez Top Ventures Limited | ||||||||
| ICONIQ (Tianjin) Investment Co. Ltd (“WFOE”) | ||||||||
| ICONIQ (Tianjin) Motors Co., Ltd. | ||||||||
| NWTN (Zhejiang) Motors Limited (“NWTN Zhejiang”) | ||||||||
| NWTN Smart Motors Shenzhen New Technology Limited | ||||||||
| Tianqi Group | ||||||||
| Shanghai Zunyu Automobile Sales Co., Ltd. (“Shanghai Zunyu”) | ||||||||
| Shanghai ICONIQ New Energy Development Co., Ltd. (“Shanghai ICONIQ”) | ||||||||
| Tianjin Tianqi New Energy Automobile Co., Ltd. (“Tianjin Tianqi”) | ||||||||
| East Stone | ||||||||
| NWTN General Trading Sole Proprietary LLC | ||||||||
| NWTN Green Energy Co. | ||||||||
| Robo.ai Investment | Investm ent holding | |||||||
| NWTN holding limited | ||||||||
| NWTN Global Energy Co. LTD | ||||||||
| Astra Mobility Meta (Cayman Islands) Limited (“Astra”) * |
| * |
F-9
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
2. GOING CONCERN
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. For the years ended December 31, 2025, 2024 and 2023, the
Company incurred significant and recurring operating losses of approximately US$
Historically, the Company has relied on financing from existing shareholders and third-party investors as its primary sources of liquidity. In order to address its liquidity needs and improve its financial position, management has implemented or plans to implement the following actions:
| 1. | Disposal of ICONIQ Holding Limited. In February 2026, the Company completed the disposal of ICONIQ Holding Limited, which management expects will eliminate historical liabilities and significant losses associated with that business. See Note 28 Subsequent Events for further details. |
| 2. | Potential
financing arrangements. The Company has entered into an equity purchase facility with SZOP Opportunities I LLC and a convertible note
facility with JAK Mobility Ventures II LLC in December 2025, providing potential access to up to US$ |
While management believes that the above actions may provide additional liquidity and improve the Company’s financial position, these plans are subject to significant uncertainties and conditions that are not entirely within the Company’s control. Accordingly, management cannot conclude that it is probable that these plans will effectively alleviate the substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date of these consolidated financial statements. Therefore, substantial doubt about the Company’s ability to continue as a going concern remains.
The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the ordinary course of business.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation and principles of consolidation
The consolidated financial statements include the financial statements of the Group. The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) to reflect the financial position, results of operations and cash flows of the Group.
Subsidiaries are those entities in which the Group, directly or indirectly, controls more than one half of the voting power or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.
All intercompany transactions and balances among the Group and its subsidiaries have been eliminated upon consolidation.
A non-controlling interest is recognized to reflect the portion of the subsidiaries’ equity which is not attributable, directly or indirectly, to the Group. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheet and net income and other comprehensive income are attributed to controlling and non-controlling interests respectively.
(b) Use of estimates
The preparation of the consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include, but not limited to, assessment for impairment oflong-lived assets, write-down for inventories, the recoverability of prepayments and other current assets, provisions and contingent liabilities, accounting for deferred income taxes and valuation allowance for deferred tax assets, as well as fair value determination of convertible notes. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.
F-10
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(c) Cash and cash equivalents
Cash and cash equivalents include cash on hand, balances held at financial institutions, and demand deposits with original maturities of three months or less from the date of acquisition. These amounts are readily convertible to known amounts of cash and are not subject to significant risk of changes in value. All cash and cash equivalents are unrestricted as to withdrawal and use.
(d) Restricted cash
Restricted cash consists of litigation frozen deposits.
(e) Accounts receivable, net
Accounts receivable are stated at the original amount less an allowance for credit loss. Accounts receivable are recognized in the period when the Group has provided services to its customers and when its right to consideration is unconditional. The Group reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. The Group has developed a current expected credit loss (“CECL”) model based on historical experience, the age of the accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The Group considers historical collection rates, current financial status, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. Accounts receivable balances are written off after all collection efforts have been exhausted.
(f) Inventories
Inventories, consisting of smart electric vehicles and auto parts and materials purchased by the Group, are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Cost of inventory is determined using the weighted average cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged products, which is dependent upon factors such as historical and forecasted consumer demand, as well as the aging of inventory.
(g) Property and equipment, net
Property and equipment are stated at cost less
accumulated depreciation and impairment, if any, and depreciated on a straight-line basis over the estimated useful lives of the assets.
Cost represents the purchase price of the asset and other costs incurred to bring the asset into its intended use.
| Category | Estimated useful lives | |
| Electronic equipment | ||
| Vehicles | ||
| Production facilities | ||
| Battery and charging swap infrastructure | ||
| Furniture |
Repair and maintenance costs are charged to expenses as incurred, whereas the cost of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation and impairment with any resulting gain or loss recognized in the consolidated statements of operations and comprehensive loss.
F-11
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(h) Intangible assets, net
Intangible assets are carried at cost less accumulated
amortization and any recorded impairment.
| Category | Estimated useful lives | |
| Software | ||
| Trademark |
(i) Impairment of long-lived assets
The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Group measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows.
(j) Long term investment
Equity investments accounted for using the equity method
The Group applies the equity method of accounting to equity investments, in common stock or in-substance common stock, over which it has significant influence but does not own a majority equity interest or otherwise control. Under the equity method, the Group initially records its investment at cost. The difference between the cost of the equity investment and the amount of the underlying equity in the net assets of the equity investee is recognized as equity method goodwill or as an intangible asset as appropriate, which is included in the equity method investment on the consolidated balance sheets. The Group subsequently adjusts the carrying amount of the investment to recognize the Group’s proportionate share of each equity investee’s net income or loss into consolidated statements of operations and comprehensive loss after the date of investing.
Equity investments without readily determinable fair values
The Group’s equity investments without readily determinable fair values, which do not qualify for the existing practical expedient in ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), to estimate fair value using the net asset value per share (or its equivalent) of the investment (“NAV practical expedient”), and over which the Group does not have the ability to exercise significant influence through the investments in common stock or in substance common stock, are accounted for under the measurement alternative upon the adoption of ASU 2016-01 (the “Measurement Alternative”). Under the Measurement Alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. All gains and losses on these investments, realized and unrealized, are recognized in the combined statements of operations and comprehensive loss.
The Group makes assessment of whether an investment is impaired based on the performance and financial position of the investee as well as other evidence of market value at each reporting date.
Such assessment includes, but is not limited to, reviewing the investee’s cash position, recent financing, as well as the financial and business performance. The Group recognizes an impairment loss equal to the difference between the carrying value and fair value in the consolidated statements of operations and comprehensive loss if any.
F-12
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(k) Fair value measurement
Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are:
| ● | Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 — Include other inputs that are directly or indirectly observable in the marketplace. |
| ● | Level 3 — Unobservable inputs which are supported by little or no market activity. |
Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities.
The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
The Group’s financial assets and liabilities primarily include cash and cash equivalent, accounts receivable, amounts due from related parties, other receivables (included in prepayments and other current assets), accounts payable, loan from a third party, warrant liabilities, amounts due to related parties, convertible notes and other payables (included in accrued expenses and other current liabilities).
The warrant liabilities are measured at fair value using the market approach based on the quoted prices in active markets at the reporting date. The Group classifies the valuation techniques that use these inputs as Level I of fair value measurements.
Convertible notes are measured at fair value using unobservable inputs and categorized in Level III of the fair value hierarchy, see Note 14.
The Group’s non-financial assets, such as property and equipment as well as intangible assets, would be measured at fair value only if they were determined to be impaired.
Liabilities Measured at Fair Value on a Recurring Basis
The following table details the fair value measurements of liabilities that were measured at fair value on a recurring basis based on the following three-tiered fair value hierarchy per ASC 820, Fair Value Measurement, as of December 31, 2025 and 2024.
| Fair Value Measurement using | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total fair value | |||||||||||||
| Warrant liabilities: | ||||||||||||||||
| As of December 31, 2025 | $ | $ | $ | $ | ||||||||||||
| As of December 31, 2024 | $ | $ | $ | $ | ||||||||||||
| Convertible notes: | ||||||||||||||||
| As of December 31, 2025 | $ | $ | $ | $ | ||||||||||||
| As of December 31, 2024 | $ | $ | $ | $ | ||||||||||||
F-13
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Warrant liabilities
As of December 31, 2025 and 2024, the fair value
of the Private Warrants were US$
| Private | Representative | |||||||
| Warrants | Warrants | |||||||
| Fair value as of December 31, 2022 | $ | $ | ||||||
| Change in fair value | ( | ) | ( | ) | ||||
| Fair value as of December 31, 2023 | $ | $ | ||||||
| Change in fair value | ( | ) | ( | ) | ||||
| Fair value as of December 31, 2024 | $ | $ | ||||||
| Change in fair value | ||||||||
| Fair value as of December 31, 2025 | $ | |||||||
Convertible notes
The following is a reconciliation of the beginning and ending balances for convertible note measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2025, see Note 14 for details:
| Opening balance | ||||
| New convertible note issued | ||||
| Debt issuance expenses | ||||
| Change in fair value of convertible note | ||||
| Ending balance | ||||
(l) Current expected credit loss
On January 1, 2023, the Group adopted ASC 326, Financial Instruments—Credit Losses, which requires recognition of allowances upon origination or acquisition of financial assets at an estimate of expected credit losses over the contractual term of the financial assets (the current expected credit loss or the “CECL” model) using the modified retrospective transition method.
The Group’s financial assets subject to the CECL model mainly include accounts receivable, amounts due from related parties and other current and non-current assets.
For accounts receivable, the Group estimates the loss rate based on historical experience, the age of the receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. For amounts due from related parties and other current assets, we review them on a periodic basis and make allowances on an individual basis when there is doubt as to the collectability. These amounts are written off after all collection efforts have been exhausted.
F-14
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
For the years ended December 31, 2025, 2024 and 2023, allowance for expected credit losses made by the Group were shown as follows:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Allowance for expected credit losses for accounts receivable, current | $ | $ | $ | |||||||||
| Allowance for expected credit loss for other current assets | ||||||||||||
| (Reversal of) Allowance for expected credit losses for amounts due from related parties | ( | ) | ||||||||||
| Allowance for expected credit losses for accounts receivable, non-current | ||||||||||||
| Total | $ | $ | $ | |||||||||
(
Advance to suppliers and prepayments represent amounts paid in advance for goods or services to be received in the future. Such amounts do not represent financial assets as they do not give rise to a contractual right to receive cash or another financial instrument, and therefore are not within the scope of ASC 326 Financial Instruments—Credit Losses.
The Group evaluates the recoverability of advance to suppliers and prepayments at each reporting date. When events or changes in circumstances indicate that the carrying amount of prepayments may not be recoverable, the Group assesses whether it is probable that the prepaid amounts will not be realized through the receipt of goods or services, or through refund.
Indicators of impairment may include, but are not limited to, significant financial difficulties of the counterparty, bankruptcy or insolvency, disputes regarding performance under the underlying agreements, cancellation or termination of contracts, or other adverse changes in the business environment that affect the counterparty’s ability to fulfill its obligations.
If it is determined that the carrying amount is not recoverable, an impairment loss is recognized in the amount by which the carrying value of the prepayments exceeds the amount expected to be recovered.
Estimates of recoverability involve significant judgment and are based on available information regarding the financial condition of counterparties and the status of the underlying arrangements.
For the years ended December 31, 2025, 2024 and 2023, impairment loss made by the Group were shown as follows:
For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Impairment loss of advance to suppliers | $ | $ | $ | |||||||||
| Impairment loss of prepaid expenses | ||||||||||||
| Total | $ | $ | $ | |||||||||
F-15
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(n) Warrants
The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.
Management evaluates all of its financial instruments, including issued warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815-15. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. In accordance with ASC 825-10 “Financial Instruments”, offering costs attributable to the issuance of the warrant liabilities are recognized in the consolidated statement of operations and comprehensive loss as incurred.
The Group issued
(o) Convertible notes
Under the Fair Value Option Subsection of ASC Subtopic 825-10, Financial Instruments – Overall (“ASC 825”), the Group has an irrevocable option to designate certain financial assets and financial liabilities at fair value on an instrument-by-instrument basis, with changes in fair value reported in the statement of operations. Changes in fair value do not include accrued interest on debt instruments. Any changes in the fair value of liabilities resulting from changes in instrument-specific credit risk are reported in other comprehensive (loss) gain. The Group separately measures changes attributed to instrument-specific credit risk by calculating the difference between the overall change in the fair value of the instrument and the change attributed to fluctuations in the relevant risk-free.
The Group elected the fair value option for its convertible notes, and the Group believes the fair value option best reflects the economics of the underlying transaction. See Note 14 for details.
(p) Commitments and contingencies
In the normal course of business, the Group is subject to commitments and contingencies, including operating lease commitments, legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter.
(q) Revenue recognition
The Group’s revenues are generated from sales of smart electric vehicles and auto parts and materials.
F-16
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The Group recognizes revenues pursuant to ASC 606, Revenue from Contracts with Customers (“ASC 606”). In accordance with ASC 606, revenues from contracts with customers are recognized when control of the promised goods or services is transferred to the Group’s customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services, reduced by value added tax (“VAT”). To achieve the core principle of this standard, the Group applies the following five steps:
| 1. | Identification of the contract, or contracts, with the customer; |
| 2. | Identification of the performance obligations in the contract; |
| 3. | Determination of the transaction price; |
| 4. | Allocation of the transaction price to the performance obligations in the contract; and |
| 5. | Recognition of the revenue when, or as, a performance obligation is satisfied. |
The Group recognizes revenues pursuant to Revenue from Contracts with Customers (“ASC 606”). In accordance with ASC 606, revenues from contracts with customers are recognized when control of the promised smart electric vehicles is transferred to the Group’s customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those products net of and value added tax. Revenue recognition policy for the revenue stream is as follows:
Sales of smart electric vehicles
The Group generates revenue from sales of smart electric vehicles through purchase orders. The Group identified only one performance obligation to provide customers with vehicles, at a fixed price stated in the purchase orders. Full prepayment is required before or upon the Group’s delivery of the vehicles. Revenue is recognized at a point of time upon the customer’s acceptance of the smart electric vehicles. The Group is deemed as the principal, recognizing revenue on a gross basis as the Group the Group is primary responsible for fulfilling the contract, bears the inventory risk, and has the discretion in establishing the sales price.
In the normal course of business, the Group’s warranties are required by the law and related to the risk of purchasing defective products. In addition, the Group would not sell a warranty separately. Accordingly, warranty costs are treated as a cost of fulfillment subject to accrual, rather than a performance obligation.
The Group recognizes a warranty liability at the time of sale based on historical warranty claim experience and other relevant factors. The estimated warranty costs are recorded as cost when the related revenue is recognized. Actual repair and replacement costs are charged against the warranty liability as incurred.
In the instance that a customer selects to pay by installments for vehicles under an auto financing program provided to the customers by the Group, such arrangement contains a significant financing component and as a result, the transaction price is adjusted to reflect the impact of time value of the transaction price using an applicable discount rate (i.e. the interest rates of the loan reflecting the credit risk of the borrower). Interest income from such arrangements with a significant financing component is presented as other income. Receivables related to the vehicle installment payment are expected to be repaid by customers beyond one year of the dates of the financial statements are recognized as non-current assets. The difference between the gross receivable and the respective present value is recorded as unearned interest income. Interest income from such arrangements with a significant financing component is presented separately from revenue from contracts with customers.
F-17
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Sales of auto parts and materials
The Group generates revenue from sales of auto parts and materials through purchase orders. The Group considers that there is only one performance obligation to provide customers the specific materials explicitly stated in a sales contract under ASC 606. The transaction price is explicitly agreed on contracts and fixed without any variable consideration. The Group recognizes revenues at a point in time when the control of the auto parts and materials is transferred to the customer upon the customer’s pickup and acceptance of auto parts and materials.
(r) Warranties
The Group provides a one-year manufacturer’s standard warranty on all vehicles sold. The Group accrues a warranty reserve for the vehicles sold by the Group, which includes the Group’s best estimate of the future costs to be incurred in order to repair or replace items under warranties and recalls when identified. These estimates were made based on actual claims incurred to date and an estimate of the nature, frequency and magnitude of future claims with reference made to the past claim history. These estimates are inherently uncertain given the Group’s relatively short history of sales, and changes to the Group’s historical or projected warranty experience may cause material changes to the warranty reserve in the future. The warranty reserve is expected to be incurred within the next 12 months and included within accrued expenses and other liabilities on the consolidated balance sheets. Warranty expense is recorded as a component of cost of sales in the consolidated statements of comprehensive loss.
The Group’s standard warranty is an assurance-type warranty, as it is required by law and is intended to provide assurance that the vehicles comply with agreed-upon specifications. The Group does not consider standard warranty as being a separate performance obligation as it is intended to provide greater quality assurance to customers and is not viewed as a distinct obligation. Accordingly, standard warranty is accounted for in accordance with ASC 460, Guarantees.
(s) Litigation
The Group and its operations from time to time may be parties to or targets of lawsuits, claims, investigations, and proceedings including product liability, personal injury, patent and intellectual property, commercial, contract, environmental, health and safety, and environmental matters, which are handled and defended in the ordinary course of business. The Group accrues a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When a single amount cannot be reasonably estimated but the cost can be estimated within a range, the Group accrues the minimum amount.
(t) Research and development expenses
Research and development expenses consist primarily of design and development expenses with new technology, payroll and related expenses for research and development professionals, materials and supplies and other R&D related expenses. Research and development expenses are expensed as incurred.
(u) General and administrative expenses
General and administrative expenses mainly consist of (i) staff cost and depreciation related to general and administrative personnel, (ii) share-based compensation, (iii) professional service fees, (iv) allowance for expected credit losses, (v) properties rental fees, and (vi) other corporate expenses.
F-18
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(v) Selling and marketing expenses
Selling and marketing expenses mainly consist
of marketing, promotional and advertising expenses. The advertising expenses were , US$
(w) Share-based compensation
Share-based awards granted to eligible employees, officers, directors, and non-employees, including unvested shares, are measured at fair value on grant date and are classified as equity awards in accordance with ASC 718, Compensation-Stock Compensation.
For the share-based awards granted with only service conditions that have a graded vesting schedule, share-based compensation expenses are recognized using the graded vesting method, over the requisite service period, which is generally the vesting period. The Group elects to recognize the effect of forfeitures in compensation costs when they occur. To the extent the required vesting conditions are not met resulting in the forfeiture of the share-based awards, previously recognized compensation expense relating to those awards is reversed.
The Group’s share-based awards primarily consist of restricted share awards, the details of which are disclosed in Note 20. The fair value of restricted shares granted is determined based on the fair value of the underlying ordinary shares of AIIO on the grant date, which is based on the quoted market price of AIIO’s ordinary shares on the Nasdaq Global Market.
(x) Employee benefits
The Company’s subsidiaries in PRC participate
in a government mandated, multiemployer, defined contribution plan, pursuant to which certain retirement, medical, housing and other welfare
benefits are provided to employees. PRC labor laws require the entities incorporated in the PRC to pay to the local labor bureau a monthly
contribution calculated at a stated contribution rate on the monthly basic compensation of qualified employees. The Group has no further
commitments beyond its monthly contribution. Employee social benefits included as expenses in the accompanying consolidated statements
of operations and comprehensive loss amounted to approximately , US$
(y) Leases
Prior to the adoption of Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance including ASU No. 2017-13, ASU No. 2018-10, ASU No. 2018-11, ASU No. 2018-20, and ASU No. 2019-01 (collectively, “Topic 842”), operating leases were not recognized on the consolidated balance sheets, instead, rental expenses with fixed payments were recognized on a straight-line basis over the lease term.
At the inception of a contract, the Group determines if the arrangement is, or contains, a lease. Operating lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. Operating lease right-of-use assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred and less any lease incentives received. As the rate implicit in the lease cannot be readily determined, the Group uses incremental borrowing rate at the lease commencement date in determining the imputed interest and present value of lease payments. The incremental borrowing rate is determined based on the rate of interest that the Group would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. The lease term for all of the Group’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Group’s option to extend (or not to terminate) the lease that the Group is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. For operating leases, the Group recognizes a single lease cost on a straight-line basis over the remaining lease term.
The Group has elected not to recognize right-of-use assets or lease liabilities for leases with an initial term of 12 months or less and the Group recognizes lease expense for these leases on a straight-line basis over the lease terms.
F-19
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
(z) Income taxes
The Group accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
The provisions of ASC 740-10-25, “Accounting
for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and
measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition
of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest
and penalties associated with tax positions, and related disclosures. The Group’s operating subsidiaries in PRC are subject to examination
by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years
if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations
is extended to five years under special circumstances, where the underpayment of taxes is more than RMB
The Group accrued income tax payable of US$
(aa) Foreign currency transactions and translations
The functional and reporting currency of the Company is the United States Dollar (“US$”). The Company’s operating subsidiaries in China, Dubai and the United States use their respective currencies Renminbi (“RMB”), United Arab Emirates Dirham (“AED”), and US$ as their functional currencies.
The results of operations and the consolidated statements of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive loss included in consolidated statements of changes in shareholders’ equity. Gains and losses from foreign currency transactions are included in the financial expenses in consolidated statements of operations and comprehensive loss.
F-20
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
The following table outlines the currency exchange rates that were used in creating the consolidated financial statements:
| As of December 31, | ||||||||
| Balance sheet items, except for equity accounts | 2025 | 2024 | ||||||
| US$ against RMB | ||||||||
| US$ against AED | ||||||||
| For the years ended December 31, | ||||||||||||
| Items in the statements of operations and comprehensive loss, and statements of cash flows | 2025 | 2024 | 2023 | |||||||||
| US$ against RMB | ||||||||||||
| US$ against AED | ||||||||||||
No representation is made that the RMB and AED amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
(ab) Loss per share
Basic loss per share is computed by dividing net loss attributable to ordinary shareholders, taking into consideration the deemed dividends to preferred shareholders (if any), by the weighted average number of ordinary shares outstanding during the year using the two-class method. Under the two-class method, net income is allocated between ordinary shares and other participating securities based on their participating rights. Shares issuable for little to no consideration upon the satisfaction of certain conditions are considered as outstanding shares and included in the computation of basic loss per share as of the date that all necessary conditions have been satisfied. Net losses are not allocated to other participating securities if based on their contractual terms they are not obligated to share the losses.
Diluted loss per share is calculated by dividing net loss attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the year. Ordinary equivalent shares consist of ordinary shares issuable upon the conversion of the preferred shares, using the if-converted method, and shares issuable upon the exercise of share options using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted loss per share calculation when inclusion of such share would be anti-dilutive.
(ac) Segment reporting
The Group uses the management approach in determining
its operating segments. The Group’s chief operating decision maker (“CODM”) identified as the Group’s Chief Executive
Officer, relies upon the consolidated results of operations as a whole when making decisions about allocating resources and assessing
the performance of the Group. As a result of the assessment made by CODM, the Group has only
F-21
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Geographic information
The majority of the Group’s long-lived assets as of December 31, 2025 and 2024, were located in the Mainland China, the United States, the United Arab Emirates. The following table sets forth the disaggregation of the Groups long-lived assets by geographic area:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| The United States | $ | $ | ||||||
| The United Arab Emirates | ||||||||
| Mainland China | ||||||||
| Total | $ | $ | ||||||
Long-lived assets as presented above include property and equipment, intangible assets, and right-of-use assets. The disclosure also includes certain non-tangible and financial assets (e.g., PIPE escrow account) for informational purposes, although these are not classified as long-lived assets under ASC 280.
(ad) Recent accounting pronouncements
The Group 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.
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will result in the required additional disclosures being included in the consolidated financial statements, once adopted. The Group is in the process of evaluating the impact of adopting this new guidance on its consolidated financial statement.
In January 2025, the Financial Accounting Standards Board (“FASB”) updated 2025-01: Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. Public business entities must adopt the guidance in Update 2024-03 for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The update clarifies that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Group is evaluating the impact the updated guidance will have on its consolidated financial statements and disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). The amendments in ASU 2025-05 provide entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”) by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. ASU 2025-05 is effective for the Company for its for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Group is currently evaluating the impact ASU 2025-05 will have on its consolidated financial statements.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (“Topic 815”) and Revenue from Contracts with Customers (“Topic 606”): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract (“ASU 2025-07”). ASU 2025-07, expands an existing scope exception under Topic 815 to exclude non-exchange-traded contracts where the underlying is based on the operations or activities specific to one of the contract parties. The Group is currently evaluating the impact that this update will have on the consolidated financial statements.
In November 2025, the FASB issued ASU 2025-08, Financial Instruments — Credit Losses (“Topic 326”): Purchased Loans (“ASU 2025-08”). The amendments expand the population of acquired loans subject to the gross-up approach, treating non-credit-deteriorated loans (excluding credit cards) as “seasoned” if purchased at least 90 days after origination or acquired in a business combination. ASU 2025-08 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Group is currently evaluating the impact that this update will have on the consolidated financial statements.
Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.
F-22
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
4. ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: Allowance for expected credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
As of December 31, 2025 and 2024, the accounts receivable remained outstanding assessed as uncollectible and a full allowance for expected credit losses had been recognized.
The movement of allowance for credit losses for the years ended December 31, 2025, 2024 and 2023 were as follows:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Balance at the beginning of the year | $ | $ | $ | |||||||||
| Addition during the year | ||||||||||||
| Written off during the year | ( | ) | ||||||||||
| Effect of exchange rate differences | ||||||||||||
| Balance at the end of the year | $ | $ | $ | |||||||||
5. ADVANCE TO SUPPLIERS, NET
Advance to suppliers, net consisted of the following:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Advance to suppliers | $ | $ | ||||||
| Less: impairment loss | ( | ) | ( | ) | ||||
| Advance to suppliers, net | $ | $ | ||||||
The movement of impairment loss for the years ended December 31, 2025, 2024 and 2023 were as follows:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Balance at the beginning of the year | $ | $ | $ | |||||||||
| Addition during the period | ||||||||||||
| Reversal during the period | ( | ) | ( | ) | ||||||||
| Effect of exchange rate differences | ( | ) | ||||||||||
| Balance at the end of the year | $ | $ | $ | |||||||||
F-23
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
6. INVENTORIES, NET
Inventories, net consisted of the following:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Smart electric vehicles | $ | $ | ||||||
| Auto parts and other materials | ||||||||
| Total | $ | $ | ||||||
During the years ended December 31, 2025, 2024,
and 2023, the Group recognized inventory write-downs of US$
During the years ended December 31, 2025, 2024,
and 2023, the Group recognized inventory write-off of US$
7. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted of the following:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Amounts due from export agents (i) | $ | |||||||
| Prepaid expenses (ii) | $ | |||||||
| Deductible input VAT (iii) | ||||||||
| Deposits (iv) | ||||||||
| Prepaid investment funds (v) | ||||||||
| Advance to staff | ||||||||
| Others | ||||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ||||
| Less: impairment losses | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets, net | $ | $ | ||||||
The movement allowance for expected credit losses for the years ended December 31, 2025, 2024 and 2023 were as follows:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Balance at the beginning of the year | $ | $ | $ | |||||||||
| Addition during the period | ||||||||||||
| Effect of exchange rate differences | ( | ) | ||||||||||
| Balance at the end of the year | $ | $ | $ | |||||||||
F-24
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
7. PREPAID EXPENSES AND OTHER CURRENT ASSETS (cont.)
The movement of impairment losses for the years ended December 31, 2025, 2024 and 2023 were as follows:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Balance at the beginning of the year | $ | $ | $ | |||||||||
| Addition during the period | ||||||||||||
| Write off during the period | ( | ) | ( | ) | ||||||||
| Effect of exchange rate differences | ( | ) | ( | ) | ||||||||
| Balance at the end of the year | $ | $ | $ | |||||||||
| (i) |
| (ii) |
| (iii) |
| (iv) |
| (v) |
F-25
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
8. PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of the following:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Vehicles held for use (i) | $ | $ | ||||||
| Production facilities | ||||||||
| Electronic equipment(i) | ||||||||
| Furniture(i) | ||||||||
| Leasehold improvement | ||||||||
| Battery and charging swap infrastructure(i) | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Less: Impairment of property and equipment (i) | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
| (i) |
| (ii) | Accumulated impairment loss of property and equipment was US$ |
Depreciation expenses were US$
Impairment made for property and equipment was as follows:
| Amounts | ||||
| Balance as at December 31, 2022 | $ | |||
| Impairment made during the period | ||||
| Effect of exchange rate differences | ||||
| Balance as at December 31, 2023 | $ | |||
| Impairment made during the period | ||||
| Effect of exchange rate differences | ( | ) | ||
| Balance as at December 31, 2024 | $ | |||
| Impairment made during the period | ||||
| Effect of exchange rate differences | ||||
| Balance as at December 31, 2025 | $ | |||
F-26
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
9. PIPE ESCROW ACCOUNT
In September 2022, NWTN and Al Ataa Investment
LLC (“PIPE Investor” or the “Pledgee”), a company incorporated in Abu Dhabi Global Market entered into a PIPE
Subscription Agreement for PIPE Investor investing US$
| (a) |
| (b) | To award Pledgee’s PIPE investment in NWTN by guaranteeing
the Pledgee a minimum |
In addition, NWTN, FIRST ABU DHABI BANK PJSC (the
“Escrow Agent”), and an affiliate entity of PIPE Investor entered into an Escrow Agreement. Pursuant to the Escrow Agreement,
NWTN agreed to open an account (the “Escrow Account”) and credit the sum of US$
Key terms of Escrow Agreement were as follows:
| (a) | Escrow Account is a non-interest-bearing account. |
| (b) | Escrow Amount would be transferred a minimum |
| (c) |
| (d) | 3 months after (b) above is executed, the escrow account
will be reviewed. If the market value of NWTN’s shares has recovered, funds over the needed US$ |
| (e) | Escrow Agent shall release the Escrow Amount and transfer such amount less any amounts which Escrow Agent is entitled to retain to NWTN in 3 business days after November 9, 2024. |
F-27
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
9. PIPE ESCROW ACCOUNT (cont.)
In accordance with Codification of Staff Accounting
Bulletins Topic 5: Miscellaneous Accounting – T. Accounting for Expenses or Liabilities Paid by Principal Stockholder(s) (SAB 5T),
as the Pledgor is obligated to pay the
For the years ended December 31, 2025, 2024 and
2023, the Group incurred financial expenses related to the
On September 7, 2023, Mr. Alan Wu, the former
CEO of the Company, the Group, and the investor entered into a loan agreement under which the Company was permitted to withdraw $
On July 1, 2024, an addendum was signed to restructure
the original loan agreement. Under the revised terms, the Group agreed to transfer $
After evaluating the collectability of these amounts, the Group recorded a full provision for the amounts due from the Pledgors as of December 31, 2025 and 2024, respectively. See Note 24, Related Party Transactions, for further details.
10. LONG-TERM INVESTMENT
| Equity investments accounted for using the equity method | Equity investments without readily determinable fair values | |||||||
| Balance as of December 31, 2022 | $ | $ | ||||||
| Investment made (i) | ||||||||
| Balance as of December 31, 2023 | $ | $ | ||||||
| Impairment loss of investment (i) | ( | ) | ||||||
| Balance as of December 31, 2024 | $ | $ | ||||||
| Investment made | ||||||||
| Balance as of December 31, 2025 | $ | $ | ||||||
| (i) |
As of December 31, 2024, the Group made full impairment on the long-term investment in W. Motors due to the investee’s net liability position.
F-28
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
11. ACCOUNTS PAYABLE
Accounts payable represent obligations of the
Group to suppliers for purchases of vehicles held for sale and raw materials. The Group generally receives credit terms ranging from 0
to 180 days. As of December 31, 2025 and 2024, accounts payable totaled US$
12. LOANS FROM A THIRD PARTY
As of December 31, 2025 and 2024, loans from a
third party consisted of the principal and legal fees for the loans from Tianjin Yizhong Jinshajiang Equity Investment Fund Partnership
(“Yizhong”). In 2016 and 2017, Tianqi Group entered into two convertible debt agreements with Yizhong. According to the agreements,
Yizhong provided loans of US$
In 2022, Yizhong and the Group agreed to an instalment
plan, which allowed the Group to repay the outstanding obligations totalling US$
Tianqi Group executed the instalment plan and
repaid the accrued interests and part of the legal fees in the amount of US$
Pursuant to the supplemental settlement agreement dated August 8, 2025, a third-party guarantor provided a joint and several liability guarantee for the Group’s repayment obligations under the instalment plan to Yizhong.
On August 25, 2025, the board of directors approved
the settlement of a debt of US$
13. WARRANTS
In connection with the Business Combination, the
Company assumed
Common Stock Warrants became exercisable on the
later of (a) the completion of the Business Combination or (b) 12 months from the closing of the initial public offering (“IPO”)
(February 19, 2020). The common stock warrants will expire
F-29
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
13. WARRANTS (cont.)
Public Warrants
As of December 31, 2025 and 2024, the Company
had
The Company may redeem the Public Warrants in
whole and not in part, at a price of US$
| ● | at any time while the Warrants are exercisable, |
| ● | upon not less than |
| ● | if, and only if, the reported last sale price of the ordinary
shares equals or exceeds US$ |
| ● | if, and only if, there is a current registration statement in effect with respect to the issuance of the ordinary shares underlying such Warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the Company calls the warrants for redemption as described above, management will have the option to require all holders that wish to exercise the warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the trust account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the trust account with respect to such warrants. Accordingly, the warrants may expire worthless.
Detail related to Public Warrant activity was as follows:
| Public Warrants | Number of Warrants | Weighted Average Exercise Price | ||||||
| Balances as of December 31, 2022 | $ | |||||||
| Exercised | ( | ) | ||||||
| Balances as of December 31, 2023 | $ | |||||||
| Exercised | ||||||||
| Balances as of December 31, 2024 | $ | |||||||
| Exercised | ||||||||
| Balances as of December 31, 2025 | $ | |||||||
For the years ended December 31, 2025, 2024 and
2023, , and
F-30
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
13. WARRANTS (cont.)
Warrant liabilities
As of December 31, 2025 and 2024, the Company
had
The Private Warrants are identical to the Public
Warrants underlying the Units being sold in the IPO, except that the Private Warrants and the ordinary shares issuable upon the exercise
of the Private Warrants will not be transferable, assignable or salable until
The Representative Warrants are different from
Public and Private Warrants. The exercise price of Representative Warrants is US$
As of December 31, 2025, the remaining contractual
terms for the outstanding Private Warrants and Representative Warrants to purchase the Company’s ordinary shares were each
14. CONVERTIBLE NOTES
On December 10, 2025, the Company entered into
a securities purchase agreement with JAK Mobility Ventures II LLC (“JAK”, “the investor”), under which the Company
may issue, and JAK may purchase, convertible notes (the “Notes”) in an aggregate principal amount of up to $
The Notes mature two years after issuance, bear
no interest, and rank pari passu with all other Notes. Upon an Event of Default, the Notes accrue interest at
Proceeds from the Notes are to be used for general
corporate purposes and working capital, with up to $
The Company has elected to recognize the convertible
note at fair value and therefore there was no further evaluation of embedded features for bifurcation. The Company engaged third party
valuation firm to perform the valuation of convertible note. The fair value of the convertible note is calculated using the Scenario-based
Discounted Cash Flows with Monte Carlo Simulation Model (the “Monte Carlo Model”).
| December 10, 2025 | December 31, 2025 | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected life | ||||||||
| Share price | $ | $ | ||||||
| Volatility | % | % | ||||||
| Conversion Multiple Threshold | ||||||||
Sensitivity Analysis of Convertible Notes
The fair value of the convertible notes is subject to changes in certain key assumptions, among which the conversion multiple threshold is one of the most significant unobservable inputs.
The conversion multiple threshold represents management’s estimate of the level at which conversion is economically rational and directly impacts the probability and timing of conversion events.
| 1.10x | 1.17x | 1.20x | |||||||
| As of December 10, 2025 | |||||||||
| As of December 31, 2025 |
F-31
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
15. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Contingent liabilities of Jinghong Dispute (i) | $ | $ | ||||||
| Contingent liabilities of Loop Dispute (ii) | ||||||||
| Payroll payable (iii) | ||||||||
| Lawsuit provision (iv) | ||||||||
| Accrued expense | ||||||||
| Output VAT (v) | ||||||||
| Warranty provisions | ||||||||
| Borrowing from a third party | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
| (i) |
| (ii) |
| (iii) |
| (iv) | Lawsuit provision represented liabilities accrual for closed and on-going lawsuits the Group did not pay or make settlement. The Group regularly reviews these disputes to determine whether its accruals are adequate. The amount of ultimate loss may differ from these estimates. |
In January 2023, NWTN Zhejiang invited
Tiancheng Coating System Changzhou Co., Ltd. (“Tiancheng”) to bid for a coating production line project and Tiancheng was
orally notified as the winning bidder to claim total amount plus interest of RMB
Xingjing (Guangzhou) Technology Co., Ltd. (“Xingjing”) alleged that under a system development
service contract signed in June 2023 for RMB
Anfeirui Engineering Technology (Chengdu) Co., Ltd., Shanghai Zhuolun International Logistics Co., Ltd., Hangzhou Yarui
Standard Technology Service Co., Ltd., Shanghai Longchuang Automotive Design Co., Ltd., Shanghai Luanming Automobile Technology Co.,
Ltd., and Shanghai Xundao New Energy Technology Co., Ltd. provided project management, freight forwarding services, technical standard
certification services, mold development, supplied interior and exterior modification and customization services to the Group, respectively.
However, they failed to collect the payments and sued the Group for totaling US$
Other than the disputes discussed above,
as of December 31, 2025 and the issuance date of the audited consolidated financial statements, there were still seven closed lawsuits
or mediation against the Group for unpaid claim amount, penalty and accrued interests with minors amounts, which also have been fully
recorded as lawsuit provision. For the years ended December 31, 2024 and 2025, the Group recognized a lawsuit provision of $
| (v) |
F-32
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
16. LEASES
The balances for the operating leases where the Group is the lessee are presented as follows:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Lease liabilities – current | $ | ( | ) | $ | ( | ) | ||
| Lease liabilities – non-current | ( | ) | ||||||
| Total operating lease liabilities | $ | ( | ) | $ | ( | ) | ||
The components of operating lease expenses are as follows:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Operating lease expense | $ | $ | $ | |||||||||
| Short-term lease expense | ||||||||||||
| Lease termination expense | ||||||||||||
| Total lease expense | $ | $ | $ | |||||||||
Short-term leases included lease of offices, warehouse and others with a term of 12 months or less, which were excluded from the recognition of right-of-use assets or lease liabilities.
For the year ended December 2025, the Group derecognized
right-of-use assets of $
Both operating lease expense, short-term lease expense and termination expense are recognized as general and administrative expenses and other expense.
Other information related to operating leases where the Group is the lessee is as follows:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
Because most of the leases do not provide an implicit rate of return, the Group used the incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments.
The following is a schedule of future minimum payments under the Group’s operating leases as of December 31, 2025:
| For the year ended December 31, | Amounts | |||
| 2026 | $ | |||
| Total lease payments | ||||
| Less: imputed interest | ||||
| Total operating lease liabilities, net of interest | $ | |||
F-33
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
17. OTHER INCOME (EXPENSES), NET
Other income (expenses), net by nature consisted of the following
| For the years ended December 31, | ||||||||||||
| Nature | 2025 | 2024 | 2023 | |||||||||
| Loss of Loop Dispute (see Note 15 for more details) | $ | $ | ( | ) | $ | |||||||
| Contingent liabilities for litigation (see Note 15 for more details) | ( | ) | ||||||||||
| Penalty due to breach of contracts | ( | ) | ||||||||||
| Transfer-out of input tax | ( | ) | ||||||||||
| Disposal loss of property and equipment (see Note 8 for more details) | ( | ) | ||||||||||
| Income from disposal of R&D vehicles | ||||||||||||
Loss on inventory write-off | ( | ) | ||||||||||
| Loss of Jinghong Dispute (see Note 15 for more details of Jinghong Dispute) | ( | ) | ||||||||||
| Write-off / settlement of long-outstanding receivables and payables | ( | ) | ||||||||||
| Individual income tax surcharge due to delayed payroll payments | ( | ) | ||||||||||
| Gain (expenses) incurred resulting from discrepancies in the enforcement payments | ( | ) | ||||||||||
| Individual income tax refund | ||||||||||||
| Corporate income tax refund | ||||||||||||
| Government subsidies | ||||||||||||
| Gain from dissolution of a subsidiary (see Note 19 for more details) | ||||||||||||
| Others | ( | ) | ||||||||||
| Total | $ | $ | ( | ) | $ | ( | ) | |||||
18. INTEREST EXPENSES, NET
| For the years ended December 31, | ||||||||||||
| Nature | 2025 | 2024 | 2023 | |||||||||
| Interest expenses on various loans and others | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Interest income on cash deposits in banks | ||||||||||||
| Total | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Interest expense primarily consists of interest accrued on various borrowings, including loans from a third party (refer to Note 12, Loans from a Third Party) and interest expense accrued on Jinghong Dispute, Loop Dispute and others (refer to Note 15 Accrued expenses and other current liabilities).
19. DISSOLUTION OF A SUBSIDIARY
On June 27, 2023, the Group dissolved its subsidiary, Jiangsu ICONIQ New Energy Automobile Manufacturing Co., Ltd. (“Jiangsu ICONIQ”), which was wholly owned by Tianqi Group. Jiangsu ICONIQ had not conducted any material operations since its establishment in 2018. The dissolution did not represent a strategic shift and had no material impact on the Group’s overall business; therefore, it did not meet the criteria to be classified as a discontinued operation under ASC 205-20.
Upon completion of the dissolution, the remaining
assets and liabilities of Jiangsu ICONIQ, totaling US$
F-34
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
20. SHARE-BASED COMPENSATION
Earnout shares
In connection with the Business Combination, each
Class A ordinary share of ICONIQ that was issued and outstanding before the Transactions was cancelled and converted into the right to
receive
The Earnout Shares will be issued to Muse Limited (the company held by Mr. Alan Nan Wu, Executive Chairman of the Company) when the Company delivers 12 vehicles on an aggregate basis or would be adjusted if the Company has delivered less than 12 vehicles by the end of 2023.
The Earnout Shares are determined as compensation,
which is a transaction separate from the reverse recapitalization. In addition, the issuance of Earnout Shares does not meet any condition
to be classified as a liability under ASC 718, thus it should be classified as an equity financial instrument, and measured at fair value
using the quoted market price on grant date, November 11, 2022, which is US$
The Company evaluated and considered that the performance condition of delivering 12 vehicles would probably be achieved by the end of 2023. Thus, the Company should recognize compensation cost for awards with performance conditions. In addition, all terms and conditions of the Earnout Shares were approved and communicated to the grantee on November 11, 2022, which is considered the grant date under ASC 718. The requisite service period should be the shortest of the explicit, implicit or derived service periods, which is determined as the period from November 11, 2022, the grant date, to December 31, 2023.
In October 2023, the performance condition of delivering 12 vehicles is achieved and the Earnout Shares was issued to Muse Limited accordingly.
Share-based expenses recognized in general and
administrative expenses were , and US$
2022 Equity Incentive Plan
On August 25, 2025, the Group adopted the 2022 Equity Incentive Plan (“2022 Plan”), which permits the granting of share options, restricted share units, restricted shares, and other equity-based awards to employees, directors, and consultants of the Group. Under the Group’s 2022 Plan, RSUs and restricted shares may vest upon grant or over a period determined at the time of grant, and options will vest as specified in the individual award agreements. The purpose of the 2022 Plan is to attract, retain, and motivate key personnel by providing incentives through equity-based awards, aligning their interests with the long-term success of the Group.
Restricted Shares for existing employees
On August 25, 2025, the Group granted 15 active
employees and five independent directors amounting to
On September 17, 2025, the Group granted 1 active
employee amounting to
On November 28, 2025, the Group granted 1 active
employee amounting to
The vesting schedules of the share-based awards granted to employees vary depending on factors such as their employment commencement dates and contributions to the Company, as specified in the respective individual award agreements.
For the majority of employees, the vesting schedules are as follows:
| ● | Employees who joined the Company on or before July 28, 2023:
|
| ● | Employees who joined the Company between July 28, 2023 and
July 19, 2024: |
Accordingly, the share-based awards granted to employees contain only service conditions and follow a graded vesting schedule. As such, compensation expense related to these awards is recognized over the requisite service period using the graded vesting attribution method.
F-35
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
20. SHARE-BASED COMPENSATION (cont.)
The following table summarized the Company’s restricted share activities under the 2022 Plan:
| Number of nonvested restricted shares | Weighted average fair value per ordinary share at the grant dates | |||||||
| Outstanding as of December 31, 2024 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | $ | |||||||
| Outstanding as of December 31, 2025 | $ | |||||||
Total share-based compensation expenses recognized
for these restricted shares for the year ended December 31, 2025 were US$
Restricted Shares for external consultants
On August 25, 2025, the Group granted 5 external
consultants amounting to
The vesting schedules are as follows:
Accordingly, the share-based awards granted to external consultants contain only service conditions and follow a graded vesting schedule. As such, compensation expense related to these awards is recognized over the requisite service period using the graded vesting attribution method.
The following table summarized the Company’s restricted share activities under the 2022 Plan:
| Number of nonvested restricted shares | Weighted average fair value per ordinary share at the grant dates | |||||||
| Outstanding as of December 31, 2024 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | $ | |||||||
| Outstanding as of December 31, 2025 | $ | |||||||
Total share-based compensation expenses recognized
for these restricted shares for the year ended December 31, 2025 were US$
F-36
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
20. SHARE-BASED COMPENSATION (cont.)
Other share-based compensation
In 2025, the Company issued
On September 18, 2025, the Company agreed to grant
an aggregate of
On December 10, 2025, the Company and Burkhan
Capital LLC mutually agreed to terminate the convertible note purchase agreement dated September 29, 2025. In connection with the termination,
the Company issued
On September 3, 2025, the Company entered into
a standby equity purchase agreement with YA II PN, Ltd. (“Yorkville”), pursuant to which the Company had the right, but not
the obligation, to issue and sell up to US$
Pursuant to a supplemental agreement entered into
in 2025, Vision Path was added as a new co-obligor and Long Hope Holdings Limited (“Long Hope”) was introduced as an additional
guarantor. Both parties jointly assumed joint and several guarantee obligations in respect of the Puluo Debt. As consideration for providing
the guarantee services, the Company issued
On July 24, 2025, the Company issued
21. TAXATION
Cayman Islands
The Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.
British Virgin Islands
The Company’s subsidiaries incorporated in the BVI are not subject to tax on income or capital gains under current BVI law. In addition, upon payments of dividends by these entities to their shareholders, no BVI withholding tax will be imposed..
United Arab Emirates
Our subsidiaries incorporated in United Arab Emirates are currently not subject to taxation in United Arab Emirates, as companies operating in the designated free zones of the UAE and not conducting business activities in the UAE mainland are exempt from corporate taxes or customs duty.
F-37
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
21. TAXATION (cont.)
Hong Kong
The Company’s subsidiaries incorporated
in Hong Kong are subjected to Hong Kong profits tax. With effect from April 1, 2018, a two-tiered profits tax rate regime
applies. The profits tax rate for the first HKD
Mainland China
Generally, the Group’s WFOE and subsidiaries,
which are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax on their worldwide taxable income
as determined under PRC tax laws and accounting standards at a rate of
United States
The company’s subsidiary, which incorporated
in USA in 2022, is subject to statutory U.S. Federal corporate income tax at a rate of
The following table sets forth current and deferred portion of income tax expense of the Group:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Current income tax expense | $ | $ | $ | |||||||||
| Deferred income tax expense | ||||||||||||
| Total income tax expense | $ | $ | $ | |||||||||
Loss before provision for income tax were attributable to the following geographic locations:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Mainland China | $ | $ | $ | |||||||||
| Dubai | ||||||||||||
| United States | ||||||||||||
| Total loss before income tax expenses | $ | $ | $ | |||||||||
The following table sets forth reconciliation between the statutory income tax rate and the effective tax rates:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Statutory income tax rate in PRC | % | % | % | |||||||||
| Tax effect of non-deductible items | ( | )% | ||||||||||
| Tax effect of undeclared expenses (i) | ( | )% | ( | )% | ||||||||
| Tax effect of fair value change of convertible notes | ( | )% | ||||||||||
| Tax effect of share-based compensation | ( | )% | ||||||||||
| Tax effect of income tax rate differences in jurisdictions other than the PRC | ( | )% | ( | )% | ( | )% | ||||||
| Tax effect of net operating loss not applicable to carryforwards | ( | )% | % | ( | )% | |||||||
| Change in valuation allowance | ( | )% | ( | )% | ( | )% | ||||||
| Effective tax rate | ||||||||||||
| (i) |
F-38
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
21. TAXATION (cont.)
As of December 31, 2025 and 2024, the significant components of the deferred tax assets were summarized below:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets： | ||||||||
| Net operating loss carried forward | $ | $ | ||||||
| State net operating loss carried forwards for US entity | ||||||||
| Accrued expenses | ||||||||
| Impairment loss | ||||||||
| Allowance for expected credit loss | ||||||||
| Impairment on investments | ||||||||
| Inventory write-down | ||||||||
| Lawsuit provision | ||||||||
| Property and equipment | ||||||||
| Total deferred tax assets | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net of valuation allowance | $ | $ | ||||||
| Roll forward of valuation allowance | ||||||||
| Balance at the beginning of the year | $ | |||||||
| Allowance made during the year | ||||||||
| Effect of exchange rate differences | ( | ) | ||||||
| Balance at the end of the year | $ | |||||||
As of December 31, 2025, the Group had net operating
loss from US entity of US$
| Net operating loss carry forward due by schedule | ||||||||||||||||||||||||
| 2026 | 2027 | 2028 | 2029 | 2030 | Total | |||||||||||||||||||
| Net operating loss carry forward | ||||||||||||||||||||||||
The Group does not file combined or consolidated
tax returns, therefore, losses from individual subsidiaries of the Group may not be used to offset other subsidiaries’ earnings
within the Group. Valuation allowance is considered on each individual subsidiary basis. Valuation allowance of US$
22. ORDINARY SHARES
The Company is authorized to issue a total of
In October 2023, the performance condition of
delivering 12 vehicles is achieved and the Earnout Shares of
F-39
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
22. ORDINARY SHARES (cont.)
In April 2023, the Company issued
On July 31, 2025, the Company issued
On August 5, 2025, the Company issued an aggregate
of
On September 18, 2025, the Company issued
During the year ended December 31, 2025, the Company
granted an aggregate of
During the year ended December 31, 2025, the Company
granted an aggregate of
During the year ended December 31, 2025, the Company
issued an aggregate of
As of December 31, 2025 and 2024,
Increase in share capital
Effective October 23, 2025, the Group increased
its authorized share capital from US$
Equity Purchase Facility
On December 11, 2025, the Group entered into an
Equity Purchase Facility Agreement (the “EPFA”) with SZOP Opportunities I LLC (“SZOP”), pursuant to which the
Group has the right, but not the obligation, to sell up to US$
Under the EPFA, the Group may, at its sole discretion
and subject to the terms and conditions set forth therein, deliver advance notices to require SZOP to purchase specified amounts of shares
(each, an “Advance”), subject to a maximum advance amount per notice. There is no minimum usage requirement and no commitment
or non-usage fee. The EPFA limits SZOP’s beneficial ownership to
The Group is restricted from entering into certain variable rate transactions during the term of the EPFA and is subject to limitations on additional equity issuances during the defined restricted period, including providing SZOP participation rights in certain subsequent placements. As of the issuance of the consolidated financial statements, no shares had been issued under the EPFA.
F-40
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
23. NON-CONTROLLING INTERESTS
As a result of the Reorganization of the Company that was completed on January 19, 2022 (see Note 1), Tianqi Group and its subsidiaries’ financial statements have been prepared on a consolidated basis by applying the pooling of interests method as if the reorganization had been completed at the beginning of the earliest reporting period, and the equity interests held by the original shareholders are recognized as non-controlling interests as if the Capital Increase were occurred on January 1, 2020.
As of December 31, 2020, the non-controlling
interests consisted of (i) the
On November 24, 2021, Tianqi Group acquired
the
In 2021, Tianqi Group entered into a series of
supplemental agreements (the “new supplemental agreements”) with Taizhou Puluo New Energy Automobile Equity Investment Enterprise
(Limited Partnership) (“Puluo”), Guozhong Tianhong Asset Management (Tianjin) Co., LTD (“Guozhong Tianhong”, or
the new investor), and Tianjin Tuoda Enterprise Management Service Co., LTD (“Tianjin Tuoda”) which is the shareholder of
the Tianqi Group. Under the supplemental agreements, Guozhong Tianhong agreed to repay the investment subscription of US$
Each of Mr. Nan Wu and ICONIQ has provided guarantee
liability for Tianjin Tuoda’s repayment to Puluo and ICONIQ has provided guarantee for Guozhong Tianhong’s repayment to Puluo.
The Group would assume joint guarantee obligations arising from Guozhong Tianhong or Tianjin Tuoda’s default on the Puluo Debts,
and the guarantee is valid until two years after the due date of performance of repayment obligations In addition, each of eight shareholders
of the Group, representing an aggregated holding interest of
Although there is a contingency term which related to the success of SPAC merger transaction, as of December 31, 2021, the Puluo Debts was de-recognized by the Company, and the equity interests owned by Guozhong Tianhong through the conversion of debts were recognized as non-controlling interests.
In 2022, there was a subscribed capital contribution
of US$
As of December 31, 2025 and 2024, the non-controlling
interests were
As of December 31, 2025 and 2024, non-controlling
interests in the consolidated balance sheet was US$
F-41
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
24. RELATED PARTY TRANSACTIONS
(a)
| No. | Name of Related Parties | Relationship | ||
| 1 | ICONIQ (Tianjin) New Energy Technology Research Institute (“ICONIQ Institute”) | |||
| 2 | Shenzhen Yinghehuicheng Investment Center (Limited Partnership) (“Shenzhen Yinghehuicheng”) | |||
| 3 | Tianjin Tuoda Enterprise Management Service Co., Ltd. (“Tianjin Tuoda”) | |||
| 4 | Mr. Alan Nan Wu | |||
| 5 | Vision Path Holdings Limited (“Vision Path”) * | |||
| 6 | Shanghai OBS Culture and Technology Co., Ltd. (“Shanghai OBS”) | |||
| 7 | Al Ataa | |||
| 8 | Muse Limited | |||
| 9 | Mr. Benjamin Zhai | |||
| 10 | My Car (Shenzhen) Technology Co., Ltd. (“My Car”) | |||
| 11 | Long Hope Holdings Limited (Long Hope) * |
| * |
(b)
| For the years ended December 31, | ||||||||||||
| Nature | 2025 | 2024 | 2023 | |||||||||
| Expense paid by a related party on behalf of the Group | ||||||||||||
| – Mr. Benjamin Zhai (i) | $ | $ | $ | |||||||||
| – Mr. Alan Nan Wu (ii) | ( | ) | ( | ) | ||||||||
| Technical service provided by a related party | ||||||||||||
| – Shanghai OBS | ||||||||||||
| Loan proceeds from related parties | ||||||||||||
| – Mr. Benjamin Zhai (i) | ||||||||||||
| – Mr. Alan Nan Wu (ii) | ||||||||||||
| Repayments to a related party | ||||||||||||
| – Mr. Alan Nan Wu (ii) | ||||||||||||
| Repayments of Mr.Nan Wu loan by Tianjin Tuoda | ||||||||||||
| – Mr. Alan Nan Wu (iii) | ||||||||||||
| Loan to related parties | ||||||||||||
| – Shanghai OBS | ||||||||||||
| – Tianjin Tuoda (iii) | ||||||||||||
| Interest expenses of loan from a related party | ||||||||||||
| – Mr. Benjamin Zhai (i) | ||||||||||||
| Accrued financial expenses to PIPE Investor | ||||||||||||
| – Al Ataa (see Note 9 PIPE escrow account for details) | ( | ) | ( | ) | ||||||||
| Share-based compensation | ||||||||||||
| – Muse Limited (see Note 20 share-based compensation for details) | ||||||||||||
| – Vision Path (see Note 20 share-based compensation for details) | ||||||||||||
– Long Hope (see Note 20 share-based compensation for details) | $ | $ | $ | |||||||||
F-42
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
24. RELATED PARTY TRANSACTIONS (cont.)
(c)
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Amounts due from related parties: | ||||||||
| – Tianjin Tuoda (iii) | $ | $ | ||||||
| – Mr. Alan Nan Wu (ii) | ||||||||
| – Shanghai OBS | ||||||||
| – The Pledgor (see Note 9 PIPE escrow account for details) | ||||||||
| Subtotal | $ | $ | ||||||
| Less: Allowance for expected credit loss (see Note 9 PIPE escrow account for details) | ( | ) | ( | ) | ||||
| Amount due from related parties, net | $ | $ | ||||||
| Amounts due to related parties, current: | ||||||||
| – Vision Path (iv) | $ | $ | ||||||
| – Shenzhen Yinghehuicheng | ||||||||
| – Mr. Benjamin Zhai (i) | ||||||||
| Total | $ | $ | ||||||
| (i) |
| (ii) | In 2022, My Car paid loan and expenses on behalf of the Group
totaled US$ |
In 2022, Mr. Nan Wu paid loan and expenses on behalf of the Group
totaled US$
In 2024, the Group made repayments to Mr. Nan Wu of US$
| (iii) | In April 2022, Tianjin Tuoda and the Group entered into a
financing service agreement that Tianjin Tuoda would provide financing service for a |
The Group paid US$
During the six months ended June 30, 2023, the Group provided interest-free loans totaled US$
In the second half of 2023, the Group continued to provide a series interest-free loans amounting to US$
| (iv) |
As of December 31, 2025, the Group recorded full credit losses for amounts due from related parties based on the management’ estimation of the collectability.
F-43
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
25. RESTRICTED NET ASSETS
A significant portion of the Group’s operations are conducted through its PRC (excluding Hong Kong) subsidiaries, the Group’s ability to pay dividends is primarily dependent on receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by its subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations, and after it has met the PRC requirements for appropriation to statutory reserves. Paid in capital of its subsidiaries included in the Group’s consolidated net assets are also non-distributable for dividend purposes.
In accordance with the Mainland China regulations
on Enterprises with Foreign Investment, a WFOE established in the PRC is required to provide certain statutory reserves, namely general
reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the
enterprise’s PRC statutory accounts. A WFOE is required to allocate at least
Additionally, in accordance with the Company Law
of the PRC, a domestic enterprise is required to provide a statutory common reserve of at least
As a result of these PRC laws and regulations,
the Group’s subsidiaries are restricted in their ability to transfer a portion of their net assets to the Group. As of December
31, 2025 and 2024, net assets restricted in the aggregate, which include paid-in capital and statutory reserve funds of the Group’s
subsidiaries, that are included in the Group’s consolidated net assets were approximately US$
26. COMMITMENTS AND CONTINGENCIES
Contingencies
The Group is, from time to time, subject to claims and disputes arising in the normal course of business. In the opinion of the management, while the outcome of any such claims and disputes cannot be predicted with certainty, its ultimate liability in connection with these matters is not expected to have a material adverse effect on the Group’s results of operations.
Except for the Disputes described below, the Group is not aware of any pending or threatened claims or litigation as of December 31, 2025 and through the issuance date of these consolidated financial statements.
Puluo Debt
During 2018, Tianqi Group entered into a series
of agreements with Taizhou Puluo New Energy Automobile Equity Investment Enterprise (Limited Partnership) (“Puluo”) and had
received several loans from Puluo totaled RMB
In December 2021, to settle the Puluo Debts, Tianqi
Group entered into a series of supplemental agreements (the “New Agreements”) with Puluo, Guozhong Tianhong Asset Management
(Tianjin) Co., LTD (“Guozhong Tianhong”), and Tianjin Tuoda. Under the New Agreements, Guozhong Tianhong acquired the Puluo
Debts from Puluo, resulting in a payment obligation of RMB
F-44
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
26. COMMITMENTS AND CONTINGENCIES (cont.)
According to the New Agreements, in the event that the Group fails to obtain approval from the SEC and complete a business combination before December 31, 2022, Guozhong Tianhong is obligated to transfer both the Puluo Debts and its equity interest of Tianqi Group to Tianjin Tuoda. Subsequently, on January 1, 2023, Tianjin Tuoda would assume responsibility for repaying the Puluo Debts to Puluo while also acquiring the equity interests of Tianqi Group. However, the consummation of a business combination before December 31, 2022 would require Guozhong Tianhong to pay back Puluo Debts in two installments within a period of two years from the date of the business combination. Additionally, within this same timeframe following completion of the business combination, Tianjin Tuoda will make two installment payments towards indemnifying Puluo (referred to as “Indemnification”). On November 11, 2022, the Company consummated the business combination with East Stone.
According to the New Agreements, the Group assumed joint and several liability (the “Joint and Several Liability”) for both the repayment of the Puluo Debts and the Indemnification from Guozhong Tianhong or Tianjin Tuoda (the “Co-obligator”) to Puluo. Additionally, Mr. Alan Nan Wu assumed joint and several liability for the repayment of the Indemnification from Tianjin Tuoda to Puluo.
In 2022, eight shareholders of the Group signed letters of support to demonstrate their commitment to providing financial support to Tianjin Tuoda for its indebtedness in the event that the Group fails to complete a business combination, as well as assuming joint and several liability of the Group for the repayment of both the Puluo Debts and the Indemnification. In 2023, (i) two shareholders of the Group signed letters of support to commit their financial support to Tianjin Tuoda and Guozhong Tianhong for the indebtedness, as well as assuming the joint and several liability for the repayment of both the Puluo Debts and the Indemnification, and (ii) Guozhong Tianhong signed a letter to commit its repayment of the debt to Puluo (collectively, the “Shareholders’ Support”).
As of December 31, 2023, 2024 and 2025, the Puluo
Debts payable by Guozhong Tianhong were US$
Pursuant to a supplemental agreement entered into in 2025, Vision Path was added as a new co-obligor and Long Hope Holdings Limited was introduced as an additional guarantor, both jointly undertaking the relevant joint and several guarantee obligations. The parties further acknowledged that, except in the case of acceleration events, the creditors will not seek to enforce the Group’s joint and several guarantee obligations under the termination agreement before December 31, 2027.
In consideration for the provision of guarantee
services by Vision Path and Long Hope, the Company issued
The management assessed the Joint and Several Liability in accordance with ASC 405-40. As of December 31, 2024 and 2025, the Company has not recognized a liability in respect of such arrangement, based on the following considerations:
(i) Enforcement restriction
Under the relevant agreements, except in the case of specified acceleration events, the creditors are not entitled to enforce the Group’s joint and several guarantee obligations prior to December 31, 2027. As of December 31, 2025, no acceleration event had been triggered.
(ii) Assessment of acceleration and legal analysis
Based on the contractual terms and relevant legal analysis, the Company has not triggered any acceleration events as of December 31, 2025. Furthermore, the arrangement does not specify the Company’s payment obligations, and accordingly, no present obligation requiring recognition has been identified as of December 31, 2024 and 2025.
(iii) Mitigation considerations
Management believes that, even in the event of potential acceleration, it would take appropriate actions to address and resolve any related obligations.
(iv) Subsequent disposal of ICONIQ Holding Limited
In February 2026, the Company completed the disposal of ICONIQ Holding Limited. Under the relevant transaction agreement, all liabilities and guarantees of ICONIQ Holding Limited, whether contingent or actual, remain the responsibility of the purchaser, and the Company has no continuing liability. As the contractual arrangements relating to the Puluo Debt were entered into by ICONIQ Holding Limited, the Company believes it has no remaining exposure following the disposal. See Note 28 Subsequent events for details.
F-45
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
26. COMMITMENTS AND CONTINGENCIES (cont.)
Canshi Dispute
On July 31, 2021, Shanghai Canshi Investment Management
Co., Ltd. (“Canshi”), Tianjin Tuoda, the Group, and Mr. Alan Nan Wu entered into a supplementary settlement agreement. Under
this agreement, the Group agreed to provide a joint and several guarantee for Tuoda’ s repayment of a RMB
The Group completed its listing on November 14,
2022, and the compensation became due on May 14, 2023. The Group, however, failed to make the payment. On April 28, 2025, Canshi filed
a civil complaint with the Shanghai No. 1 Intermediate People’ s Court against the Group, Mr. Alan Nan Wu, and Mr. Fu Xing, claiming
(i) compensation of RMB
According to the legal opinion dated September 25, 2025, the relevant clause of the agreement has been deemed invalid and is unlikely to be upheld by the courts. As a result, no compensation is expected to be payable under this claim, and the estimated liability arising from this litigation is . The Group does not expect any material adverse impact from this matter.
27. SEGMENT REPORTING
The Group operates in a single operating segment
and has
The table below provides information about Group’s segment (in thousands):
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Revenues | $ | $ | $ | |||||||||
| Less: | ||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ||||||
| Segment gross (loss) profit | ( | ) | ||||||||||
| Less: | ||||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ( | ) | ||||||
| Amortization of operating lease right-of-use asset | ( | ) | ( | ) | ( | ) | ||||||
| Changes in fair value of warrant liabilities | ( | ) | ||||||||||
| Change in fair value of convertible notes | ( | ) | ||||||||||
| Disposal loss of property and equipment | ( | ) | ( | ) | ||||||||
| Lawsuit provision | ( | ) | ( | ) | ||||||||
| Inventory write-downs | ( | ) | ( | ) | ( | ) | ||||||
| Allowance for expected credit losses | ( | ) | ( | ) | ( | ) | ||||||
| Impairment loss | ( | ) | ( | ) | ( | ) | ||||||
| Interests on loans from a third party | ( | ) | ( | ) | ( | ) | ||||||
| Salary expenses | ( | ) | ( | ) | ( | ) | ||||||
| Rental expenses | ( | ) | ( | ) | ( | ) | ||||||
| Share-based compensation expenses | ( | ) | ( | ) | ||||||||
Financial expenses on PIPE (see Note 9 for details) | ( | ) | ( | ) | ||||||||
| Other operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Interest expenses, net | ( | ) | ( | ) | ( | ) | ||||||
| Other income (expenses), net | ( | ) | ( | ) | ||||||||
| Segment loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
F-46
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
28. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of issuance of the consolidated financial statements, except for the events mentioned below, the Company did not identify any subsequent events with material financial impact on the Company’s consolidated financial statements.
Conversion of convertible note
In January 2026, JAK completed a series of conversions with an aggregate
conversion amount of US$
Disposal of ICONIQ Holding Limited
Subsequent to the reporting period, on February
5, 2026, the Company entered into a share transfer agreement with Energy Plus Management Limited, pursuant to which the Company agreed
to dispose of its entire equity interest in ICONIQ Holding Limited, representing
The Company determined that the disposal represents
a significant strategic transaction. A gain of US$
As of December 31, 2025, ICONIQ Holding Limited remained fully operational and continued to be consolidated in the Company’s financial statements. Although management had conducted preliminary internal evaluations of strategic alternatives relating to ICONIQ during the second half of 2025, no binding commitment to sell had been approved by the Board of Directors, no definitive buyer had been identified, and no legally binding sale documentation had been executed as of that date.
Accordingly, the Company determined that, as of December 31, 2025, ICONIQ Holding Limited did not meet the criteria to be classified as held for sale under ASC 360-10-45-9, nor did the disposal qualify for presentation as a discontinued operation under ASC 205-20. The execution of the share transfer agreement and related approvals occurred after the reporting period and therefore represent a non-adjusting subsequent event. No reclassification or adjustment was required in the consolidated financial statements for the year ended December 31, 2025.
Acquisition of a Subsidiary
The Company, through its indirectly wholly owned
subsidiary Robo.ai Investments L.L.C.-FZ, entered into a share purchase agreement dated February 19, 2026 with Yuntao Liu, the
Entry into a Joint Venture Agreement with DaBoss.AI Inc.
On February 9, 2026, Robo.ai Inc. (the “Company”), through its indirectly wholly owned subsidiary, Robo.ai Investments L.L.C.-FZ, entered into a joint venture agreement with DaBoss.AI Inc. to establish a joint venture under the laws of the United Arab Emirates for the purpose of operating an Embodied AI data collection center within the Gulf Cooperation Council (“GCC”) region.
Pursuant to the agreement, Robo.ai Investments
L.L.C.-FZ will be responsible for providing non-technical infrastructure and operational support, while DaBoss.AI Inc. will be responsible
for the technical and commercial operations of the joint venture. The Company is expected to beneficially own
F-47
ROBO.AI INC.
(FORMERLY KNOWN AS NWTN Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands, except share and per share data)
28. SUBSEQUENT EVENTS (cont.)
The joint venture is expected to be established
within
The initial project of the joint venture is expected
to involve the deployment of a distributed data collection network in the United Arab Emirates. The agreement also provides that certain
data collection and annotation business opportunities within the GCC region will be conducted exclusively through the joint venture and
includes customary shareholder rights, including buyout rights, liquidation rights, rights of first refusal, and drag-along rights. The
agreement has an initial term of
Entry into a Joint Venture Agreement with Tachyon9 Corporation
On January 28, 2026, Robo.ai Inc. (the “Company”),
through its indirectly wholly owned subsidiary, Robo.ai Investments L.L.C.-FZ, entered into a joint venture agreement with Tachyon9 Corporation
to establish a joint venture under the laws of the United Arab Emirates to invest in, develop, own, and operate data center facilities.
Pursuant to the agreement, the Company will beneficially own
The joint venture’s first material project will involve the development and operation of a data center facility with a target design capacity of approximately 20 megawatts (MW) of critical IT load. The project is expected to be located in the Asia-Pacific or Middle East and North Africa regions, with the specific site to be mutually agreed upon following a feasibility study.
The joint venture agreement has a term of
Reverse Stock Split
On April 1, 2026, the Company announced that
it would implement a 1-for-20 reverse stock split of all classes of its ordinary shares, including Class A and Class B ordinary shares.
The reverse stock split was approved by the Company’s board of directors on January 19, 2026. Upon effectiveness, the number of
outstanding shares decreased from
The reverse stock split was implemented to regain
compliance with the US$
All outstanding options, warrants, and other convertible securities were proportionately adjusted in accordance with their respective terms. No fractional shares were issued in connection with the reverse stock split, and any fractional shares otherwise issuable were rounded up to the nearest whole share.
The reverse stock split has been retrospectively reflected in the calculation of earnings per share. Except for EPS, no full retrospective adjustment has been made to prior period share or per-share information in the accompanying consolidated financial statements and related disclosures.
Adoption of Equity Incentive Plan (EIP 2026)
On February 27, 2026, the Company adopted the
Equity Incentive Plan (2026) (the “EIP 2026”), which is substantially consistent with the Company’s previously adopted
Equity Incentive Plan (2022) (the “EIP 2022”), except that the EIP 2026 authorizes the issuance of up to
All awards previously granted under the EIP 2022 remain outstanding and continue to be governed by their respective terms. The Board of Directors approved the EIP 2026 to promote the Company’s long-term growth and profitability by providing performance-based incentives to employees, directors and consultants.
Meanwhile, the Board approved the issuance of
F-48
Exhibit 2.4
Description of Securities
The following description of the material terms of the share capital of Robo.ai Inc. includes a summary of specified provisions of our Amended and Restated Memorandum and Articles of. References in this section to “Robo.ai Inc.,” “we”, “our” or “us” refer to Robo.ai Inc., an exempted company organized under the laws of the Cayman Islands.
The rights of shareholders described in this section are available only to Robo.ai Inc.’s shareholders. For the purposes of this section, a “shareholder” means a person who holds shares of Robo.ai Inc..
General
The Fourth Amended and Restated Memorandum and Articles of Association authorizes the issuance of up to 500,000,000 Class A ordinary shares and 3,500,000,000 Class B ordinary shares, each of $0.0001 par value per share.
Ordinary Shares
Holders of Class A ordinary shares and Class B ordinary shares generally have the same rights and powers except for voting and conversion rights. The holders of Class B ordinary shares are entitled to one vote for each share held of record on all matters to be voted on by shareholders, while the holders of Class A ordinary shares are entitled to twenty-five (25) votes.
There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the votes cast at an annual meeting for the election of directors can elect all of the directors to be elected at such general meeting.
Each Class A ordinary share will be convertible into one (1) Class B ordinary share (as adjusted for share splits, share combinations and similar transactions) at the option of the holder thereof. Class B ordinary shares will not be convertible into Class A ordinary shares under any circumstances. Holders of Class B ordinary shares do not have any conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to Class B ordinary shares.
There are no limitations on the right of non-resident or foreign owners to hold or vote ordinary shares imposed by Cayman Islands law or by the Fourth Amended and Restated Memorandum and Articles of Association.
Alan Nan WU controls the voting power of all of the outstanding Class A ordinary shares. Although Alan Nan WU controls the voting power of all of the outstanding Class A ordinary shares, his control over those shares is not permanent and is subject to reduction or elimination at any time or after certain periods as a result of a variety of factors. As further described below, upon any transfer of Class A ordinary shares by a holder thereof to any person which is not a Permitted Transferee (as defined below) of such holder, those shares will automatically and immediately convert into Class B ordinary shares. In addition, all Class A ordinary shares will automatically convert to Class B ordinary shares in other events described below. See “— Optional and Mandatory Conversion.”
Voting Rights
Holders of our ordinary shares have the right to receive notice of, attend, speak and vote at general meetings of the shareholders. In respect of all matters upon which holders of our ordinary shares are entitled to vote, each Class A ordinary share is entitled to twenty-five (25) votes and each Class B ordinary share is entitled to one (1) vote. At any meeting of shareholders, a resolution put to the vote of the meeting shall be decided by way of a show of hands and not by way of a poll, unless before, or on, the declaration of the result of the show of hands, a poll is duly demanded.
Class A ordinary shares and Class B ordinary shares vote together on all matters, except that we will not, without the approval of holders of a majority of the voting power of the Class A ordinary shares, voting exclusively and as a separate class:
| ● | increase the number of authorized Class A ordinary shares; |
| ● | issue any Class A ordinary shares or securities convertible into or exchangeable for Class A ordinary shares, other than (i) to any Key Executive (as defined below) or their Affiliates (as defined below), or (ii) on a pro rata basis to all holders of Class A ordinary shares permitted to hold such shares under the Fourth Amended and Restated Memorandum and Articles of Association; |
| ● | create, authorize, issue, or reclassify into, any preference shares in our capital or any shares in our capital that carry more than one (1) vote per share; |
| ● | reclassify any Class A ordinary shares into any other class of shares or consolidate or combine any Class A ordinary shares without proportionately increasing the number of votes per Class A ordinary share; or |
| ● | amend, restate, waive, adopt any provision inconsistent with or otherwise vary or alter any provision of the Fourth Amended and Restated Memorandum and Articles of Association relating to the voting, conversion or other rights, powers, preferences, privileges or restrictions of Class A ordinary shares. |
An ordinary resolution to be passed by the shareholders will require a simple majority of votes cast at a meeting of shareholders, while a special resolution will require not less than two-thirds of votes cast at a meeting of shareholders. An ordinary resolution and a special resolution may also be passed by way of a unanimous resolution in writing of shareholders entitled to vote, with prior notice duly given.
Optional and Mandatory Conversion
Each Class A ordinary share will be convertible into one (1) Class B ordinary share (as adjusted for share splits, share combinations and similar transactions) at the option of the holder thereof. Class B ordinary shares will not be convertible into Class A ordinary shares under any circumstances.
Any number of Class A ordinary shares held by a holder thereof will automatically and immediately be converted into an equal number of Class B ordinary shares (as adjusted for share splits, share combinations and similar transactions) upon the occurrence of any of the following:
| ● | Any direct or indirect sale, transfer, assignment, or disposition of such number of Class A ordinary shares by the holder thereof or the direct or indirect transfer or assignment of the voting power attached to such number of Class A ordinary shares through voting proxy or otherwise to any person that is not a Permitted Transferee of such holder; or |
| ● | The direct or indirect sale, transfer, assignment, or disposition of a majority of the issued and outstanding voting securities of, or the direct or indirect transfer or assignment of the voting power attached to such voting securities through voting proxy or otherwise, or the direct or indirect sale, transfer, assignment, or disposition of all or substantially all of the assets of, a holder of Class A ordinary shares that is an entity to any person that is not a Permitted Transferee of the such holder. |
Transfer of Ordinary Shares
Class A ordinary shares may be transferred only to a Permitted Transferee of the holder and any Class A ordinary shares transferred otherwise will be converted into Class B ordinary shares as described above. See ” Optional and Mandatory Conversion.”
“Affiliate” means, with respect to a person, (i) any other person which, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such person, including trusts, funds and accounts promoted, sponsored, managed, advised or serviced by such person (ii) if such person is an individual, his/her Family Member (as defined below) and Affiliates of such person and/or his/her Family Members; provided, that in the case of a Key Executive, the term Affiliate shall include such Key Executive’s Permitted Entities (as defined below), notwithstanding anything to the contrary contained herein.
2
A “Permitted Transferee” with respect to each holder of Class A ordinary shares, any or all of the following:
(a) any Key Executive;
(b) any Key Executive’s Affiliate;
(c) Robo.ai Inc. or any of its subsidiaries;
(d) in connection with a transfer as a result of, or in connection with, the death or incapacity of a Key Executive: any Key Executive’s Family Members, another holder of Class A ordinary shares, or a designee approved by majority of all directors, provided that in case of any transfer of Class A ordinary shares pursuant to clauses (b) through (c) above to a person who at any later time ceases to be a Permitted Transferee under the relevant clause, Robo.ai Inc. shall be entitled to refuse registration of any subsequent transfer of such Class A ordinary shares except back to the transferor of such Class A ordinary shares pursuant to clauses (b) through (c) (or to a Key Executive or his or her Permitted Transferees) and in the absence of such transfer back to the transferor (or to a Key Executive or his or her Permitted Transferees), the applicable Class A ordinary shares be subject to mandatory conversion as set out above.
“Key Executives” means Muse Limited, a company incorporated in the Cayman Islands, and Mr. Alan Nan WU, the sole shareholder of Muse Limited.
“Permitted Entity” means, with respect to any Key Executive:
| (a) | any person in respect of which such Key Executive has, directly or indirectly: (i) control with respect to the voting of all the Class A ordinary shares held by or to be transferred to such person; (ii) the ability to direct or cause the direction of the management and policies of such person or any other person having the authority referred to in the preceding clause (a)(i) (whether by contract, as executor, trustee, trust protector or otherwise); or (iii) the operational or practical control of such person, including through the right to appoint, designate, remove or replace the person having the authority referred to in the preceding clauses (a)(i) or (ii); |
| (b) | any trust or estate planning entity (including partnerships, limited companies, and limited liability companies), that is primarily for the benefit of, or the ownership interests of which are controlled by, the Key Executive or its Affiliates and/or any persons controlled directly or indirectly controlled by such a trust or other trusts or estate planning entities described in this paragraph (b). |
“Family Member” means, with respect to an individual, any of such individual’s former, current or future spouse, parent, step-parent, grandparent, step-grandparent, child, step-child, grandchild, step-grandchild, sibling, step-sibling, niece, nephew and in-laws, including adoptive relationships.
3
Warrants
Public and Private Warrants
Each warrant (other than the Representative’s Warrants, as defined and described below) represents the right to purchase one-half (1/2) of one Class B ordinary share at a price of $11.50 per share, subject to adjustment as discussed below, until November 14, 2027. No public warrants are exercisable for cash unless we have an effective and current registration statement covering the ordinary shares issuable upon exercise of such warrants and a current prospectus relating to such ordinary shares. Pursuant to the Amendment to Warrant Agreement that we entered into in connection with the consummation of the Business Combination, a copy of which is filed as Exhibit 10.1 to our Form 6-K filed with the SEC on November 21, 2022, and incorporated herein by reference, Robo.ai Inc. will bear all fees and expenses attendant to registering the securities, other than underwriting commissions, which will be paid for by the holders themselves. Notwithstanding the foregoing, if a registration statement covering the shares issuable upon exercise of such warrants is not effective within a specified period following the closing of the Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period during which we have failed to maintain an effective registration statement, exercise warrants on a cashless basis in the same manner as if we had called the warrants for redemption and required all holders to exercise their warrants on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose will mean the average reported last sale price of our ordinary shares for the ten (10) trading days ending on the trading day prior to the date of exercise. The public warrants will become exercisable on the later of the Closing Date and 12 months from February 24, 2021 and will expire on the fifth (5th) anniversary of the Closing Date.
Our private warrants are identical to the public warrants, except that such private warrants are be exercisable for cash (even if a registration statement covering the ordinary shares issuable upon exercise of such warrants is not effective) or on a cashless basis, at the holder’s option, and are not redeemable by us, in each case so long as they are still held by the initial purchasers or their affiliates. In addition, for as long as the private warrants are held by I-Bankers or their respective designees or affiliates, they may not be exercised after February 19, 2025.
The Representative’s Warrants (as defined below) are identical to our public warrants, except that each Representative Warrant is exercisable to purchase one full Class B ordinary share at $12.00 per share. Such warrants are not redeemable for as long as they are held by I-Bankers or their respective designees or affiliates, and they may not be exercised after February 24, 2025.
We may call the warrants for redemption (excluding the private warrants and the Representative’s Warrants), in whole and not in part, at a price of $0.01 per warrant,
| ● | at any time while the warrants are exercisable; |
| ● | upon not less than 30 days’ prior written notice of redemption to each warrant holder; and |
| ● | if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants commencing five business days prior to the 30-day trading period and continuing each day thereafter until the date of redemption. |
The right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such warrant.
The redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants.
If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. In this case, the “fair market value” will mean the average reported last sale price of the ordinary shares traded in the form of Class B ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Whether we will exercise our option to require all holders to exercise their warrants on a “cashless basis” will depend on a variety of factors including the price of our Class B ordinary shares at the time the warrants are called for redemption, our cash needs at such time and concerns regarding dilutive stock issuances.
4
The exercise price and number of Class B ordinary shares issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below their respective exercise prices.
The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of ordinary shares and any voting rights until they exercise their warrants and receive ordinary shares. After the issuance of ordinary shares upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.
Warrant holders may elect to be subject to a restriction on the exercise of their warrants such that an electing warrant holder would not be able to exercise their warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% (or such other amount specified by the holder) of the ordinary shares outstanding.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up or down to the nearest whole number the number of ordinary shares to be issued to the warrant holder.
There are no limitations on the right of non-resident or foreign owners to hold warrants imposed by Cayman Islands law or by the Fourth Amended and Restated Memorandum and Articles of Association.
Representative’s Warrants
On February 24, 2020, East Stone Acquisition Corporation, a British Virgin Islands business company (“East Stone”), issued an aggregate of 690,000 warrants of East Stone (“Representative’s Warrants”), exercisable at $12.00 per full share, to East Stone’s underwriters, I-Bankers Securities, Inc. and EarlyBird Capital, Inc., in connection with their services as underwriters for East Stone’s initial public offering (the “IPO”). In connection with the closing of the Business Combination, each outstanding Representative’s Warrant was converted into one warrant of Robo.ai Inc. that entitles the holder thereof to purchase one full Class B ordinary share of Robo.ai Inc. in lieu of one ordinary share of East Stone. The Representative’s Warrants may be exercised for cash or on a cashless basis, at the holder’s option, at any time during the period commencing on the later of the first anniversary of the effective date of the IPO registration statement of East Stone and the closing of East Stone’s initial business combination and terminating on the fifth anniversary of such effectiveness date. The underwriters have each agreed that neither it nor its designees will be permitted to exercise the warrants after the five-year anniversary of the effective date of the registration statement.
The Representative’s Warrants and such shares purchased pursuant to the Representative’s Warrants have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 360 days immediately following the date of the effectiveness of the IPO registration statement of East Stone pursuant to FINRA Rule 5110(g)(1). Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 360 days immediately following the effective date of the registration statement, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 360 days immediately following the effective date of the IPO registration statement of East Stone except to any underwriter and selected dealer participating in the IPO and their bona fide officers or partners. The Representative’s Warrants grant to holders demand and “piggy back” rights for periods of five and seven years, respectively, from the effective date of the IPO registration statement of East Stone with respect to the registration under the Securities Act of the ordinary shares issuable upon exercise of the Representative’s Warrants. The exercise price and number of ordinary shares issuable upon exercise of the Representative’s Warrants may be adjusted in certain circumstances including in the event of a share dividend, or Robo.ai Inc.’s recapitalization, reorganization, merger or consolidation. However, the Representative’s Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price.
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Dividends
We have never declared or paid any cash dividend on our ordinary shares. We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. Any further determination to pay dividends on our ordinary shares would be at the discretion of our board of directors, subject to applicable laws, and would depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our board of directors may deem relevant.
Tax Treaty
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by Robo.ai Inc.. There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of our ordinary shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares, nor will gains derived from the disposal of our ordinary shares be subject to Cayman Islands income, withholding or corporation tax.
No Cayman Islands stamp duty is payable in respect of the issue of our ordinary shares or on an instrument of transfer in respect of our ordinary shares. However, as above, Cayman Islands stamp duty will be payable if an instrument of transfer is executed in, or brought to, the Cayman Islands (including being produced to a court of the Cayman Islands).
Anti-Takeover Provisions
Some provisions of Cayman Islands law and our Fourth Amended and Restated Memorandum and Articles of Association may have the effect of delaying, deterring or discouraging another party from acquiring control of our Company. Our Fourth Amended and Restated Memorandum and Articles of Association provide for a classified board of directors with three-year staggered terms as well as restrictions requiring the holders of shares together carrying at least one-third of the rights to vote at a shareholder meeting to be able to requisition a general meeting of shareholders. As a matter of Cayman Islands law, any resolutions in writing must be passed unanimously.
These provisions of our Fourth Amended and Restated Memorandum and Articles of Association and Cayman Islands law could delay the ability of shareholders to change the membership of a majority of its board, force shareholder action to be taken at an annual meeting or an extraordinary general meeting called by our board of directors or on the requisition of the holders of shares carrying at least one-third of the rights to vote at a shareholder meeting, and in turn delay the ability of shareholders to force consideration of a proposal or take action.
Our Fourth Amended and Restated Memorandum and Articles of Association requires an ordinary resolution to remove any director. Our Fourth Amended and Restated Memorandum and Articles of Association and Cayman Islands law also require a special resolution to amend the Fourth Amended and Restated Memorandum and Articles of Association. Such requirements may prevent our existing shareholders from effecting a change of management of our Company and removing the provisions in our constitutional documents that may have an anti-takeover effect.
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Exhibit 4.4
ROBO.AI INC.
2026 EQUITY INCENTIVE PLAN
| 1 | Purposes of the Plan. The purposes of this Plan are: |
| ● | to attract and retain the best available personnel for positions of substantial responsibility, |
| ● | to provide additional incentive to Employees, Directors and Consultants, and |
| ● | to promote the success of the Company’s business. |
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Performance Awards.
| 2 | Definitions. As used herein, the following definitions will apply: |
| 2.1 | “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan. |
| 2.2 | “Applicable Laws” means the legal and regulatory requirements relating to the administration of equity-based awards, including but not limited to the related issuance of Ordinary Shares, including but not limited to, under Cayman Islands laws, U.S. federal and state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange (or share exchange) or quotation system on which the Ordinary Shares are listed or quoted and the applicable laws of any non-U.S. country or jurisdiction where Awards are, or will be, granted under the Plan or in which the Participant resides. |
| 2.3 | “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, or Performance Awards. |
| 2.4 | “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. |
| 2.5 | “Board” means the Board of Directors of the Company. |
| 2.6 | [Reserved]. |
| 2.7 | “Cause” means, unless another definition is provided in an applicable Award Agreement, employment agreement, or other applicable written agreement with a Participant and the Company (or any Parent or Subsidiary of the Company) or another definition required by Applicable Laws, the occurrence of any of the following: (a) the Participant’s conviction of, or plea of nolo contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude; (b) the Participant’s gross misconduct in connection with the performance of services to the Company or any Parent or Subsidiary, which is reasonably likely to cause material harm to the Company or any Parent or Subsidiary of the Company; (c) the Participant’s wilful and unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any Parent or Subsidiary of the Company, or any other party to whom the Participant owes an obligation of nondisclosure as a result of the Participant’s relationship with the Company or any Parent or Subsidiary of the Company, which is reasonably likely to cause material harm to the Company or any Parent or Subsidiary of the Company; or (d) the Participant’s wilful violation of Applicable Laws relating to the business of the Company or any Parent or Subsidiary of the Company. |
| 2.8 | “Change in Control” means the occurrence of any of the following events after the later of the Registration Date and the Effective Time: |
| (a) | Change in Ownership of the Company. A change in the ownership of the Company which occurs on the date that any one Person, or more than one Person acting as a group, acquires ownership of the shares of the Company that, together with the shares held by such Person or Persons acting as a group, constitutes more than fifty percent (50%) of the total voting power of the shares of the Company; provided, however, that for purposes of this Section 2.8, the acquisition of additional shares by any one Person or Persons acting as a group, who prior to such acquisition is considered to own more than fifty percent (50%) of the total voting power of the shares of the Company will not be considered a Change in Control; provided, further, that any change in the ownership of the shares of the Company as a result of a private financing of the Company that is approved by the Board also will not be considered a Change in Control; whether a transaction is a private financing will be determined by the Board in its sole discretion. Further, if the shareholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting shares immediately prior to the change in ownership, direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the shares of the Company or of the ultimate parent entity of the Company, such event will not be considered a Change in Control under this Section . For this purpose, indirect beneficial ownership will include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; or |
| (b) | Change in Effective Control of the Company. If the Company has a class of securities registered pursuant to Section 12 of the Exchange Act, a change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12)-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the appointment or election. For purposes of this Section 2.8, if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or |
| (c) | Change in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person or Persons acting as a group acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such Person or Persons acting as a group) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this Section 2.8, the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: |
| (i) | a transfer to an entity that is controlled by the Company’s shareholders immediately after the transfer, or |
| (ii) | a transfer of assets by the Company to: |
| (A) | a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s shares, |
| (B) | an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, |
| (C) | a Person or Persons acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding shares of the Company, or |
| (D) | an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person or Persons acting as a group described in Section 2.8 to Section . |
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| (d) | For purposes of this Section 2.8, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. For purposes of this Section 2.8, Persons will be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of shares, or similar business transaction with the Company. “Person” means a person as defined in the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act; however, wholly-owned subsidiaries of the Company shall not be considered “Persons” for purposes of this Section 2.8. |
| (e) | A transaction will not be a Change in Control: |
| (i) | unless the transaction qualifies as a change in control event within the meaning of Section 409A, provided that in this subsection (i) will have effect only if (A) the Award is subject to Section 409A, and (B) giving effect to this subsection (i) is necessary in order to avoid a violation of Section 409A; or |
| (ii) | if its primary purpose is to (A) change the jurisdiction of the Company’s incorporation, or (B) create a holding company owned in substantially the same proportions by the Persons or Persons acting as a group who held the Company’s securities immediately before such transaction. |
| 2.9 | “Code” means the U.S. Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder will include such section or regulation, any valid regulation or other formal guidance of general or direct applicability promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. |
| 2.10 | “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or by a duly authorized committee of the Board, in accordance with Section 4 hereof. |
| 2.11 | “Company” means Robo.ai Inc., an exempted company incorporated with limited liability in the Cayman Islands, or any of its successors. |
| 2.12 | “Consultant” means any natural person, including an advisor, engaged by the Company or any of its Parent or Subsidiaries to render bona fide services to such entity, provided the services (a) are not in connection with the offer or sale of securities in a capital-raising transaction, and (b) do not directly promote or maintain a market for the Company’s securities, in each case, within the meaning of Form S-8 promulgated under the Securities Act, and provided further, that a Consultant will include only those persons to whom the issuance of Shares may be registered under Form S-8 promulgated under the Securities Act. |
| 2.13 | “Designated Beneficiary” means the beneficiary or beneficiaries the Participant designates, in a manner the Administrator determines, to receive amounts due or exercise the Participant’s rights if the Participant dies or becomes incapacitated. Without a Participant’s effective designation, “Designated Beneficiary” will mean the Participant’s estate. |
| 2.14 | “Director” means a member of the Board. |
| 2.15 | “Disability” means total and permanent disability as defined in Code Section 22(e)(3), provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non- discriminatory standards adopted by the Administrator from time to time. |
| 2.16 | “Effective Time” means the date of Board approval of this Plan. |
| 2.17 | “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company. |
| 2.18 | “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder. |
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| 2.19 | “Exchange Program” means a program under which (a) outstanding Awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (b) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (c) the exercise price of an outstanding Award is reduced or increased. The Administrator will determine the terms and conditions of any Exchange Program in its sole discretion. |
| 2.20 | “Fair Market Value” means, as of any date and unless the Administrator determines otherwise, the value of an Ordinary Share determined as follows: |
| (a) | If the Ordinary Shares are listed on any established stock exchange (or share exchange) or a national market system, including without limitation the New York Stock Exchange or the NASDAQ Global Select Market, the NASDAQ Global Market, or the NASDAQ Capital Market of The NASDAQ Stock Market, its Fair Market Value will be the closing sales price for such shares (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported by such source as the Administrator deems reliable. If the determination date for the Fair Market Value occurs on a non-Trading Day (i.e., a weekend or holiday), the Fair Market Value will be such price on the immediately preceding Trading Day, unless otherwise determined by the Administrator; |
| (b) | If the Ordinary Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value will be the mean between the high bid and low asked prices for the Ordinary Shares on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last Trading Day such bids and asks were reported), as reported by such source as the Administrator determines to be reliable; or |
| (c) | Absent an established market for the Ordinary Shares, the Fair Market Value will be determined in good faith by the Administrator and, to the extent applicable, in accordance with Section 409A. |
Notwithstanding the foregoing, if the determination date for the Fair Market Value occurs on a weekend, holiday or other day other than a Trading Day, the Fair Market Value will be the price as determined under subsections (a) or (b) above on the immediately preceding Trading Day, unless otherwise determined by the Administrator. In addition, for purposes of determining the fair market value of shares for any reason other than the determination of the exercise price of Options or Stock Appreciation Rights, fair market value will be determined by the Administrator in a manner compliant with Applicable Laws and applied consistently for such purpose. The determination of fair market value for purposes of tax withholding may be made in the Administrator’s sole discretion subject to Applicable Laws and is not required to be consistent with the determination of fair market value for other purposes.
| 2.21 | “Fiscal Year” means the fiscal year of the Company. |
| 2.22 | “Incentive Stock Option” or “Incentive Share Option” means an Option that is designated as an “incentive stock option” that by its terms qualifies or is otherwise intended to qualify as an incentive stock option within the meaning of Code Section 422 and the regulations promulgated thereunder. |
| 2.23 | “Inside Director” means a Director who is an Employee. |
| 2.24 | “Nonstatutory Stock Option” or “Nonstatutory Share Option” means an Option that is not designated as an Incentive Stock Option or by its terms does not qualify or is not intended to qualify as an Incentive Stock Option. |
| 2.25 | “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. |
| 2.26 | “Option” means any option to purchase Ordinary Shares granted pursuant to Section 6. |
| 2.27 | “Ordinary Shares” means the Class A ordinary shares of par value US$0.0001 of the Company (“Class A Ordinary Share”) and the Class B ordinary shares of par value US$0.0001 of the Company (“Class B Ordinary Share”). |
| 2.28 | “Outside Director” means a Director who is not an Employee. |
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| 2.29 | “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Code Section 424(e). |
| 2.30 | “Participant” means the holder of an outstanding Award. |
| 2.31 | “Performance Awards” means an Award under Section 10 which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be cash- or share-denominated and may be settled for cash, Shares or other securities or a combination of the foregoing. |
| 2.32 | “Performance Period” means Performance Period as defined in Section 10.1. |
| 2.33 | “Period of Restriction” means the period (if any) during which the transfer of Shares of Restricted Stock is subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator. |
| 2.34 | “Plan” means this Robo.ai Inc. 2026 Equity Incentive Plan, as may be amended from time to time. |
| 2.35 | “Registration Date” means the effective date of the first registration statement that is filed by the Company and declared effective pursuant to Section 12(b) of the Exchange Act, with respect to any class of the Company’s securities. |
| 2.36 | “Restricted Stock” or “Restricted Share” means Shares issued pursuant to an Award of Restricted Stock under Section 8 of the Plan, or issued pursuant to the early exercise of an Option. |
| 2.37 | “Restricted Stock Unit” or “Restricted Share Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 9. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company. |
| 2.38 | “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. |
| 2.39 | “Section 16b” means Section 16(b) of the Exchange Act. |
| 2.40 | “Section 409A” means Code Section 409A and the U.S. Treasury Regulations and guidance thereunder, and any applicable state law equivalent, as each may be promulgated, amended or modified from time to time. |
| 2.41 | “Section 457A” or “Code Section 457A” means Code Section 457A and the U.S. Treasury Regulations and guidance thereunder, and any applicable state law equivalent, as each may be promulgated, amended or modified from time to time. |
| 2.42 | “Securities Act” means the U.S. Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder. |
| 2.43 | “Service Provider” means an Employee, Director or Consultant. |
| 2.44 | “Share” means an Ordinary Share, as adjusted in accordance with Section 15 of the Plan. |
| 2.45 | “Stock Appreciation Right” or “Share Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 7 is designated as a Stock Appreciation Right. |
| 2.46 | “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Code Section 424(f). |
| 2.47 | “Trading Day” means a day that the primary stock exchange (or share exchange), national market system, or other trading platform, as applicable, upon which the Ordinary Shares are listed (or otherwise trades regularly, as determined by the Administrator, in its sole discretion) is open for trading. |
| 2.48 | “U.S. Treasury Regulations” means the Treasury Regulations of the Code. Reference to a specific Treasury Regulation or section of the Code will include such Treasury Regulation or section, any valid regulation or other official applicable guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. |
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| 3 | Shares Subject to the Plan. |
| 3.1 | Shares Subject to the Plan. Subject to adjustment upon changes in capitalization of the Company as provided in Section 15 and the automatic increase set forth in Section 3.2, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan will be equal to (a) a number of Class B Ordinary Shares equal to fifteen percent (15%) of the aggregate number of Ordinary Shares issued and outstanding as of effectiveness of the Plan plus a number of Class A Ordinary Shares equal to fifty percent (50%) of the aggregate number of Ordinary Shares issued and outstanding as of effectiveness of the Plan, and that, (b) on or after the Effective Time, are cancelled, expire or otherwise terminate without having been exercised in full, are forfeited to or repurchased by the Company due to failure to vest, or are withheld by the Company from Assumed Awards other than restricted stock for payment of an exercise price or for tax withholding obligations. In addition, Shares may become available for issuance under Sections 3.2 and 3.3. The Shares may be authorized but unissued, or reacquired Ordinary Shares. |
| 3.2 | Automatic Share Reserve Increase. Subject to adjustment upon changes in capitalization of the Company as provided in Section 15, the number of Shares available for issuance under the Plan will be increased on the first day of each Fiscal Year beginning with the 2023 Fiscal Year, in an amount equal to lesser of (a) a number equal to 1.5% of the aggregate number of Class A Ordinary Shares and Class B Ordinary Shares outstanding on the last day of the immediately preceding Fiscal Year and (b) such number of Shares as is determined by the Administrator. |
| 3.3 | Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program (other to the extent the Exchange Program include an exchange or transfer of previously granted Restricted Stock), , the unpurchased Shares which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, only Shares actually issued (i.e., the net Shares issued) pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the Plan has terminated). Shares that actually have been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units or Performance Awards are repurchased by the Company or are forfeited to the Company due to the failure to vest, such Shares will become available for future grant under the Plan. Shares subject to an Award other than Restricted Stock withheld to pay the exercise price of an Award or to satisfy the tax liabilities or withholdings related to such Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment as provided in Section 15, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3.1, plus, to the extent allowable under Code Section 422 and the U.S. Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant to Section 3.2. |
| 3.4 | Share Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan. |
| 4 | Administration of the Plan. |
| 4.1 | Procedure. |
| 4.1.1 | Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan. |
| 4.1.2 | Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the Committee and the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3. |
| 4.1.3 | Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which Committee will be constituted to comply with Applicable Laws. |
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| 4.2 | Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion: |
| (a) | to determine the Fair Market Value; |
| (b) | to select the Service Providers to whom Awards may be granted hereunder; |
| (c) | to approve forms of Award Agreements for use under the Plan; |
| (d) | to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto (including but not limited to, temporarily suspending the exercisability of an Award if the Administrator deems such suspension to be necessary or appropriate for administrative purposes or to comply with Applicable Laws, provided that such suspension must be lifted prior to the expiration of the maximum term and post-termination exercisability period of an Award), based in each case on such factors as the Administrator will determine; |
| (e) | to institute and determine the terms and conditions of an Exchange Program, including, subject to Section 20.3, to unilaterally implement an Exchange Program without the consent of the applicable Award holder; |
| (f) | to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; |
| (g) | to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of facilitating compliance with applicable non-U.S. laws, easing the administration of the Plan and/or for qualifying for favorable tax treatment under applicable non-U.S. laws, in each case as the Administrator may deem necessary or advisable; |
| (h) | to modify or amend each Award (subject to Section 20.3), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards and, subject to Section 409A to the extent applicable, to extend the maximum term of an Option or Stock Appreciation Right (subject to Sections 6.4 and 7.5); |
| (i) | to allow Participants to satisfy withholding tax obligations in a manner prescribed in Section 16; |
| (j) | to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; |
| (k) | subject to Section 409A to the extent applicable, to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that otherwise would be due to such Participant under an Award; and |
| (l) | to make all other determinations deemed necessary or advisable for administering the Plan. |
| 4.3 | Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any holders of Awards and will be given the maximum deference permitted by Applicable Laws. |
| 5 | Eligibility. |
Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, or Performance Awards may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.
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| 6 | Stock Options. |
| 6.1 | Grant of Options. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Options to Service Providers in such amounts as the Administrator, in its sole discretion, will determine. |
| 6.2 | Option Agreement. Each Award of an Option will be evidenced by an Award Agreement that will specify the exercise price, the term of the Option, the number of Shares subject to the Option, the exercise restrictions, if any, applicable to the Option, and such other terms and conditions as the Administrator, in its sole discretion, will determine. |
| 6.3 | Limitations. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. Notwithstanding such designation, however, to the extent that the aggregate fair market value of the shares with respect to which incentive stock options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars (US$100,000), such options will be treated as Nonstatutory Stock Options. For purposes of this Section 6.3, Incentive Stock Options will be taken into account in the order in which they were granted, the fair market value of the shares will be determined as of the time the option with respect to such shares is granted, and calculation will be performed in accordance with Code Section 422 and the U.S. Treasury Regulations promulgated thereunder. |
| 6.4 | Term of Option. The term of each Option will be stated in the Award Agreement; provided, however, that the term will be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns shares representing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary of the Company, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement. |
| 6.5 | Option Exercise Price and Consideration. |
| 6.5.1 | Exercise Price. The per Share exercise price for the Shares to be issued pursuant to the exercise of an Option will be determined by the Administrator, but will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. In addition, in the case of an Incentive Stock Option granted to an Employee who owns shares representing more than ten percent (10%) of the voting power of all classes of shares of the Company or any Parent or Subsidiary of the Company, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing provisions of this Section 6.5.1, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Code Section 424(a). |
| 6.5.2 | Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised. |
| 6.5.3 | Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (a) cash (including cash equivalents); (b) check; (c) promissory note, to the extent permitted by Applicable Laws; (d) other Shares or other shares of another class of Company ordinary shares, provided that such shares have a fair market value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided further that accepting such shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (e) consideration received by the Company under a cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (f) by net exercise; (g) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (h) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator will consider if acceptance of such consideration may be reasonably expected to benefit the Company. |
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| 6.6 | Exercise of Option. |
| 6.6.1 | Procedure for Exercise; Rights as a Shareholder. |
Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.
An Option will be deemed exercised when the Company receives: (a) notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (b) full payment for the Shares with respect to which the Option is exercised (together with applicable tax withholdings). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Ordinary Shares are issued (as evidenced by the appropriate entry in the Register of Members of the Company or on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan. Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
The exercise of any Option shall be subject to the Company having a sufficient number of authorized shares available to cover such exercise, including that shareholders of the Company shall have approved, in accordance with Applicable Laws (whether in a general meeting or otherwise) any necessary increase in the authorized share capital of our Company.
| 6.6.2 | Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon Participant’s termination (a) for Cause, or (b) such cessation as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within three (3) months of such cessation, or such shorter or longer period of time, as is specified in the Award Agreement, in no event later than the expiration of the term of such Option as set forth in the Award Agreement or Section 6.4. Unless otherwise provided by the Administrator or set forth in the Award Agreement or other written agreement authorized by the Administrator between the Participant and the Company or any of its Subsidiaries or Parent, as applicable, if on such date of cessation the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan immediately. If after such cessation the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan. |
| 6.6.3 | Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within six (6) months of cessation, or such longer or shorter period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement or Section 6.4, as applicable) to the extent the Option is vested on such date of cessation. Unless otherwise provided by the Administrator or set forth in the Award Agreement or other written agreement authorized by the Administrator between the Participant and the Company or any of its Subsidiaries or Parent, as applicable, if on the date of cessation the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan immediately. If after such cessation the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. |
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| 6.6.4 | Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised within six (6) months following the Participant’s death, or within such longer or shorter period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement or Section 6.4, as applicable), by the Participant’s Designated Beneficiary, provided such beneficiary has been designated prior to the Participant’s death in a form (if any) acceptable to the Administrator. If the Administrator has not permitted the designation of a beneficiary or if no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution (each, a “Legal Representative”). If the Option is exercised pursuant to this Section 6.6.4, Participant’s Designated Beneficiary or Legal Representative shall be subject to the terms of this Plan and the Award Agreement, including but not limited to the restrictions on transferability and forfeitability applicable to the Service Provider. Unless otherwise provided by the Administrator or set forth in the Award Agreement or other written agreement authorized by the Administrator between the Participant and the Company or any of its Subsidiaries or Parent, as applicable, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan immediately. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. |
| 6.6.5 | Termination for Cause. Unless otherwise provided by the Administrator, if a Participant ceases to be a Service Provider due to the Participant’s termination for Cause, the Shares covered by the Option (including both the vested and the unvested portion of the Option) will immediately revert to the Plan on the date of such termination. |
| 6.6.6 | Tolling Expiration. A Participant’s Award Agreement may also provide that: |
| (a) | if the exercise of the Option following the cessation of Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would result in liability under Section 16b, then the Option will terminate on the earlier of (i) the expiration of the term of the Option set forth in the Award Agreement, or (ii) the tenth (10th) day after the last date on which such exercise would result in liability under Section 16b; or |
| (b) | if the exercise of the Option following the cessation of the Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of Shares would violate the registration requirements under the Securities Act, then the Option will terminate on the earlier of (i) the expiration of the term of the Option or (ii) the expiration of a period of thirty (30) days after the cessation of the Participant’s status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements. |
| 7 | Stock Appreciation Rights. |
| 7.1 | Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. |
| 7.2 | Number of Shares. The Administrator will have complete discretion to determine the number of Shares subject to any Award of Stock Appreciation Rights. |
| 7.3 | Exercise Price and Other Terms. The per Share exercise price for the Shares that will determine the amount of the payment to be received upon exercise of a Stock Appreciation Right as set forth in Section 7.6 will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing provisions of this Section 7.3, Stock Appreciation Rights may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Code Section 424(a). Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan. |
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| 7.4 | Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine. |
| 7.5 | Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6.4 relating to the maximum term and Section 6.6 relating to exercise also will apply to Stock Appreciation Rights. |
| 7.6 | Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying: |
| (a) | the difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times |
| (b) | the number of Shares with respect to which the Stock Appreciation Right is exercised. |
At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof, as set forth in the Award Agreement.
| 8 | Restricted Stock. |
| 8.1 | Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant, allot and issue Restricted Stock to Service Providers in such amounts and for such consideration (with the amount of such consideration from the Participant being at least the aggregate par value of such Restricted Stock to be granted, allotted and issued) as the Administrator, in its sole discretion, will determine. For the avoidance of doubt, to the extent permitted by Applicable Laws, the Administrator may determine that such consideration from the Participant will be satisfied by the value of services rendered. |
| 8.2 | Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction (if any), the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed. The Administrator, in its sole discretion, may determine that an Award of Restricted Stock will be fully vested and will not be subject to any Period of Restriction or other vesting or restriction requirement or provision, and/or that consideration for such Award is paid for by past services rendered as a Service Provider. |
| 8.3 | Transferability. Except as provided in this Section 8 or as the Administrator determines, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. |
| 8.4 | Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate. |
| 8.5 | Removal of Restrictions. Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow or from its designation with the applicable transfer agent as restricted as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed. |
| 8.6 | Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. |
| 8.7 | Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. |
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| 8.8 | Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and, in accordance with, and to the extent provided under, the terms and conditions of the Plan, again will become available for grant under the Plan. |
| 9 | Restricted Stock Units. |
| 9.1 | Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units. |
| 9.2 | Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion. |
| 9.3 | Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout. |
| 9.4 | Form and Timing of Payment. Payment of earned Restricted Stock Units will be made at the time(s) determined by the Administrator and set forth in the Award Agreement. Consideration from the Participant for such payment must be at least the aggregate par value of the Shares subject to the Restricted Stock Unit award to be allotted and issued in settlement of the Award. For the avoidance of doubt, to the extent permitted by Applicable Laws, the Administrator may determine that such consideration from the Participant will be satisfied by the value of services rendered. The Administrator, in its sole discretion, may settle earned Restricted Stock Units in cash, Shares, or a combination of both, as set forth in the Award Agreement. |
| 9.5 | Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company and, in accordance with, and to the extent provided under, the terms and conditions of the Plan, the Shares subject to such forfeited Restricted Stock Units shall again be available under the Plan. |
| 10 | Performance Awards. |
| 10.1 | Award Agreement. Each Performance Award will be evidenced by an Award Agreement that will specify any time period during which any performance objectives or other vesting provisions will be measured (“Performance Period”), and such other terms and conditions as the Administrator determines. Each Performance Award will have an initial value that is determined by the Administrator on or before its date of grant. |
| 10.2 | Objectives or Vesting Provisions and Other Terms. The Administrator will set any objectives or vesting provisions that, depending on the extent to which any such objectives or vesting provisions are met, will determine the value of the payout for the Performance Awards. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion. |
| 10.3 | Earning Performance Awards. After an applicable Performance Period has ended, the holder of a Performance Award will be entitled to receive a payout for the Performance Award earned by the Participant over the Performance Period. The Administrator, in its discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Award. |
| 10.4 | Form and Timing of Payment. Payment of earned Performance Award will be made at the time(s) determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may settle earned Performance Award in cash, Shares, or a combination of both, as set forth in the Award Agreement. |
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| 10.5 | Cancellation of Performance Awards. On the date set forth in the Award Agreement, all unearned or unvested Performance Awards will be forfeited to the Company, and, in accordance with, and to the extent provided under, the terms and conditions of the Plan, the Shares subject to such Performance Awards shall again be available for grant under the Plan. |
| 11 | Outside Director Award Limitations. |
No Outside Director may be granted, in any Fiscal Year, equity awards (including any Awards granted under this Plan), the value of which will be based on their grant date fair value determined in accordance with U.S. generally accepted accounting principles, and be provided any cash retainers for service as an Outside Director in amounts that, in the aggregate, exceed $750,000, provided that such amount is increased to $1,000,000 in the Fiscal Year of his or her initial service as an Outside Director. Any Awards or other compensation provided to an individual (a) for his or her services as an Employee, or for his or her services as a Consultant other than as an Outside Director, or (b) prior to the Registration Date, will be excluded for purposes of this Section 11.
| 12 | Compliance With Section 409A and Exemption from Section 457A. |
Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A, and, if applicable, to be exempt from the application of Section 457A, in each case except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to be exempt from or meet the requirements of Section 409A and to be exempt from the application of Section 457A, and will be construed and interpreted in accordance with such intent (including with respect to any ambiguities or ambiguous terms), except as otherwise determined in the sole discretion of the Administrator. In no event will the Company or any of its Parent or Subsidiaries have any responsibility, liability, or obligation to reimburse, indemnify, or hold harmless a Participant (or any other person) in respect of Awards, for any taxes, penalties or interest that may be imposed on, or other costs incurred by, a Participant (or any other person) as a result of Section 409A or Section 457A and the U.S. Treasury Regulations promulgated thereunder.
| 13 | Leaves of Absence/Transfer Between Locations. |
Unless the Administrator provides otherwise or as otherwise required by Applicable Laws, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (a) any leave of absence approved by the Company or (b) transfers between locations of the Company or between the Company, its Parent, or any of its Subsidiaries. For purposes of Incentive Stock Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the first (1st) day of such leave, any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Nonstatutory Stock Option.
| 14 | Limited Transferability of Awards. |
Unless determined otherwise by the Administrator, Awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution (which, for purposes of clarification, shall be deemed to include through a beneficiary designation if available in accordance with Section 6.6, and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.
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| 15 | Adjustments; Dissolution or Liquidation; Merger or Change in Control. |
| 15.1 | Adjustments. In the event of any equity restructuring (within the meaning of the Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation or any successor or replacement accounting standard), such as a stock dividend, shares split (or stock split), spinoff, rights offering or recapitalization through a large, nonrecurring cash dividend, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of shares that may be delivered under the Plan and/or the number, class, and price of shares covered by each outstanding Award, and numerical Share limits in Section 3. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence be made to the extent and in a manner as determined to be appropriate and equitable by the Administrator to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. In either case, the decision of the Administrator regarding any such adjustment shall be final, binding and conclusive. |
| 15.2 | Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action. |
| 15.3 | Merger or Change in Control. |
| (a) | In the event of a merger of the Company with or into another corporation or other entity or a Change in Control, each outstanding Award will be treated as the Administrator (as constituted prior to the merger or Change in Control) determines (subject to the provisions of the following paragraph) without a Participant’s consent, including, without limitation, that |
| (i) | Awards will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; |
| (ii) | upon written notice to a Participant, that the Participant’s Awards will terminate upon or immediately prior to the consummation of such merger or Change in Control; |
| (iii) | outstanding Awards will vest and become exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon consummation of such merger or Change in Control, and, to the extent the Administrator determines, terminate upon or immediately prior to the effectiveness of such merger or Change in Control; |
| (iv) | (A) the termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment), or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion; or |
| (v) | any combination of the foregoing. |
In taking any of the actions permitted under this Section 15.3, the Administrator will not be obligated to treat all Awards, all Awards held by a Participant, all Awards of the same type, or all portions of Awards, similarly.
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| (b) | In the event that the successor corporation does not assume or substitute for the Award (or portion thereof), the Participant will fully vest in and have the right to exercise his or her outstanding Options and Stock Appreciation Rights (or portions thereof) not assumed or substituted for, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock, Restricted Stock Units, or Performance Awards (or portions thereof) not assumed or substituted for will lapse, and, with respect to Awards with performance-based vesting (or portions thereof) not assumed or substituted for, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met, in each case, unless specifically provided otherwise under the applicable Award Agreement or other written agreement authorized by the Administrator between the Participant and the Company or any of its Subsidiaries or Parent, as applicable. In addition, unless specifically provided otherwise under the applicable Award Agreement or other written agreement authorized by the Administrator between the Participant and the Company or any ofits Subsidiaries or Parent, as applicable, if an Option or Stock Appreciation Right (or portion thereof) is not assumed or substituted in the event of a merger or Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right (or its applicable portion) will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right (or its applicable portion) will terminate upon the expiration of such period. |
| (c) | For the purposes of this Section 15.3 and Section 15.4 below, an Award will be considered assumed if, following the merger or Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether shares, cash, or other securities or property) received in the merger or Change in Control by holders of Ordinary Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely shares ofthe successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit or Performance Awards, for each Share subject to such Award, to be solely shares of the successor corporation or its Parent equal in fair market value, as of the date of assumption, to the per share consideration received by holders of Ordinary Shares in the merger or Change in Control. |
| (d) | Notwithstanding anything in this Section 15.3 to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent, in all cases, unless specifically provided otherwise under the applicable Award Agreement or other written agreement authorized by the Administrator between the Participant and the Company or any of its Subsidiaries or Parent, as applicable; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption. For the avoidance of doubt, the Administrator may determine that, for purposes of this Section 15.3 and Section 15.4 below the Company is the successor corporation with respect to some or all Awards. |
| (e) | Notwithstanding anything in this Section 15.3 or Section 15.4 to the contrary, and unless otherwise provided in an Award Agreement, if an Award that vests, is earned or paid-out under an Award Agreement is subject to Section 409A and if the change in control definition contained in the Award Agreement (or other agreement related to the Award, as applicable) does not comply with the definition of “change in control” for purposes of a distribution under Section 409A, then any payment of an amount that is otherwise accelerated under this Section will be delayed until the earliest time that such payment would be permissible under Section 409A without triggering any penalties applicable under Section 409A. |
| 15.4 | Outside Director Awards. In the event of a Change in Control, with respect to Awards granted to an Outside Director while such individual was an Outside Director that, are assumed or substituted for, if on the date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such resignation is at the request of the acquirer), then the Participant will fully vest in and have the right to exercise outstanding Options and/or Stock Appreciation Rights as to all of the Shares underlying such Award, including those Shares which otherwise would not be vested or exercisable, all restrictions on other outstanding Awards will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met, unless specifically provided otherwise under the applicable Award Agreement, a Company policy related to Director compensation, or other written agreement authorized by the Administrator between the Participant and the Company or any of its Subsidiaries or Parent, as applicable, that specifically references this default rule. |
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| 16 | Tax Withholding. |
| 16.1 | Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any tax withholdings are due, the Company (or any of its Parent, Subsidiaries, or affiliates employing or retaining the services of a Participant, as applicable) will have the power and the right to deduct or withhold, or require a Participant to remit to the Company (or any of its Parent, Subsidiaries, or affiliates, as applicable) or a relevant tax authority, an amount sufficient to satisfy U.S. federal, state, local, non-U.S., and other taxes (including the Participant’s FICA or other social insurance contribution obligation) required by any Applicable Laws to be withheld or paid with respect to such Award (or exercise thereof). |
| 16.2 | Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax liability or withholding obligation, in whole or in part by such methods as the Administrator shall determine, including, without limitation, (a) paying cash, check or other cash equivalents, (b) electing to have the Company withhold otherwise deliverable cash or Shares having a fair market value equal to the minimum statutory amount required to be withheld or such greater amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion, (c) delivering to the Company already-owned Shares having a fair market value equal to the minimum statutory amount required to be withheld or such greater amount as the Administrator may determine, in each case, provided the delivery of such Shares will not result in any adverse accounting consequences, as the Administrator determines in its sole discretion, (d) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld or paid, (e) such other consideration and method of payment for the meeting of tax liabilities or withholding obligations as the Administrator may determine to the extent permitted by Applicable Laws, or (f) any combination of the foregoing methods of payment. The amount of the withholding obligation will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined or such greater amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion. The fair market value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld. |
| 17 | No Effect on Employment or Service. |
Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company or its Subsidiaries or Parent, as applicable, nor will they interfere in any way with the Participant’s right or the right of the Company and its Subsidiaries or Parent, as applicable, to terminate such relationship at any time, free from any liability or claim under the Plan.
| 18 | Date of Grant. |
The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
| 19 | Term of Plan. |
Subject to Section 23 of the Plan, the Plan will become effective upon the later to occur of (a) its adoption by the Board, and (b) the earlier to occur of (x) the time as of immediately prior to the Effective Time and (y) the business day immediately prior to the Registration Date. The Plan will continue in effect until terminated under Section 20 of the Plan, but (i) no Options that qualify as incentive stock options within the meaning of Code Section 422 may be granted after ten (10) years from the earlier of the Board approval of the Plan and (ii) Section 3.2 relating to the automatic share reserve increase and any provisions of Section 3 that are or would create a “formula” for purposes of The Nasdaq Capital Market listing requirements will operate only until the ten (10)-year anniversary of the earlier of the Board approval of the Plan.
16
| 20 | Amendment and Termination of the Plan. |
| 20.1 | Amendment and Termination. The Administrator, in its sole discretion, may amend, alter, suspend or terminate the Plan, or any part thereof, at any time and for any reason (but subject to Sections 20.2 and 20.3). |
| 20.2 | [Reserved] |
| 20.3 | Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. |
| 21 | Conditions Upon Issuance of Shares. |
| 21.1 | Legal Compliance. Shares will not be issued pursuant to an Award unless the exercise or vesting of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance. |
| 21.2 | Investment Representations. As a condition to the exercise or vesting of an Award, the Company may require the person exercising or vesting in such Award to represent and warrant at the time of any such exercise or vesting that the Shares are being acquired only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. |
| 22 | Inability to Obtain Authority. |
If the Company determines it to be impossible or impractical to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any registration or other qualification of the Shares under any U.S. state or federal law or non-U.S. law or under the rules and regulations of the U.S. Securities and Exchange Commission, the stock exchange (or share exchange) on which Shares ofthe same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any Shares hereunder, the Company will be relieved of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority, registration, qualification or rule compliance will not have been obtained.
| 23 | [Reserved] |
17
| 24 | Forfeiture Events. |
The Administrator may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award will be subject to the reduction, cancellation, forfeiture, recoupment, reimbursement, or reacquisition upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events may include, without limitation, termination of such Participant’s status as an Employee and/or other Service Provider for cause or any specified action or inaction by a Participant, whether before or after such termination of employment and/or other service, that would constitute cause for termination of such Participant’s status as an Employee and/or other Service Provider. Notwithstanding any provisions to the contrary under this Plan, all Awards granted under the Plan will be subject to reduction, cancellation, forfeiture, recoupment, reimbursement, or reacquisition under any clawback policy adopted by the Company and in effect as of the date of grant or any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Laws (the “Clawback Policy”). The Administrator may require a Participant to forfeit, return or reimburse the Company all or a portion of the Award and any amounts paid thereunder pursuant to the terms of the Clawback Policy or as necessary or appropriate to comply with Applicable Laws, including without limitation any reacquisition right regarding previously acquired Shares or other cash or property. Unless this Section 24 specifically is mentioned and waived in an Award Agreement or other document, no recovery of compensation under a Clawback Policy or otherwise will constitute an event that triggers or contributes to any right of a Participant to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company or any Parent or Subsidiary of the Company.
| 25 | Governing Law. |
The Plan will be governed by, and construed in accordance with, the laws of the State of Delaware (except its choice-of-law provisions).
| 26 | Non U.S. Employees. |
Without amending the Plan, the Administrator may grant awards to Service Providers who are foreign nationals and/or reside outside of the United States on such terms and conditions different from those specified in the Plan as may in the judgment of the Administrator be necessary or desirable to foster and promote achievement of the purposes of the Plan and, in furtherance of such purposes, the Administrator may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws (including without limitation any applicable exchange and tax regulations) in other countries or jurisdictions in which the Company or its Subsidiaries or Parent operates or has employees or in which the Participant resides.
18
Exhibit 8.1
List of Subsidiaries of Robo.ai Inc.
| Subsidiaries | Jurisdiction of Incorporation | |
| ROBO.AI Holding Limited | Cayman Islands | |
| Roboai Investments L.L.C.-FZ | UAE | |
| Robus Trading FZ | UAE | |
| ROBOAIIO GENERAL TRADING LLC | UAE | |
| NWTN Automobile Cars Trading - Sole Proprietary LLC | UAE | |
| Robocar Inc. | British Virgin Islands | |
| Robocar International LLC | Hong Kong | |
| Simo Robot Technology (Shanghai) LTD | Mainland China | |
| Rovtol LTD | Cayman Islands | |
| Rovtol International Limited | Cayman Islands |
Exhibit 12.1
ROBO.AI INC.
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
OF COMPANY PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(RULE 13a-14(a) or 15d-14(a) OF THE EXCHANGE ACT)
I, Benjamin Bin Zhai, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Robo.ai Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial re- porting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
| Robo.ai Inc. | ||
| Date: April 30, 2026 | By: | /s/ Benjamin Bin Zhai |
|
Benjamin Bin Zhai Chief Executive Officer and Executive Director (Principal Executive Officer) | ||
Exhibit 12.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
OF COMPANY PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(RULE 13a-14(a) or 15d-14(a) OF THE EXCHANGE ACT)
I, Adrian Wong, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Robo.ai Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial re- porting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
| Robo.ai Inc. | ||
| Date: April 30, 2026 | By: | /s/ Adrian Wong |
|
Adrian Wong Chief Financial Officer (Principal Financial Officer) | ||
Exhibit 13.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Annual Report of Robo.ai Inc. (the “Company”) on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Annual Report”), Benjamin Bin Zhai, Chief Executive Officer and Executive Director of the Company, certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Robo.ai Inc. | ||
| Date: April 30, 2026 | By: | /s/ Benjamin Bin Zhai |
|
Benjamin Bin Zhai Chief Executive Officer and Executive Director (Principal Executive Officer) | ||
Exhibit 13.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT of 2002
In connection with this Annual Report of Robo.ai Inc. (the “Company”) on Form 20-F for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Annual Report”), Adrian Wong, Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Robo.ai Inc. | ||
| Date: April 30, 2026 | By: | /s/ Adrian Wong |
|
Adrian Wong Chief Financial Officer (Principal Financial Officer) | ||
Exhibit 15.1
Robo.ai Inc. 4th Floor, Harbour Place 103
South Church Street, P.O. Box 10240 Cayman Islands
Attention The Board of Directors |
Email ccheng@applebyglobal.com
Direct Dial +852 2905 5719
Tel +852 2523 8123 Fax +852 2524 5548
Appleby Ref 471878.0004
30 April 2026 |
Suites
3504B-06 979 King’s Road Quarry
Bay
Tel +852 2523 8123
applebyglobal.com
Managing
Partner
Partners
Judy
Lee |
Robo.ai Inc. (Company)
We have acted as Cayman Islands counsel to the Company in connection with the Company’s annual report for the fiscal year ended December 31, 2025 on Form 20-F (Annual Report), which will be filed with the United States Securities and Exchange Commission (Commission) under the United States Securities Act of 1933, as amended (Securities Act).
We consent to the filing of this consent letter as an exhibit to the Annual Report and to the reference to our name under the headings "Item 3.Key Information—D. Risk Factors" and “Item 8. Financial Information —E. Taxation — Cayman Islands Tax Considerations” in the Annual Report. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act, the rules and regulations of the Commission promulgated thereunder, or Item 509 of the Commission’s Regulation S-K promulgated under the Securities Act.
Yours faithfully
/s/ Appleby
Appleby |
Bermuda ■ British Virgin Islands ■ Cayman Islands ■ Guernsey ■ Hong Kong ■ Isle of Man ■ Jersey ■ Mauritius ■ Seychelles ■ Shanghai ■ Shenzhen
Exhibit 15.2
 |
Onestop Assurance PAC |
| Co. Registration No.: 201823302D | |
| 10 Anson Road #21-14 | |
| International Plaza | |
| Singapore, 079903 | |
| Email: audit@onestop-audit.com | |
| Website: www.onestop-audit.com |
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of Robo.ai Inc. (formerly known as NWTN Inc.) of our report dated April 30, 2026, relating to the consolidated financial statements of Robo.ai Inc, which appears in the Annual Report on Form 20-F for the year ended December 31, 2025.
/s/ OneStop Assurance PAC
Onestop Assurance PAC
Singapore
April 30, 2026
Exhibit 16.1
 |
Assentsure PAC UEN – 201816648N 180B Bencoolen Street #03-01 The Bencoolen Singapore 189648 http://www.assentsure.com.sg |
September 24, 2025
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Dear Commissioners:
We have read the statements made by Robo.ai Inc. (the “Company”), which we understand will be filed with the Securities and Exchange Commission pursuant to a Form 6-K dated on or about September 24, 2025 (Commission File Number: 001-41559), concerning the change in the Company’s independent registered public accounting firm. We agree with the statements concerning our firm contained in paragraphs two and three of such Form 6-K.
We have no basis to agree or disagree with any other statements made in such Form 6-K.
Very truly yours,
| /s/ AssentSure PAC | |
| AssentSure PAC |
Chartered Accountants
Enclosed