UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: June 30, 2026

OR

☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ______ to _______.

Commission file number: 001-38544

CENNTRO INC.
 
(Exact name of registrant as specified in its charter)
Nevada
  
93-2211556
     
(State or other jurisdiction of incorporation or organization)
  
(IRS Employer Identification Number)

33 Wood Avenue South, Suite 600, PMB #3572

Iselin, New Jersey 08830

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code (732) 820-6757

Securities registered under Section 12(b) of the Exchange Act:
Title of each class:
  
Trading Symbol(s)
  
Name of each exchange on which
 registered:
         
Common Stock, $0.0001 par value per share
  
CENN
  
The Nasdaq Capital Market


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 ☒ No ☐

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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
   
Emerging growth company
☐
If an emerging growth company, 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

The registrant had 2,456,452 of the registrant’s common stock per value $0.0001 per share, issued and outstanding as of August 13, 2026.

TABLE OF CONTENTS

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Forward-Looking Statements

This Quarterly Report of Cenntro Inc. (“we,” “us,” “our,” “Cenntro” and the “Company”) contains statements that constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical facts may be deemed to be forward-looking statements. These statements appear in several different places in this Quarterly Report and, in some cases, can be identified by words such as “anticipates”, “estimates”, “projects”, “expects”, “contemplates”, “intends”, “believes”, “plans”, “may”, “will” or their negatives or other comparable words, although not all forward-looking statements contain these identifying words. Forward-looking statements in this Quarterly Report may include, but are not limited to, statements and/or information related to: our financial performance and projections; our business prospects and opportunities; our business strategy and future operations; the projection of timing and delivery of products in the future; projected costs; expected production capacity; expectations regarding demand and acceptance of our products; estimated costs of machinery to equip a new production facility; trends in the market in which we operate; the plans and objectives of management; our liquidity and capital requirements, including cash flows and uses of cash; trends relating to our industry; plans relating to our electric vehicles (“EVs”); and plans and intentions to regain compliance with the listing requirements of The Nasdaq Stock Market LLC (“Nasdaq”), including, among other things, through a reverse stock split.

We have based these forward-looking statements on our current expectations about future events on information that is available as of the date of this Quarterly Report, and any forward-looking statements made by us speak only as of the date on which they are made. While we believe these expectations are reasonable, such forward-looking statements are inherently subject to risks and uncertainties, many of which are beyond our control. Our actual future results may differ materially from those discussed or implied in our forward-looking statements for various reasons, including, our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; our capital needs, and the competitive environment of our business. Additional Factors that could contribute to such differences include, but are not limited to:

●
general economic and business conditions, including changes in interest rates;
●
prices of other EVs, costs associated with manufacturing EVs and other economic conditions;
●
the effect of an outbreak of disease or similar public health threat, or natural phenomena on the Company’s business;
●
the impact of political unrest, natural disasters or other crises, terrorist acts, acts of war and/or military operations, and our ability to maintain or broaden our business relationships and develop new relationships with strategic alliances, suppliers, customers, distributors or otherwise;
●
breaches in data security, failure of information security systems, cyber-attacks or other security or privacy-related incidents affecting us or our suppliers;
●
the ability of our information technology systems or information security systems to operate effectively;
●
actions by government authorities, including changes in government regulation and ongoing and anticipated changes in the United States political environment, including those resulting from the current presidential administration, and its control of Congress;
●
the implementation of changes to the existing tariff regime by the current presidential administration and measures taken in response to such tariffs by foreign governments;
●
risks associated with obtaining orders and executing upon such orders or the unavailability, reduction, elimination and adverse application of government subsidies and incentives or any challenge to or failure by the federal government, states or other governmental entities to adopt or enforce regulations such as the California Air Resource Board’s Advanced Clean Fleet regulation;
●
changes in attitude toward environmental, social, and governance matters among regulators, investors, and parties with which we do business
●
uncertainties associated with legal proceedings;
●
changes in the size of the EV market;
●
future decisions by management in response to changing conditions;
●
the Company’s ability to execute prospective business plans;
●
misjudgments in the course of preparing forward-looking statements;
●
the Company’s ability to raise sufficient funds to carry out its proposed business plan;
 
●
inability to keep up with advances in EV and battery technology;
●
inability to design, develop, market and sell new EVs and services that address additional market opportunities to generate revenue and positive cash flows;
●
dependency on certain key personnel and any inability to retain and attract qualified personnel;
●
inexperience in mass-producing EVs;
●
inability to succeed in establishing, maintaining and strengthening the Cenntro brand;
●
disruption of supply or shortage of raw materials and supply chain disruptions, including constraints on steel, semiconductors and other material inputs and resulting cost increases impacting our Company;
●
our ability to receive sufficient proceeds from our current and any future financing arrangements to meet our immediate liquidity needs and the potential costs, dilution and restrictions resulting from any such financing; our ability to maintain compliance with the listing requirements of the Nasdaq and the impact of any steps we have taken, including reverse splits of our common stock, on our operations, stock price and future access to funds
●
the unavailability, reduction or elimination of government and economic incentives;
●
failure to manage future growth effectively; and
●
the other risks and uncertainties detailed from time to time in our filings with the United States Securities and Exchange Commission (“SEC”), including but not limited to those described under “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on April 15, 2026 (the “Form 10-K”).

Forward-looking statements speak only as of the date hereof. Although management has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There is no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. These cautionary remarks expressly qualify, in their entirety, all forward-looking statements attributable to our Company or persons acting on our Company’s behalf. We do not undertake to update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements, except as, and to the extent required by, applicable securities laws.

INDEX
 
Page
1
1
2
3
4
5

PART I

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CENNTRO INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Expressed in U.S. dollars, except for number of shares)

         
For the Three Months Ended June 30,
    
For the Six Months Ended June 30,
  
   
Note
    
2026
    
2025
    
2026
    
2025
  
                               
Net revenues
    
2(d
)
  
$
6,221,822
    
$
6,406,918
    
$
7,433,982
    
$
8,549,976
  
Cost of goods sold
            
(5,809,002
)
    
(6,425,822
)
    
(6,784,034
)
    
(8,247,353
)
Gross profit (loss)
            
412,820
      
(18,904
)
    
649,948
      
302,623
  
                                   
　 　　 　
  
OPERATING EXPENSES:
                                  
　 　　 　
  
Selling and marketing expenses
            
(670,974
)
    
(227,580
)
    
(965,241
)
    
(1,004,297
)
General and administrative expenses
            
(3,831,516
)
    
(5,167,754
)
    
(7,240,475
)
    
(10,101,922
)
Research and development expenses
            
(465,267
)
    
(648,861
)
    
(943,400
)
    
(1,433,039
)
Impairment loss
            
(2,917,428
)
    
-
      
(2,917,428
)
    
-
  
Provision for credit losses
            
(26,513
)
    
(2,035,343
)
    
(62,831
)
    
(2,035,343
)
Total operating expenses
            
(7,911,698
)
    
(8,079,538
)
    
(12,129,375
)
    
(14,574,601
)
                                   
　 　　 　
  
Loss from operations
            
(7,498,878
)
    
(8,098,442
)
    
(11,479,427
)
    
(14,271,978
)
                                   
　 　　 　
  
OTHER INCOME (EXPENSE):
                                  
　 　　 　
  
Interest expense, net
            
(153,186
)
    
(156,396
)
    
(241,256
)
    
(275,084
)
Gain (loss) from long-term investments
            
4,263
      
3
      
(41
)
    
(36
)
Change in fair value of convertible promissory notes and derivative liability
            
1,098,426
      
(134,161
)
    
1,333,290
      
(137,290
)
Loss from Note Amendment
            
-
      
(1,756,137
)
    
-
      
(1,756,137
)
Gain from early termination of lease contract
            
-
      
-
      
-
      
1,138
  
Change in fair value of equity securities
            
-
      
259,565
      
-
      
516,277
  
Foreign currency exchange (loss) gain, net
            
(82,854
)
    
567,141
      
(189,848
)
    
971,332
  
Gain from disposal of Cenntro Electric CICS, SRL’s equity
            
-
      
1,157,556
      
-
    
1,157,556　
  
Loss on deconsolidation of a subsidiary due to insolvency
            
(1,902,577
)
    
-
      
(1,902,577
)
    
-
  
Gain (loss) from cross-currency swaps
            
167
      
26,445
      
19,517
      
(9,695
)
Other income (expense), net
            
733,427
      
(70,378
)
    
583,588
      
225,214
  
Net loss from continuing operations before taxes
            
(7,801,212
)
    
(8,204,804
)
    
(11,876,754
)
    
(13,578,703
)
Income tax benefit
            
122,143
      
15,408
      
135,068
      
27,040
  
Net loss from continuing operations
            
(7,679,069
)
    
(8,189,396
)
    
(11,741,686
)
    
(13,551,663
)
                                   
　 　　 　
  
Discontinued operations:
                                  
　 　　 　
  
Loss from discontinued operations, net of tax
            
(2,935,552
)
    
(1,705,812
)
    
(2,795,767
)
    
(2,009,202
)
                                   
　 　　 　
  
Net loss
            
(10,614,621
)
    
(9,895,208
)
    
(14,537,453
)
    
(15,560,865
)
Less: net loss attributable to non-controlling interests
            
(45,829
)
    
(5,871
)
    
(60,562
)
    
(17,192
)
Net loss attributable to the Company’s shareholders
          
$
(10,568,792
)
  
$
(9,889,337
)
  
$
(14,476,891
)
  
$
(15,543,673
)
                                   
　 　　 　
  
OTHER COMPREHENSIVE INCOME
                                  
　 　　 　
  
Foreign currency translation adjustment
            
3,029,611
      
1,097,728
      
3,530,077
      
1,488,890
  
Unrealized holding gains for available-for-sale securities
            
3,430
      
7,500
      
10,930
    
15,000　
  
Total comprehensive loss
            
(7,581,580
)
    
(8,789,980
)
    
(10,996,446
)
    
(14,056,975
)
                                   
　 　　 　
  
Less: total comprehensive loss attributable to non-controlling interests
            
(45,079
)
    
(4,547
)
    
(58,725
)
    
(15,524
)
Total comprehensive loss attributable to the Company’s shareholders
          
$
(7,536,501
)
  
$
(8,785,433
)
  
$
(10,937,721
)
  
$
(14,041,451
)
                                         
Weighted average number of shares outstanding, basic and diluted*
            
1,773,110
      
606,643
      
1,620,013
      
560,798
  
                                         
Loss per common share
                                        
Continuing operations - basic and diluted
            
(4.31
)
    
(13.49
)
    
(7.21
)
    
(24.13
)
Discontinued operations - basic and diluted
            
(1.66
)
    
(2.81
)
    
(1.73
)
    
(3.58
)
Net loss per common share - basic and diluted
            
(5.97
)
    
(16.30
)
    
(8.94
)
    
(27.71
)
* On April 13, 2026, the Company effected a 1-for-60 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every sixty (60) shares of the Company’s common stock were automatically combined into one (1) share of common stock, with any fractional shares rounded up to the nearest whole share.

All share and per share amounts presented in the accompanying unaudited condensed consolidated financial statements have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented, unless otherwise indicated.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1
CENNTRO INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars, except for the number of shares)

   
Note
    
June 30,
2026
    
December 31,
2025
  
         
(Unaudited)
        
ASSETS
                  
Current assets:
            
Cash and cash equivalents
        
$
4,331,715
    
$
4,483,906
  
Restricted cash, current
          
70,200
      
154,422
  
Accounts receivable, net
    
3
      
1,492,819
      
1,281,238
  
Inventories, net
    
4
      
18,438,696
      
21,935,893
  
Prepayment and other current assets
    
5
      
17,259,547
      
15,013,263
  
Amounts due from related parties, current
     18      
12,618
      
37,705
  
Assets held for sale, current
    
1(d
)
    
-
      
2,726,690
  
Total current assets
             41,605,595
      
45,633,117
  
                         
Non-current assets:
                        
Long-term investments
    
6
      
3,919,420
      
3,853,261
  
Property, plant and equipment, net
    
7
      
15,144,215
      
15,916,725
  
Intangible assets, net
    
8
      
5,368,765
      
6,143,776
  
Right-of-use assets
    
13
      
1,592,449
      
1,855,267
  
Other non-current assets, net
            
787,732
      
1,027,144
  
Total non-current assets
            
26,812,581
      
28,796,173
  
                         
Total Assets
    
$
68,418,176
    
$
74,429,290
  
                         
LIABILITIES AND EQUITY
                        
                         
LIABILITIES
                        
Current liabilities:
                        
Accounts payable
    
9
    
$
4,660,312
    
$
5,532,563
  
Short-term loans and current portion of long-term loans
    
11
      
2,948
      
1,259,813
  
Accrued expenses and other current liabilities
    
10
      
10,623,412
      
8,348,095
  
Contract liabilities
            
5,679,876
      
3,021,544
  
Operating lease liabilities, current
    
13
      
890,338
      
1,434,441
  
Convertible promissory notes
    
14
      
2,623,377
      
3,955,897
  
Deferred government grant, current
            
113,761
      
110,378
  
Amounts due to a related party
    
18
      
569,062
      
889,675
  
Liabilities held for sale, current
    
1(d
)
    
-
      
2,103,088
  
Total current liabilities
            
25,163,086
      
26,655,494
  
                         
Non-current liabilities:
                        
Long-term loans
    
11
      
3,537,162
      
1,214,054
  
Deferred tax liabilities
            
4,159
      
142,312
  
Deferred government grant, non-current
            
1,734,861
      
1,738,449
  
Derivative liability - placement agent warrant
    
14
      
3,456,285
      
3,457,055
  
Operating lease liabilities, non-current
    
13
      
543,331
      
841,449
  
Total non-current liabilities
            
9,275,798
      
7,393,319
  
                   
　　
  
Total Liabilities
          
$
34,438,884
    
$
34,048,813
  
                         
Commitments and contingencies
    
17
      
 
      
 
  
                         
EQUITY
                        
Common stock ($0.0001 par value; 3,000,000,000 shares authorized; 2,465,452 and 1,465,214 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively) *
     19
      
247
      
147
  
Additional paid in capital
            
442,335,208
      
437,740,047
  
Accumulated deficit
            
(406,348,978
)
    
(391,872,087
)
Accumulated other comprehensive loss
      
(2,046,269
)
    
(5,585,439
)
Total equity attributable to shareholders
            
33,940,208
      
40,282,668
  
Non-controlling interests
      
39,084
      
97,809
  
Total Equity
          
$
33,979,292
    
$
40,380,477
  
Total Liabilities and Equity
    
$
 68,418,176    
$
74,429,290
  

* On April 13, 2026, the Company effected a 1-for-60 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every sixty (60) shares of the Company’s common stock were automatically combined into one (1) share of common stock, with any fractional shares rounded up to the nearest whole share.

All share and per share amounts presented in the accompanying unaudited condensed consolidated financial statements have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented, unless otherwise indicated.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2
CENNTRO INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in U.S. dollars, except for number of shares)

   
Common Stock
    
Additional
paid in capital
    
Accumulated
deficit
    
Accumulated
other
comprehensive
loss
    
Total
shareholders’
equity
    
Non-
controlling
interest
    
Total equity
  
   
Shares*
    
Amount
                                      
Balance as of December
31, 2024
    
514,444
    
$
51
    
$
405,757,052
    
$
(318,890,314
)
  
$
(9,029,499
)
  
$
77,837,290
    
$
122,212
    
$
77,959,502
  
Share-based compensation
    
-
      
-
      
1,459,588
      
-
      
-
      
1,459,588
      
-
      
1,459,588
  
Conversion of convertible bonds into shares
    
39,848
      
4
      
1,826,127
      
-
      
-
      
1,826,131
      
-
      
1,826,131
  
Cashless exercise of warrant
    
244,256
      
25
      
12,487,813
      
-
      
-
      
12,487,838
      
-
      
12,487,838
  
Net loss
    
-
      
-
      
-
      
(15,543,673
)
    
-
      
(15,543,673
)
    
(17,192
)
    
(15,560,865
)
Unrealized holding gains for available-for-sale securities
    
-
      
-
      
-
      
-
      
15,000
      
15,000
      
-
      
15,000
  
Disposal of a subsidiary
    
-
      
-
              
-
      
58,122
      
58,122
      
12,041
      
70,163
  
Foreign currency translation adjustment
    
-
      
-
      
-
      
-
      
1,487,222
      
1,487,222
      
1,668
      
1,488,890
  
 Balance as of June 30,
2025 (unaudited)
    
798,548
    
$
80
    
$
421,530,580
    
$
(334,433,987
)
  
$
(7,469,155
)
  
$
79,627,518
    
$
118,729
    
$
79,746,247
  

   
Common stock
    
Additional
paid in
capital
    
Accumulated
deficit
    
Accumulated
other
comprehensive
loss
    
Total
shareholders’
equity
    
Non-
controlling
interest
    
Total equity
  
   
Shares*
    
Amount
                                      
Balance as of December
31, 2025
    
1,465,214
    
$
147
    
$
437,740,047
    
$
(391,872,087
)
  
$
(5,585,439
)
  
$
40,282,668
    
$
97,809
    
$
40,380,477
  
Share-based compensation
    
-
      
-
      
665,261
      
-
      
-
      
665,261
      
-
      
665,261
  
Issuance of ordinary shares
    
1,000,000
      
100
      
3,929,900
      
-
      
-
      
3,930,000
      
-
      
3,930,000
  
Fractional shares issued due to reverse stock split
    
238
       -
   
-
      
-
      
-
      
-
      
-
      
-
  
Net loss
    
-
      
-
      
-
      
(14,476,891
)
    
-
      
(14,476,891
)
    
(60,562
)
    
(14,537,453
)
Unrealized holding gains for available-for-sale securities
    
-
      
-
      
-
      
-
      
10,930
      
10,930
      
-
      
10,930
  
Foreign currency translation adjustment
    
-
      
-
      
-
      
-
      
3,528,240
      
3,528,240
      
1,837
      
3,530,077
  
Balance as of June 30,
2026 (unaudited)
    
2,465,452
    
$
247
    
$
442,335,208
    
$
(406,348,978
)
  
$
(2,046,269
)
  
$
 33,940,208
    
$
39,084
    
$
33,979,292
  

* On April 13, 2026, the Company effected a 1-for-60 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every sixty (60) shares of the Company’s common stock were automatically combined into one (1) share of common stock, with any fractional shares rounded up to the nearest whole share.

All share and per share amounts presented in the accompanying unaudited condensed consolidated financial statements have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented, unless otherwise indicated.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3
CENNTRO INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net cash used in operating activities
  
$
(5,520,152
)
  
$
(9,360,191
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchase of property, plant and equipment
    
(90,668
 )
   
(640,203
)
Proceeds from disposal of property, plant and equipment
    
98,561
      
77,433
  
Net of cash decrease of disposal of Cenntro Electric CICS, SRL
    
-
      
(10,723
)
Repayment of loans by third parties
    
72,563
      
-
  
Loans provided to a related party
    
-
      
(27,576
)
Net cash provided by (used in) investing activities
    
80,456
      
(601,069
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from bank loans
    
2,261,613
      
1,354,794
  
Repayments to bank loans
    
(1,282,358
)
    
(183,727
)
Loans proceed from third parties
    
4,425,877
      
1,123,487
  
Repayment of loans to third parties
    
(26,832
)
    
(360,000
)
Loan proceeds from a related party
    
-
      
1,000,000
  
Repayment of loan to a related party
    
(350,000
)
    
-
  
Net cash provided by financing activities
    
5,028,300
      
2,934,554
  
                 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
    
126,120
      
157,307
  
                 
Net decrease in cash, cash equivalents and restricted cash
    
(285,276
 )
   
(6,869,399
)
Cash, cash equivalents and restricted cash at beginning of period
    
4,687,191
      
12,960,488
  
Cash, cash equivalents and restricted cash at end of period
  
$
 4,401,915    
$
6,091,089
  
                 
Reconciliation of cash, cash equivalents and restricted cash:
                
Cash and cash equivalents
    
4,331,715
      
5,992,986
  
Restricted cash
     70,200      
92,583
  
Cash, cash equivalents and restricted cash at end of period, held for sale
    
-
      
5,520
  
Total cash, cash equivalents and restricted cash shown in the statement of cashflow
    
4,401,915
      
6,091,089
  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                
Interest paid
  
$
86,935
    
$
14,928
  
Income tax paid
  
$
-
    
$
-
  
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTION:
                
Conversion of convertible bonds into shares
  
$
-
    
$
1,826,131
  
Cashless exercise for warrants
  
$
-
    
$
12,487,838
  
Common stock issued for proceeds held in a third-party regulated collection account
   $
3,930,000
       -
  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4
CENNTRO INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES

(a)
Historical and principal activities

Cenntro Inc. or the Company was incorporated in the State of Nevada on March 9, 2023, under the Nevada Revised Statutes (the “NRS”). As a holding company with no material operations of its own, Cenntro Inc. conducts operations through its subsidiaries in the United States, Europe, Mexico, Hong Kong, and in the People’s Republic of China, which are referred to as the PRC or China.

Cenntro Automotive Group Limited (“CAG Cayman”) was formed in the Cayman Islands on August 22, 2014. CAG Cayman was the former parent of Cenntro (as defined below), prior to the closing of the Combination (as defined below).

On March 22, 2013, Cenntro Motor Corporation (“CMC”) was registered in the State of Delaware.

On January 28, 2014, Cenntro Automotives Group Limited (“CAG BVI”) was formed in British Virgin Islands to conduct electric vehicle (“EV”) related business worldwide outside of U.S.A. On January 29, 2014, CAG BVI acquired CMC. CMC changed its name from “Cenntro Motor Corporation” to “Cenntro Motors Corporation” on August 5, 2014, and further changed from “Cenntro Motors Corporation” to “Cenntro Automotive Corporation” (“CAC”) on October 7, 2014. CAC’s operations include corporate affairs, administrative, human resources, global marketing and sales, after-market support, homologation, and quality assurance.

Cenntro Automotive Group Limited (“CAG HK”) was established by CAG Cayman on February 15, 2016 in Hong Kong. CAG HK is a non-operating, investment holding company, which conducts business through its subsidiaries in mainland China and Hong Kong.

Cenntro Electric Group, Inc. (“CEGI”) was incorporated in the state of Delaware by CAG Cayman on March 9, 2020.

Cenntro Electric Group Limited, formerly known as Naked Brand Group Limited (“NBG”), was incorporated in Australia on May 11, 2017. NBG changed its name to Cenntro Electric Group Limited on December 30, 2021, in connection with the closing of the Combination. Cenntro Electric Group Limited changed its name to Cenntro Electric Group Pty Limited (“CEGL”) on June 14, 2024.

On March 23, 2022 and January 31, 2023, CEGI entered into Share Purchase Agreements to acquire 65% and 35% of the issued and outstanding shares in Cenntro Automotive Europe GmbH (“CAE”), formerly known as Tropos Motors Europe GmbH. CAE, CEGE and Antric were fully liquidated for the six months ended June 30, 2026.

On December 16, 2022, Cenntro Electric Group (Europe) GmbH (“CEGE”) invested in Antric GmbH (“Antric”) and became a 25% shareholder of Antric. On August 31, 2023, CAE acquired the remaining 75% shares of Antric and took Antric as a subsidiary of the Company. On August 31, 2023, the Company completed the acquisition with Antric GmbH in Germany.

On June 23, 2021, the Company invested RMB2,000,000 (approximately $273,999) in Hangzhou Hezhe Energy Technology Co., Ltd. (“Hangzhou Hezhe”) to acquire 20% of its equity interest. On May 8, 2024, the Company entered into a new equity investing agreement to acquire another 60% of Hangzhou Hezhe’s equity interest.

CAC, CEGI and CAG HK and their consolidated subsidiaries are collectively known as “Cenntro”; Cenntro Inc., CEGL, Cenntro and its subsidiaries are collectively known as the “Company”. The Company designs and manufactures purpose–built, electric commercial vehicles (“ECVs”) used primarily in last mile delivery and industrial applications.

The Company is an emerging designer, manufacturer, distributor, and service provider of commercial vehicles powered by either electricity or hydrogen energy sources. The commercial vehicles are designed to serve a variety of fleet and municipal organizations in support of city services, last-mile delivery and other commercial applications.

(b)
Reverse recapitalization

On December 30, 2021, the Company consummated a stock purchase transaction (the “Combination”) pursuant to that certain stock purchase agreement, dated as of November 5, 2021 (the “Acquisition Agreement”) by and among CEGL (at the time, NBG), CAG Cayman, CAC, CEGI and CAG HK. Under U.S. generally accepted accounting principles, the Combination was accounted for as a reverse recapitalization.

(c)
Redomiciliation of CEGL

On February 27, 2024, CEGL completed the redomiciliation of CEGL in accordance with the scheme implementation agreement, between CEGL and Cenntro Inc. (the “Redomiciliation”). As a result of the Redomiciliation, the jurisdiction of incorporation of the ultimate parent company of the Cenntro group of companies was changed from Australia to Nevada, and CEGL became a wholly-owned subsidiary of Cenntro Inc..

In connection with the Redomiciliation, CEGL transferred its equity interests in its intermediate holding companies directly to Cenntro Inc. As a result, the operating subsidiaries that were previously held through CEGL became direct or indirect subsidiaries of Cenntro Inc., and CEGL no longer holds substantive operating assets and functions as a shell subsidiary within the Group.

The Redomiciliation was effected pursuant to a statutory scheme of arrangement under Australian law (the “Scheme”), whereby on February 27, 2024 (the “Implementation Date”), all of the issued ordinary shares of CEGL were exchanged for newly issued shares of common stock of the Company, on the basis of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) for every one ordinary shares of CEGL.

5
CENNTRO INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

(d)
Discontinued Operations - CEGE, CAE and Cenntro EV Center Italy S.R.L

In November 2024, the Company decided to restructure its European operations by phasing out the existing subsidiary-based direct sales model and implementing a centralized dealership distribution system. This strategic shift aims to appoint qualified regional distributors with proven market penetration capabilities, thereby reducing reliance on maintaining local operational entities.

Concurrently, the Company is reallocating capital and managerial resources to accelerate growth in its core markets of North America and Asia.

As a result of this strategic shift, three European subsidiaries: CEGE, Cenntro Automotive Europe GmbH (“CAE”), and Cenntro EV Center Italy S.R.L. (“the disposal group”) were scheduled for structured dissolution in 2024. (i) The Company commenced the wind-down of Cenntro EV Center Italy S.R.L’s operations in 2025 and deregistration was completed as of January 14, 2026; (ii) CAE initiated insolvency proceedings in 2025 and the court formally opened insolvency proceedings for CAE on June 18, 2026; (iii) CEGE initiated insolvency proceedings in June 2026, and the court appointed a provisional insolvency administrator on June 9, 2026. Upon CEGE and CAE entering insolvency, the Company lost full governance control over their 25% and 75% equity interests in Antric respectively, leading to consequential deconsolidation of Antric effective June 18, 2026. However, Antric does not qualify for discontinued operations presentation standalone, as its revenue, asset scale and strategic weight are immaterial to the consolidated group and its exit does not constitute a separate strategic shift under ASC 205-20.

Accordingly, the unaudited condensed consolidated financial statements and notes reflect the results the disposal group as a discontinued operation for the periods presented in accordance with ASC 210-05, Discontinued Operations represented the disposal group a strategic shift that had a major effect on the Company’s operations and financial results. Further, the related current and non-current assets and liabilities associated with the disposal group are reflected as held for sale in the unaudited condensed consolidated balance sheets as of December 31, 2025. As of June 30, 2026, all assets and liabilities of CEGE and CAE were fully derecognized following deconsolidation on June 9 and June 18, 2026, respectively, with no held-for-sale balances remaining on the balance sheet. The numbers in all of the relevant footnote disclosures are also adjusted for the current year and comparative periods. No loss was recognized on the initial measurement of the disposal group as held for sale. For the six months ended June 30, 2026, total deconsolidation loss of $4.7 million was recorded, including $2.3 million from CEGE presented in discontinued operations and $0.5 million from CAE presented in discontinued operations, and $1.9 million from Antric presented in continuing operations.

The carrying amounts of the major classes of assets and liabilities of CEGE, CAE and Cenntro EV Center Italy S.R.L. included in assets and liabilities of discontinued operations were as follows:

     
June 30,
2026
      
December 31,
2025
   
   
(Unaudited)
        
Cash and cash equivalents
  
$
-
    
$
48,863
  
Accounts receivable, net
    
-
      
144,856
  
Inventories
    
-
      
1,318,610
  
Prepayment and other current assets, net
    
-
      
1,214,361
  
Total assets classified as held for sale
  
$
-
    
$
2,726,690
  
                 
Accounts payable
  
$
-
    
$
1,439,004
  
Accrued expenses and other current liabilities
    
-
      
579,443
  
Contract liabilities
    
-
      
84,641
  
Total liabilities classified as held for sale
  
$
-
    
$
2,103,088
  

The key components of loss from discontinued operations for the six months ended June 30, 2026 and 2025 were as follows:

   
For the Six Months ended June 30,
    
   
2026
    
2025
    
   
(Unaudited)
    
(Unaudited)
    
Net revenues
  
$
-
 
$
162,179
 
Cost of goods sold
    
-
      
(768,189
)
  
Gross loss
    
-

   
(606,010
)
  
               
 
Selling and marketing expenses
    
(95,426
)
    
(124,534
)
  
General and administrative expenses
    
(29,377
)
    
(398,227
)
  
Provision for credit losses
    
-
      
(428,610
)
  
Total operating expenses
    
(124,803
)
    
(951,371
)
  
               
 
Loss from discontinued operations
    
(124,803
)
    
(1,557,381
)
  
               
 
Income from long-term investments
    
-
      
6,359
    
Foreign currency exchange income (loss), net
    
15,054
      
(138,140
)
  
Loss on disposition of subsidiaries (1)
     (2,817,651
 )
    -
    
Other income (loss), net
    
131,633
      
(320,040
)
  
Income (loss) from discontinued operations before taxes
    
(2,795,767
 )
   
(2,009,202
)
  
Income tax expenses
  
-
      
-
 
  
Income (loss) from discontinued operations, net of tax
  
$
(2,795,767
 )
 
$
(2,009,202
)
  

(1)
Loss on disposition of subsidiaries was resulting from loss on the liquidation of CAE and CEGE.

6
CENNTRO INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND PRINCIPAL ACTIVITIES (CONTINUED)

As of June 30, 2026, Cenntro Inc.’s subsidiaries were as follows:

Name
  
Date of
Incorporation
  
Place of
Incorporation
  
Percentage of direct or
indirect economic
interest
Cenntro Electric Group Pty Limited (“CEGL”)
  
May 11, 2017
  
Australia
  
100% owned by Cenntro Inc.
Cenntro Automotive Corporation (“CAC”)
  
March 22, 2013
  
Delaware, U.S.
  
100% owned by Cenntro Inc.
Cenntro Electric Group, Inc. (“CEGI”)
  
March 9, 2020
  
Delaware, U.S.
  
100% owned by Cenntro Inc.
Cennatic Power, Inc. (“Cennatic Power”)
  
June 8, 2022
  
Delaware, U.S.
  
100% owned by Cenntro Inc.
Bison Motors Inc. (formerly known as “Teemak Power Corporation”) (1)
  
January 31, 2023
  
Delaware, U.S.
  
100% owned by Cenntro Inc.
Avantier Motors Corporation
  
November 17, 2017
  
Delaware, U.S.
  
100% owned by Cenntro Inc.
Cennatic Energy S. de R.L. de C.V.
  
August 24, 2022
  
Monterrey, Mexico
  
100% owned by Cenntro Inc.
Cenntro Automotive S.A.S.
  
January 16, 2023
  
Galapa, Colombia
  
100% owned by Cenntro Inc.
Cenntro Electric Colombia S.A.S.
  
March 29, 2023
  
Atlántico, Colombia
  
100% owned by Cenntro Inc.
Cenntro Automotive Group Limited (“CAG HK”)
  
February 15, 2016
  
Hong Kong
  
100% owned by Cenntro Inc.
Hangzhou Ronda Tech Co., Limited (“Hangzhou Ronda”)
  
June 5, 2017
  
PRC
  
100% owned by Cenntro Inc.
Hangzhou Cenntro Autotech Co., Limited (“Cenntro Hangzhou”)
  
May 6, 2016
  
PRC
  
100% owned by Cenntro Inc.
Zhejiang Cenntro Machinery Co., Limited
  
January 20, 2021
  
PRC
  
100% owned by Cenntro Inc.
Jiangsu Tooniu Tech Co., Limited
  
December 19, 2018
  
PRC
  
100% owned by Cenntro Inc.
Hangzhou Hengzhong Tech Co., Limited
  
December 16, 2014
  
PRC
  
100% owned by Cenntro Inc.
Teemak Power (Hong Kong) Limited
 
May 17, 2023
  
Hong Kong
  
100% owned by Cenntro Inc.
Avantier Motors (Hong Kong) Limited
  
March 13, 2023
  
Hong Kong
  
100% owned by Cenntro Inc.
Autotrax.ai Inc.
  
January 1, 2026
  
Delaware, U.S.
  
100% owned by Cenntro Inc.
Cenntro Electric B.V.
  
December 12, 2022
  
Amsterdam, Netherlands
  
100% owned by Cenntro Inc.
Cenntro Elektromobilite Araçlar A.Ş
  
February 21, 2023
  
Turkey
  
100% owned by Cenntro Inc.
Cenntro Elecautomotiv, S.L.
  
July 5, 2022
  
Barcelona, Spain
  
100% owned by Cenntro Inc.
Simachinery Equipment Limited (“Simachinery HK”)
  
June 2, 2011
  
Hong Kong
  
100% owned by Cenntro Inc.
Cenntro EV Center Italy S.R.L. (2)
  
May 8, 2023
  
Italy
  
100% owned by Cenntro Inc.
Pikka Electric Corporation
  
August 3, 2023
  
Delaware, U.S.
  
 100% owned by Cenntro Inc.
Averra Electric Mobility Inc.
  
January 1, 2026
  
Delaware, U.S.
  
100% owned by Cenntro Inc.
Centro Technology Intelligent Mobility Corporation
  
August 24, 2023
  
California, U.S.
  
 100% owned by Cenntro Inc.
Hangzhou Hezhe Energy Technology Co., Ltd. (“Hangzhou Hezhe”)
  
July 1, 2021
  
PRC
  
80% owned by Cenntro Inc.
Hangzhou Hezhe International Trading Co., Ltd.
  
July 15, 2025
  
PRC
  
80% owned by Cenntro Inc.

(1)
On March 6, 2025, Teemak Power Corporation changed its name to Bison Motors Inc.

(2)
On January 14, 2026, Cenntro EV Center Italy S.R.L. was deregistered. CEGE and CAE were under liquidation as of June 30, 2026

7
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)
Basis of presentation

The accompanying consolidated balance sheet as of December 31, 2025, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements as of June 30, 2026 and for the three and six months ended June 30, 2026 and 2025 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Certain information and disclosures, which are normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the interim financial statements have been included. The interim financial information should be read in conjunction with the consolidated financial statements and the notes for the fiscal year ended December 31, 2025. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results for the full year or any future periods.

All intercompany balances and transactions have been eliminated in consolidation and combination.

(b)
Use of estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include estimates and judgments applied in determination of provision for credit losses, lower of cost and net realizable value of inventories, impairment losses for long-lived assets and investments, valuation allowance for deferred tax assets and fair value measurement for share-based compensation expense, convertible promissory notes and warrants. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.

(c)
Fair value measurement

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

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

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

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

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

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

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

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

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

8
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

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

As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of its certain fund investment. The Company’s investments valued at NAV as a practical expedient are private equity funds, which represent the investment in equity security on the unaudited condensed consolidated balance sheet. The Company evaluates whether NAV remains representative of fair value at each reporting date, considering, among other factors, liquidity restrictions, the financial condition of the investee, and the ability to realize returns. Adjustments may be required to reflect the specific characteristics that market participants would consider in pricing the investment.

(d)
Revenue recognition

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

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

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

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

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

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

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

The following table disaggregated the Company’s revenues by product line for the six months ended June 30, 2026 and 2025:

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Vehicles sales
  
$
5,320,493
    
$
7,976,499
  
Spare-parts sales
    
2,000,807
      
505,779
  
Other service income
    
112,682
      
229,877
  
Net revenues
    
7,433,982
      
8,712,155
  
Less: Net revenues, discontinued operation
    
-
      
(162,179
)
Net revenues, continuing operation
  
$
7,433,982
    
$
8,549,976
  

9
CENNTRO INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Primary geographical markets
            
Europe
  
$
2,935,218
    
$
5,786,495
  
Asia
    
2,290,151
      
1,931,593
  
America
    
1,829,902
      
960,227
  
Others
    
378,711
      
33,840
  
Net revenues
    
7,433,982
      
8,712,155
  
Less: Net revenues, discontinued operation
     -      
(162,179
)
Net revenues, continuing operation
  
$
7,433,982
    
$
8,549,976
  

Contract Balances

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

Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration. The consideration received remains a contractual liability until goods or services have been provided to the customer. For the six months ended June 30, 2026 and 2025, the Company recognized $365,239 and $568,035 revenue that was included in contractual liabilities as of January 1, 2026 and 2025, respectively.

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

   
June 30,
2026
    
December 31,
2025
  
   
(Unaudited)
        
Accounts receivable, net
  
$
1,492,819
    
$
1,426,094
  
Less: accounts receivable, net, held for discontinued operation
    
-
      
(144,856
)
Accounts receivable, net, held for continuing operation
    
1,492,819
      
1,281,238
  
                 
Contract liabilities
  
$
5,679,876
    
$
3,106,185
  
Less: contract liabilities, held for discontinued operation
    
-
      
(84,641
)
Contract liabilities, held for continuing operation
    
5,679,876
      
3,021,544
  

(e)
Recently issued accounting standards pronouncements

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

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

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

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments in this update improve interim financial reporting by clarifying and simplifying certain disclosure requirements and aligning interim reporting with existing annual disclosure requirements in specific areas. The amendments are intended to reduce complexity while maintaining decision-useful information for investors. The Company is currently evaluating the impact of adopting this standard on its unaudited condensed consolidated financial statements and related disclosures and expects to adopt the guidance when it becomes effective for the Company.

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

10
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - ACCOUNTS RECEIVABLE, NET

Accounts receivable, net were summarized as follows:

   
June 30,
2026
    
December 31,
2025
  
   
(Unaudited)
        
Accounts receivable
  
$
4,145,497
    
$
7,307,154
  
Less: provision for credit losses
    
(2,652,678
)
    
(5,881,060
)
Total accounts receivable, net
    
1,492,819
      
1,426,094
  
Less: accounts receivable, net, held for discontinued operations
    
-
      
(144,856
)
Accounts receivable, net, held for continuing operations
  
$
1,492,819
    
$
1,281,238
  

The changes in the provision for credit losses were as follows:

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Balance at the beginning of the period
  
$
5,881,060
    
$
2,018,042
  
Additions
    
6,548
      
1,346,762
  
Write-off
    
(3,222,348
)
    
(21,280
)
Foreign exchange
    
(12,582
)
    
250,316
  
Balance at the end of the period
    
2,652,678
      
3,593,840
  
Less: balance of held for discontinued operations
    
-
      
(2,183,544
)
Balance of held for continuing operations
  
$
2,652,678
    
$
1,410,296
  

NOTE 4 - INVENTORIES

Inventories were summarized as follows:

   
June 30, 2026
    
December 31, 2025
  
   
(Unaudited)
        
Raw material
  
$
6,223,171
    
$
8,128,078
  
Work-in-progress
    
904,993
      
1,925,771
  
Goods in transit
    
9,092
      
39,682
  
Finished goods
    
18,072,280
      
22,340,107
  
Inventories, gross
    
25,209,536
      
32,433,638
  
Less: inventory valuation allowance
    
(6,770,840
)
    
(9,179,135
)
Total inventories, net
    
18,438,696
      
23,254,503
  
Less: inventories, net, held for discontinued operations
    
-
      
(1,318,610
)
Inventories, net, held for continuing operations
  
$
18,438,696
    
$
21,935,893
  

The changes in inventory valuation allowance were as follows:

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Balance at the beginning of the period
  
$
9,179,135
    
$
8,255,880
  
Addition
    
-
      
2,554,421
  
Write-off
    
(2,494,595
)
    
(1,850,440
)
Foreign exchange
    
86,300
      
219,274
  
Balance at the end of the period
  
$
6,770,840
    
$
9,179,135
  

NOTE 5 – PREPAYMENT AND OTHER CURRENT ASSETS

Prepayment and other current assets consisted of the following:

   
June 30, 2026
    
December 31, 2025
  
   
(Unaudited)
        
Advance to suppliers
  
$
10,488,794
    
$
9,034,026
  
Deductible input value added tax
    
5,223,250
      
6,303,559
  
Deposit in a third-party regulated collection account

3,930,000


-
  
Loans to third parties (1)
    
1,288,503
      
1,353,975
  
Others
    
852,339
      
1,050,703
  
Less: provision for credit losses
    
(1,572,691
)
    
(1,514,639
)
Less: impairment
    
(2,950,648
)
    
-
  
Prepayment and other current assets, net
    
17,259,547
      
16,227,624
  
Less: prepayment and other current assets, net, held for discontinued operations
    
-
      
(1,214,361
)
Prepayment and other current assets, net, held for continuing operations
  
$
17,259,547
    
$
15,013,263
  
(1)
This represents loans to Guangzhou Changyue New Energy Technology Co., Ltd.(“Changyue”) and Cenntro Electric CICS, S.R.L. (“CICS”).


On October 31, 2025, the Company entered into a working capital loan contract with Changyue to lend principal amount of RMB1,800,000 ($265,287), with an annual interest rate of 3.0% and due on December 30, 2025, and the loan remains past due as of June 30, 2026. Management is actively following up with Changyue regarding repayment and expects to recover the outstanding balance based on the current repayment arrangement.


Multiple interest-free intercompany drawdowns to former group entity CICS totaling $1,023,216 over several prior fiscal years. Full allowance for credit losses was recorded for this balance due to unrecoverability, resulting in no carrying value as of June 30, 2026 and December 31, 2025.

The changes in the provision for credit losses were as follows:

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Balance at the beginning of the period
  
$
1,514,639
    
$
696,698
  
Additions
    
45,352
      
1,117,190
  
Foreign exchange
    
12,700
      
13,198
  
Balance at the end of the period
    
1,572,691
      
1,827,086
  
Less: balance of held for discontinued operations
     -

   
-

Balance of held for continuing operations
  
$
1,572,691
 
$
1,827,086

Impairment loss of prepayment and other current assets was $2,917,428 and nil, respectively, for the six months ended June 30, 2026 and 2025.
11
CENNTRO INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 – LONG-TERM INVESTMENTS

(a)
Equity method investment, net

Equity method investments consisted of the following:

   
June 30, 2026
    
December 31, 2025
  
   
(Unaudited)
        
Hangzhou Entropy Yu Equity Investment Partnership (Limited Partnership) (“Entropy Yu”) (1)
  
$
2,225,640
    
$
2,159,481
  
Able 2rent GmbH (DEU) (2)
    
-
      
108,332
  
Less: impairment (2)
    
-
   
(108,332
)
Total equity method investment, net
    
2,225,640
      
2,159,481
  
Less: equity method investment, net, held for discontinued operations
    
-
      
-
  
Equity method investment, net, held for continuing operations
  
$
2,225,640
    
$
2,159,481
  

(1)
On September 25, 2022, the Company invested RMB15,400,000 (approximately $2,269,679) in Entropy Yu to acquire 99.355% of the partnership entity’s equity interest. The Company accounts for the investment under the equity method because the Company controls 50% of voting interests in partnership matters and material matters must be agreed upon by all partners. The Company has the ability to exercise significant influence over Entropy Yu.

(2)
On March 22, 2022, CAE invested EUR100,000 (approximately $114,170) in Able 2rent GmbH (DEU) to acquire 50% of its equity interest. As of December 31, 2025, the Company recognized full impairment of Able 2rent GmbH (DEU). The impairment was primarily due to a sustained decline in the investee’s operating performance and the lack of sufficient, reliable financial and operational information to support the recoverability of the carrying amount. Due to the liquidation of CAE during the first half of 2026, there was no remaining carrying value of this investment as of June 30, 2026.

(b)
Equity investment without readily determinable fair values, net

Equity investments without readily determinable fair values, net consisted of the following:

   
June 30, 2026
    
December 31, 2025
  
   
(Unaudited)
        
HW Electro Co., Ltd. (1)
  
$
1,000,000
    
$
1,000,000
  
EEE Truck Solutions Group Inc. (2)
    
693,780
      
693,780
  
Total equity investment without readily determinable fair values, net
    
1,693,780
      
1,693,780
  
Less: equity investment without readily determinable fair values, net, held for discontinued operations
    
-
      
-
  
Equity investment without readily determinable fair values, net, held for continuing operations
  
$
1,693,780
    
$
1,693,780
  

(1)
The Company owned approximately 3% of equity interest in HW Electro Co., Ltd. (“HWE”) at initial investment cost of $1,000,000.

(2)
In 2025, the Company acquired certain investment in a private company through a nonmonetary transaction by transferring the ownership of eight vehicles produced by the Company in the normal business with an aggregate market value of $693,780. Upon the completion of the transaction, the Company obtained 12% of equity interest in EEE Truck Solutions Group Inc. (the “EEE”), with no significant influence which leads the transaction to be in the scope of ASC 321 and the investment was recorded as an equity investment without readily determinable fair value, with initial cost based on the fair value of the vehicles transferred which is in accordance with ASC 606-10-32-21 through 24 based on the selling price of the goods promised to the customer due to the lack of fair value of the equity interests in EEE acquired.

(c)
Debt security investments

On July 24, 2023, the Company purchased a $1,000,000 convertible note (the “Convertible Note”) from third party Acton, Inc. (the “Issuer”), with the interest rate of 5% per annum and due in June 2024. At any time on or after the maturity date, the convertible loan will convert into shares equal to the quotient obtained by dividing the outstanding principal balance and unpaid accrued interest of the convertible loan as of the date of such conversion by the applicable conversion price. In July and August 2023, the Company paid a total amount of $600,000 to the Issuer. On August 30, 2024, the two parties made amendments to the purchase agreement to reduce the total purchase amount from $1,000,000 to $600,000 and extend the maturity date to July 24, 2025. On August 7, 2025, the two parties made amendments to extend the maturity date to July 24, 2026. Before the Maturity Date, the Issuer is entitled to calling for immediate conversion of the Convertible Note (for amount of full principal and accrued interest as of the date of conversion) provided that any of the following three conditions is satisfied: i) The Issuer closes a financing transaction of not less than $3,000,000 with pre-money valuation not lower than $38,250,000; ii) A person or entity, or a group acquires more than fifty percent (50%) of the outstanding voting power of the Issuer or all or substantially all of the assets of the Issuer; iii) The Issuer completes an initial public offering at a major US stock exchange with total market cap not lower than $38,250,000.

Given Acton’s limited operating scale, declining revenue, weak liquidity and the uncertain recoverability of its assets, management concluded that the recoverability of future cash flows associated with this financial asset is highly uncertain. Accordingly, for the year ended December 31, 2025, the Company recognized full credit loss of this investment.

On May 14, 2026, Acton, Inc. was filed a Certificate of Dissolution with the Nevada Secretary of State, ending all corporate powers of the issuer. Accordingly, the Company wrote off the full carrying value of this debt security investment for the six months ended June 30, 2026.

12
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:

   
June 30, 2026
    
December 31, 2025
  
   
(Unaudited)
        
At cost:
            
Plant and building
  
$
14,880,502
    
$
14,497,063
  
Land
    
1,063,271
      
1,063,270
  
Machinery and equipment
    
4,691,816
      
4,620,424
  
Leasehold improvement
    
840,520
      
924,396
  
Office equipment
    
1,412,546
      
2,152,609
  
Motor vehicles
    
458,921
      
1,321,308
  
Construction in progress
    
118,080
      
117,415
  
Total
    
23,465,656
      
24,696,485
  
Less: accumulated depreciation
    
(8,321,441
)
    
(7,703,231
)
Impairment
    
-
      
(1,076,529
)
Property, plant and equipment, net
    
15,144,215
      
15,916,725
  
Less: property, plants and equipment, net, held for discontinued operations
    
-
      
-
  
Property, plants and equipment, net, held for continuing operations
  
$
15,144,215
    
$
15,916,725
  

Depreciation expenses charged to the continuing operations for the six months ended June 30, 2026 and 2025 were $854,350 and $894,429, respectively. There’s no depreciation expense of discontinued operations for the six months ended June 30, 2026 and 2025.

There’s no impairment loss in property, plant and equipment of continuing operations and discontinued operations for the six months ended June 30, 2026 and 2025. For the six months ended June 30, 2026, the impairment of property, plant and equipment, which was fully held by CAE, was fully written off due to the liquidation of CAE.

NOTE 8 – INTANGIBLE ASSETS, NET

Intangible assets, net consisted of the following:

   
June 30, 2026
    
December 31, 2025
  
   
(Unaudited)
        
At cost:
            
Land use right
  
$
5,843,126
    
$
5,669,331
  
Trademark (1)
    
-
      
859,075
  
Technology (1)
    
-
      
779,270
  
Software
    
19,911
      
120,258
  
Total
    
5,863,037
      
7,427,934
  
Less: accumulated amortization
    
(494,272
)
    
(1,284,158
)
Intangible assets, net
    
5,368,765
      
6,143,776
  
Less: intangible assets, net, held for discontinued operations
    
-
      
-
  
Intangible assets, net, held for continuing operations
  
$
5,368,765
    
$
6,143,776
  

(1)
Technology and trademark attributable to Antric were fully written off due to the liquidation of Antric in the first half of 2026, leaving no related balances outstanding as of June 30, 2026.

Amortization expenses charged to the continuing operations for the six months ended June 30, 2026 and 2025 were $224,932 and $211,496, respectively.

13
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 – ACCOUNTS PAYABLE

   
June 30, 2026
    
December 31, 2025
  
   
(Unaudited)
        
Professional fees payable
  
$
3,069,592
    
$
3,665,567
  
Payable to suppliers
    
1,590,720
      
3,306,000
  
Total accounts payable
    
4,660,312
      
6,971,567
  
Less: accounts payable, held for discontinued operations
    
-
      
(1,439,004
)
Accounts payable, held for continuing operations
  
$
4,660,312
    
$
5,532,563
  

NOTE 10 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities were summarized as follows:

   
June 30, 2026
    
December 31, 2025
  
   
(Unaudited)
        
Accrued litigation compensation
  
$
1,590,483
    
$
1,784,127
  
Loan from third parties (1)
    
6,337,199
      
2,358,478
  
Rent payable - early termination of leases
    
-
      
1,359,804
  
Accrued expenses
    
34,515
      
548,384
  
Other taxes payable
    
502,087
      
590,976
  
Employee payroll and welfare payables
    
1,578,435
      
1,627,702
  
Credit card payable
    
201,577
      
167,682
  
Accrued interest for convertible promissory note
    
221,054
      
44,080
  
Others
    
158,062
      
446,305
  
Total accrued expenses and other current liabilities
    
10,623,412
      
8,927,538
  
Less: accrued expenses and other current liabilities, held for discontinued operations
    
-

 
(579,443
)
Accrued expenses and other current liabilities, held for continuing operations
  
$
10,623,412
    
$
8,348,095
  

(1)
This mainly represented the loans from third parties.

The loans details were as follows:

Borrower
  
Loan principal
  
Agreement date
  
Due date
  
Interest rate
Aqua Pyro Limited
  
258,832
  
April 30, 2024
  
April 29, 2027
  
Interest-free
JCE Partners LLC
  
200,000
  
February 10, 2025
  
March 9, 2027
  
8.00%
Bsquare Realty, Inc.
  
100,000
  
March 31, 2025
  
March 30, 2027
  
Interest-free
Hongbo Jin
  
110,000
  
March 28, 2025
  
March 27, 2027
  
Interest-free
Meiya Xu
  
58,953
  
January 23, 2025
  
December 31, 2026
  
3.45%
Suleiman International
  
300,000
  
April 9, 2025
  
April 9, 2027
  
Interest-free
Commas International Holding, LLC
  
250,000
  
June 20, 2025
  
June 18, 2026
  
5.00%
Barclays West Corporation
  
290,000
  
August 4, 2025
  
August 3, 2026
  
6.00%
Barclays West Corporation
  
115,000
  
November 21, 2025
  
November 20, 2026
  
6.00%
Barclays West Corporation
  
35,000
  
February 23, 2026
  
August 22, 2026
  
10.00%
Barclays West Corporation
  
200,000
  
March 2, 2026
  
September 1, 2026
  
10.00%
Barclays West Corporation
  
400,000
  
March 4, 2026
  
September 3, 2026
  
10.00%
Barclays West Corporation
  
380,000
  
March 10, 2026
  
September 9, 2026
  
10.00%
Barclays West Corporation
  
400,000
  
March 20, 2026
  
September 19, 2026
  
10.00%
Barclays West Corporation
  
70,000
  
March 25, 2026
  
September 24, 2026
  
10.00%
Barclays West Corporation
  
200,000
  
April 6, 2026
  
October 5, 2026
  
10.00%
Barclays West Corporation
  
70,000
  
April 8, 2026
  
October 7, 2026
  
10.00%
Barclays West Corporation
  
380,000
  
April 30, 2026
  
October 29, 2026
  
10.00%
Barclays West Corporation
  
300,000
  
May 14, 2026
  
November 13, 2026
  
10.00%
Barclays West Corporation
  
20,000
  
May 18, 2026
  
November 17, 2026
  
10.00%
Barclays West Corporation
  
10,000
  
May 18, 2026
  
November 17, 2026
  
10.00%
Barclays West Corporation
  
100,000
  
May 26, 2026
  
November 25, 2026
  
10.00%
Barclays West Corporation
  
170,000
  
June 16, 2026
  
December 15, 2026
  
10.00%
Barclays West Corporation
  
50,000
  
June 26, 2026
  
December 25, 2026
  
10.00%
Barclays West Corporation
  
250,000
  
June 26, 2026
  
December 25, 2026
  
10.00%
Domat (Hong Kong) Holdings Limited
  
350,000
  
December 23, 2025
  
December 23, 2026
  
Interest-free
Melton Corporation Limited
  
192,000
  
November 6, 2025
  
November 5, 2026
  
8.00%
HK Huace Business Limited
  
1,000,000
  
June 23, 2026
  
December 22, 2026
  
8.00%

NOTE 11 –SHORT-TERM AND LONG-TERM BANK LOANS

                   
As of
June 30, 2026
    
As of
December 31,
2025
  
Bank and other
financial
institution
  
Annual
Interest
Rate
  
Start
Maturity
  
Principal
    
Current
portion
    
Non-
current
portion
    
Current
portion
    
Non-
current
portion
  
Zhejiang Changxing Rural Commercial Bank Co., Ltd. (1)
    
3.20
%
December 2025 to March 2026
December 2026, December 2027, December 2028 and February 2029
    
3,540,110
      
2,948
      
3,537,162
      
1,430
      
1,214,054
  
Industrial and Commercial Bank of China(2)
    
2.50
%
June to December 2025
June to December 2026
    
1,258,383
      
-
      
-
      
1,258,383
      
-
  
Total borrowings
                
4,798,493
      
2,948
      
3,537,162
      
1,259,813
      
1,214,054
  
Less: borrowings, held for discontinued operations
                
-
      
-
      
-
      
-
      
-
  
Borrowings, held for continuing operations
                
$
4,798,493
      
2,948
      
3,537,162
    
$
1,259,813
      
1,214,054
  

(1)
From December 2025 to June 2026, the Company borrowed RMB24,020,000 (approximately $3,540,110) from Zhejiang Changxing Rural Commercial Bank Co., Ltd., with the interest of 3.20% per annum, due from December 2026 to February 2029.

(2)
On May 13, 2025, the Company was granted bank facility of RMB10,000,000 (approximately $1,404,692) from Industrial and Commercial Bank of China, with the interest of 2.50%, with the period from May 13, 2025 to May 12, 2028. From June 2025 to December 2025, loan principle of $1,516,607 was borrowed from the bank and will be due in one year. As of June 30, 2026, the principal was fully repaid.

14
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - INCOME TAXES

Australia

CEGL is subject to a tax rate of 25%.

United States

U.S. subsidiaries are subject to a federal tax rate of 21% and respective state tax rate. On December 22, 2017, the “Tax Cuts and Jobs Act” (“The 2017 Tax Act”) was enacted in the United States. Under the provisions of the Act, the U.S. corporate tax rate decreased from 34% to 21%. The 2017 Tax Act imposed a global intangible low-taxed income tax (“GILTI”), which is a new tax on certain off-shore earnings at an effective rate of 10.5% for tax years beginning after December 31, 2017 (increasing to 12.6% for tax years beginning after December 31, 2025) with a partial offset for foreign tax credits.

State corporate income tax rate was 0% and 9% in Nevada and New Jersey.

Europe

Subsidiaries in Germany, Spain, Italy, Netherlands and Turkey are subject to a tax rate of 15.825%, 25%, 24%, 19% and 25%, respectively. The German tax rate presented above represents the federal corporate income tax plus solidarity surcharge and does not include municipal trade tax, which varies by jurisdiction.

Hong Kong

In accordance with the relevant tax laws and regulations of Hong Kong, a company registered in Hong Kong is subject to income taxes within Hong Kong at the applicable tax rate on taxable income. Effective from April 1, 2018, a two-tier corporate income tax system was officially implemented in Hong Kong, which is 8.25% for the first HK$2.0 million profits, and 16.5% for the subsequent profits, it is exempted from the Hong Kong income tax on its foreign-derived income. CEGI’s subsidiaries, CAG HK and Simachinery HK, are registered in Hong Kong as intermediate holding companies, subject to an income tax rate of 16.5% for taxable income earned in Hong Kong. Payments of dividends from Hong Kong subsidiaries to CEGI are not subject to any Hong Kong withholding tax.

PRC

Pursuant to the tax laws and regulations of the PRC, the Company’s applicable enterprise income tax (“EIT”) rate is 25%. Jiangsu Tooniu Tech Co. Limited and Hangzhou Hengzhong Tech Co., Limited qualify as Small and micro enterprises in the PRC, and are entitled to pay a reduced income tax rate of 5%.

Mexico

Cennatic Energy S. de R.L. de C.V. is subject to a tax rate of 30%.

Colombia

Starting from 2023, the income tax rate of companies in Colombia was gradually increased from 30% to 35% and remaining at 35% in 2024 and 2025. Cenntro Automotive S.A.S. and Cenntro Electric Colombia S.A.S. are subject to a tax rate of 35% for the six months ended June 30, 2026 and 2025.

The components of losses (income) before income taxes are summarized as follows:

   
For the Six Months
Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
PRC
  
$
5,640,048
    
$
5,217,096
  
US
    
3,622,762
      
5,187,770
  
Europe
    
5,322,002
      
3,401,675
  
Australia
    
493,668
      
1,498,725
  
Others
    
(405,959
)
    
282,639
  
Total losses before income taxes
    
14,672,521
      
15,587,905
  
Less: income (losses) before income taxes for discontinued operations
    
(2,795,767
)
    
(2,009,202
)
Losses before income taxes for continuing operations
  
$
11,876,754
    
$
13,578,703
  

15
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13 - LEASES

The Company leases offices space under non-cancellable operating leases. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of right of use assets and lease liabilities. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheets.

The Company determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

A summary of lease cost of continuing operations recognized in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss were as follows:

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Operating leases cost excluding short-term lease expenses
  
$
561,778
    
$
1,703,582
  
Short-term lease expenses
    
83,909
      
70,559
  
Total
  
$
645,687
    
$
1,774,141
  

A summary of supplemental information related to operating leases held for continuing operations were as follows:

   
June 30,
2026
(Unaudited)
    
June 30,
2025
(Unaudited)
  
Cash paid for amounts included in the measurement of lease liabilities
  
$
415,649
    
$
754,386
  
Weighted average remaining lease term
  
1.86 years
    
4.43 years
  
Weighted average discount rate
    
6.56
%
    
7.35
%

The Company’s lease agreements do not have a discount rate that is readily determinable. The incremental borrowing rate is determined at lease commencement or lease modification and represents the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and an amount equal to the lease payments in a similar economic environment.

The following table summarized the maturity of lease liabilities held for continuing operations under operating leases as of June 30, 2026.

   
Operating
Leases
  
For the remaining of the year ended December 31, 2026
  
$
691,800
  
For the years ended December 31,
        
2027
    
513,185
  
2028
    
244,255
  
2029
    
72,997
  
Total lease payments
    
1,522,237
  
Less: imputed interest
    
88,568
  
Total
    
1,433,669
  
Less: current portion
    
890,338
  
Non-current portion
  
$
543,331
  

A summary of lease cost of discontinued operations recognized in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss were as follows:

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Operating leases cost excluding short-term lease expenses
  
$
-
    
$
-
  
Short-term lease expenses
    
-
      
99,092
  
Total
  
$
-
    
$
99,092
  

A summary of supplemental information related to operating leases held for discontinued operations were as follows:

   
June 30, 2026
(Unaudited)
    
June 30,2025
(Unaudited)
  
Cash paid for amounts included in the measurement of lease liabilities
  
$
-
    
$
32,353
  
Weighted average remaining lease term
    
-
    
0.50 years
 
Weighted average discount rate
    
-
      
-
  

No lease liabilities held for discontinued operations under operating leases as of June 30, 2026.

16
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - CONVERTIBLE PROMISSORY NOTE AND WARRANT

Convertible Promissory Note

On July 20, 2022, the Company issued to investors a convertible promissory note (the “Note”) in the aggregate principal amount of $61,215,000 due on July 19, 2023, unless earlier repurchased, converted or redeemed. On January 3, 2023, August 11, 2023, January 17, 2024 and December 23, 2024, the Company and the investors made amendments to extend the due date to July 19, 2023, January 19, 2024, January 19, 2025 and January 19, 2026, respectively. The Note bears interest at a rate of 8% per annum, and the net proceeds after deducting issuance expenses was $54,069,000.

The main terms of the Note are summarized as follows:

Conversion feature

At any time after the issue date until the Note is no longer outstanding, this Note shall be convertible, in whole or in part, into common stock at the option of the holder, at any time and from time to time.

Redemption feature

If the Company shall carry out one or more subsequent financings in excess of $25,000,000 in gross proceeds, the holder shall have the right to (i) require the Company to first use up to 10% of the gross proceeds of such subsequent financing if the aggregate outstanding principal amount of the Note is in excess of $30,000,000 and (ii) require the Company to first use up to 20% of the gross proceeds of such subsequent financing if the outstanding principal amount of the Note is $30,000,000 or less to redeem all or a portion of this Note for an amount in cash equal to the Mandatory Redemption Amount equal to 1.08 multiplied by the sum of principal amount subject to the mandatory redemption, plus accrued but unpaid interest, plus liquidated damages, if any, and any other amounts.

In addition, if the closing price of the common stock on the principal trading market is below the floor price of $1.00 per share for a period of ten consecutive trading days, the holder shall have the right to require the Company to redeem the sum of principal amount plus accrued but unpaid interest under the Note.

Contingent interest feature

The Note is subject to certain customary events of default. If any event of default occurs, the outstanding principal amount, plus accrued but unpaid interest, liquidated damages and other amounts owing, shall become immediately due and payable, and at the holder’s election, in cash at the mandatory default amount or in common stock at the mandatory default amount at a conversion price equal to 85% of the 10-day volume weighted average price. Commencing 5 days after the occurrence of any event of default, the interest shall accrue at an interest rate equal to the lesser of 10% per annum or the maximum rate permitted under applicable law.

The financial liability was initially measured at its issue-date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The remaining estimated fair value adjustment is presented as other income (expense) in the unaudited condensed consolidated statement of operations, as change in fair value of convertible notes.

Note amendment May 2025

On May 16, 2025, the Company and About Investment Pte. Ltd., a Singapore exempt private company limited by shares (“Holder”) entered into an amendment (the “Note Amendment”) to the Note originally issued by the Company on July 20, 2022, in an original principal amount of $52,237,500.

Pursuant to the Note Amendment, the parties have agreed to amend the floor price of any conversions of the Note to $0.202 per share (equivalent to $12.12 per share after giving effect to the reverse stock split effective on April 13, 2026) equal to an eighty percent (80%) discount of the closing bid price of the Company’s common stock during the trading day immediately preceding the Note Amendment, which will be adjusted accordingly in the event of a share split or combination. The terms of the Amended Note continue to grant the Holder the right to convert from time to time at its election, all or any portion of the outstanding balance of the Note into shares of common stock of the Company at the conversion price, which is equal to the lesser of (i) the fixed conversion price or (ii) eighty-five percent (85%) of the ten (10) day VWAP during the ten (10) consecutive trading days ending on the trading day that is immediately prior to the applicable conversion date, and in each case subject to adjustment set forth in the Note.

Conversion of Note, Exchange Agreement and 2025 Convertible Note

On October 8, 2025, About Investment Pte. Ltd. executed its rights to convert the Note to ordinary shares upon certain default trigger event underlying certain terms of the Note by submitting a conversion notice, resulting in an aggregate of 24,000,000 shares issued with total principal of $11,174,350 applied against the Note. On October 23, 2025, the Company and the Holder further entered into an exchange agreement, pursuant to which the Company issued a new convertible note in a principal amount of $4,000,000 (the “2025 Convertible Note”) in exchange for the cancellation of the existing Note.

The 2025 Convertible Note bears interest at a rate of 8% per annum and matures on January 19, 2026, and further extended to January 19, 2027. At any time after the issuance date until the 2025 Convertible Note is no longer outstanding, the 2025 Convertible Note shall be convertible, in whole or in part, into shares of common stock at the option of the Holder, at a fixed conversion price of $0.10 per share (equivalent to $6.0 per share after giving effect to the reverse stock split effective on April 13, 2026), subject to adjustment for stock splits or combinations.

Between October 23, 2025 and December 31, 2025, $1,200,000 of principal under the 2025 Convertible Note was converted into 12,000,000 shares (equivalent to 200,000 shares after giving effect to the reverse stock split effective on April 13, 2026) of common stock. As of December 31, 2025, outstanding principal was $2,800,000.

The movement of Note during the six months ended June 30, 2026 and 2025 are as follows:

   
Liability component
  
As of December 31, 2024
  
$
9,952,000
  
Convertible promissory notes issued during the period
    
-
  
Note amendment
    
1,756,137
  
Exercise
    
(1,214,708
)
Fair value change recognized
    
(214,429
)
As of June 30, 2025 (Unaudited)
  
$
10,279,000
  
         
As of December 31, 2025
    
3,955,897
  
Convertible promissory notes issued during the period
    
-
  
Redemption of convertible promissory notes
    
-
  
Fair value change recognized
    
(1,332,520
)
As of June 30, 2026 (Unaudited)
  
$
2,623,377
  

The estimated fair value of and 2025 Convertible Note as of June 30, 2026 and June 30, 2025 was computed using a Binomial lattice model and a Monte Carlo Simulation Model, respectively, which incorporates significant inputs that are not observable in the market, and thus represents a Level 3 measurement within the ASC 820 fair value hierarchy. The unobservable inputs utilized for measuring the fair value of the Note and 2025 Convertible Note reflect the Company’s assumptions about the assumptions what market participants would use in valuing the instruments  the respective measurement dates, including the Company’s historical stock price volatility, risk-free rates based on U.S. Treasury Strip yields, and yields of comparable debt instruments.

17
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - CONVERTIBLE PROMISSORY NOTE AND WARRANT (CONTINUED)

We determined the fair value by using the following key inputs to the Binomial Tree Model as of June 30, 2026 and December 31, 2025:

Fair Value Assumptions - Convertible Promissory Note
  
June 30, 2026
(Unaudited)
    
December 31,
2025
  
Face value principal payable
    
2,800,000
      
2,800,000
  
Original conversion price
  
$
6.0 per share
    
$
6.0 per share
  
Interest Rate
    
8.00
%
    
8.00
%
Expected term (years)
    
0.56
      
0.05
  
Volatility
    
46.80
%
    
59.00
%
Market yield (range)
    
24.34
%
    
9.78
%
Risk free rate
    
3.99
%
    
0.76
%
Issue date
    
October 23, 2025
      
October 23, 2025
  
Maturity date
    
January 19, 2027
      
January 19, 2026
  

Warrant

Accompany with the Note, the Company issued to the same investor warrants to purchase up to 2,473,334 warrant shares (equivalent to 41,222 shares after giving effect to the reverse stock split effective on April 13, 2026) of the Company, with an exercise price of $1.61 per share, which may be exercised by the holders on a cashless basis by using Black-Scholes model to determine the net settlement shares.

Additionally, after the Company completed the above Note financing, the Company issued to the placement agent warrants to purchase 247,333 warrant shares (equivalent to 4,122 shares after giving effect to the reverse stock split effective on April 13, 2026) of the Company at a same day, as part of the underwriter’s commission. The warrants were issued with an exercise price of $1.77 per share.

Both warrants are exercisable from the date of issuance and have a term of five years from the date of issuance. They were presented as liabilities on the unaudited condensed consolidated balance sheet at fair value in accordance with ASC 480 “Distinguishing Liabilities from Equity”. The liabilities then, will be remeasured every reporting period with any change to fair value recorded as other income (expense) in the unaudited condensed consolidated statement of operations.

The movement of warrants during the six months ended June 30, 2026 and 2025 are as follows:

   
Investor warrants component
    
Placement agent warrants component
  
   
Shares *
    
Amount
    
Shares *
    
Amount
  
As of December 31, 2024
     14,504    
$
12,137,087
      
4,122
    
$
3,455,829
  
Exercise of warrants
    
(14,504
)
    
(12,487,838
)
    
-
      
-
  
Fair value change recognized
    
-
      
350,751
      
-
      
968
  
As of June 30, 2025 (Unaudited)
    
-
    
$
-
      
4,122
    
$
3,456,797
  
                                 
As of December 31, 2025
    
-
    
$
-
      
4,122
    
$
3,457,055
  
Exercise of warrants
    
-
      
-
      
-
      
-
  
Fair value change recognized
    
-
      
-
      
-
      
(770
)
As of June 30, 2026 (Unaudited)
    
-
    
$
-
      
4,122
    
$
3,456,285


* On April 13, 2026, the Company effected a 1-for-60 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every sixty (60) shares of the Company’s common stock were automatically combined into one (1) share of common stock, with any fractional shares rounded up to the nearest whole share.

All share and per share amounts presented in the accompanying unaudited condensed consolidated financial statements have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented, unless otherwise indicated.

The fair value for these two warrants were computed using the Binomial model with the following assumptions:

 
Fair Value Assumptions – Warrants
  
June 30, 2026
(Unaudited)
    
December 31,
2025
  
Expected term (years)
    
1.05
      
1.55
  
Volatility
    
49.10
%
    
60.65
%
Risk free rate
    
4.00
%
    
3.52
%
Expected expiry date
  
July 19, 2027
    
July 19, 2027
  

18
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15- SHARE-BASED COMPENSATION

On the Implementation Date, and pursuant to the Scheme, Cenntro Inc. assumed CEGL’s obligations with respect to the settlement of the options that were issued by CEGL prior to the Implementation Date pursuant to CEGL’s amended and restated 2016 incentive stock option plan and 2022 stock incentive plan (the “Share Option Plans”) by way adoption of a new incentive plan, the Company’s 2023 equity incentive plan (the “2023 Plan”).

Following the Implementation Date, no new options will be issued under the Share Option Plans. The Company has assumed CEGL’s obligations with respect to the settlement of incentive options that were previously issued by CEGL under the 2023 Plan.

Incentive Stock Option Limit: the maximum number of Common Stock that may be issued upon the exercise of incentive stock options (“ISOs”) under the 2023 Plan is 30,000,000 shares (equivalent to 500,000 shares after giving effect to the reverse stock split effective on April 13, 2026) of Common Stock.

For the six months ended June 30, 2026 and 2025, the total share-based compensation expenses were comprised of the following:

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
General and administrative expenses

$
597,565


$
1,285,083

Selling and marketing expenses
    
15,552
      
31,103
  
Research and development expenses
  

52,144
    

143,402
  
Total

$
665,261


$
1,459,588


A summary of share options activity for the six months ended June 30, 2026 and 2025 were as follows:

   
Number
of
Share
Options*
    
Weighted
Average
Exercise
Price
$
    
Weighted
Average
Remaining
Contractual
Years
    
Aggregate
Intrinsic
Value
$
  
Outstanding at December 31, 2024
    
28,884
      
828.2
      
3.65
      
-
  
Granted
    
-
      
-
                  
Exercised
    
-
      
-
                  
Forfeited
    
(265
)
    
1,008.0
                  
Expired
    
(1,160
)
    
431.3
                  
Outstanding at June 30, 2025 (Unaudited)
    
27,459
      
843.2
      
3.38
      
-
  
                                 
Outstanding at December 31, 2025
    
25,177
      
829.8
      
3.12
      
-
  
Granted
    
-
      
-
                  
Exercised
    
-
      
-
                  
Forfeited
    
(17
)
    
1,008.0
                  
Expired
    
(498
)
    
1,008.0
                  
Outstanding at June 30, 2026 (Unaudited)
    
24,662
      
826.0
      
2.80
      
-
  
Expected to vest at June 30, 2026 (Unaudited)
    
-
      
-
              
-
  
Exercisable as of June 30, 2026 (Unaudited)
    
24,662
      
805.6
      
2.80
      
-
  

* On April 13, 2026, the Company effected a 1-for-60 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every sixty (60) shares of the Company’s common stock were automatically combined into one (1) share of common stock, with any fractional shares rounded up to the nearest whole share.

All share and per share amounts presented in the accompanying unaudited condensed consolidated financial statements have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented, unless otherwise indicated.

The Company calculated the fair value of the share options on the grant date and modification date using the Black-Scholes option-pricing valuation model. The assumptions used in the valuation model are summarized in the following table.

   
For the Six Months Ended June 30,
  
   
2026
(Unaudited)
    
2025
(Unaudited)
  
Expected volatility
  
83.41%~86.57
%
  
83.41%~86.57
%
Expected dividends yield
    
0
%
    
0
%
Risk-free interest rate per annum
  
2.97%~3.01
 %  
2.97%~3.01
 %
The fair value of underlying common stock (per share)
  
$
1008.0
    
$
1008.0
  

The expected volatility is calculated based on the annualized standard deviation of the daily return embedded in historical share prices of the Company. The risk-free interest rate is estimated based on the yield to maturity of US treasury bonds based on the expected term of the incentive shares.

As of June 30, 2026, there was no total unrecognized compensation cost from continuing operations related to unvested share options.

19
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 – CONCENTRATIONS

Continuing operations

(a)
Customers

The following table sets forth information as to each customer that accounted for 10% or more of net revenue for continuing operation for the six months ended June 30, 2026 and 2025.

   
For the Six Months Ended
  
   
June 30, 2026
(Unaudited)
    
June 30, 2025
(Unaudited)
  
Customer
  
Amount
    
% of
Total
    
Amount
    
% of
Total
  
A
  
$
1,699,142
      
23
%
  
$
-
      
-
  
B
    
1,145,681
      
15
%
    
-
      
-
  
C
    
-
      
-
      
3,501,527
      
41
%
Total
  
$
2,844,823
      
38
%
  
$
3,501,527
      
41
%

The following table sets forth information as to each customer that accounted for 10% or more of total gross accounts receivable, held for continuing operation as of June 30, 2026 and December 31, 2025.

   
As of June 30, 2026
(Unaudited)
    
As of December 31,
2025
  
Customer
  
Amount
    
% of
Total
    
Amount
    
% of
Total
  
D
  
$
1,449,521
      
35
%
  
$
1,436,228
      
36
%
E    
1,023,912
      
25
%
    
1,023,912
      
26
%
Total
  
$
2,473,433
      
60
%
  
$
2,460,140
      
62
%

The following table sets forth information as to each customer that accounted for 10% or more of advance from customers, held for continuing operation as of June 30, 2026 and December 31, 2025.

   
As of June 30, 2026
(Unaudited)
    
As of December 31,
2025
  
Customer
  
Amount
    
% of
Total
    
Amount
    
% of
Total
  
F  
$
1,513,927
      
27
%
  
$
-
      
-
  
G    
850,828
      
15
%
    
850,822
      
28
%
H
    
828,746
      
15
%
    
-
      
-
  
D
    
793,606
      
14
%
    
793,606
      
26
%
Total
  
$
3,987,107
      
71
%
  
$
1,644,428
      
54
%

20
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL NOTE 16 –

CONCENTRATIONS (CONTINUED)

(b)
Suppliers

For the six months ended June 30, 2026 and 2025, the Company’s material suppliers, each of whom accounted for 10% or more of the Company’s total purchases of continuing operation, were as follows:

   
For the Six Months Ended,
  
   
June 30,
2026
(Unaudited)
    
June 30,
2025
(Unaudited)
  
Supplier
  
Amount
    
% of Total
    
Amount
    
% of Total
  
A
  
$
1,259,274
      
21
%
  
$
*
      
*
  
B
    
1,147,726
      
19
%
    
*
      
*
  
C
    
1,058,448
      
18
%
    
*
      
*
  
D
    
675,611
      
11
%
    
-
      
-
  
E    
*
      
*
      
3,889,722
      
52
%
Total
  
$
4,141,059
      
69
%
  
$
3,889,722
      
52
%

*
Indicates below 10%.

As of June 30, 2026 and December 31, 2025, the Company’s material suppliers, each of whom accounted for 10% or more of the Company’s accounts payable of continuing operation, were as follows:

   
As of June 30, 2026
(Unaudited)
    
As of December 31,
2025
  
Supplier
  
Amount
    
% of
Total
    
Amount
    
% of
Total
  
F  
$
612,563
      
13
%
  
$
1,056,351
      
19
%
G
    
514,631
      
11
%
    
656,121
      
12
%
H    
483,558
      
10
%
    
*
      
*
  
I
    
*
      
*
      
687,529
      
12
%
Total
  
$
1,610,752
      
34
%
  
$
2,400,001
      
43
%

*
Indicates below 10%.

The following table sets forth information as to each supplier that accounted for 10% or more of advance to suppliers, held for continuing operation as of June 30, 2026 and December 31, 2025.

   
As of June 30, 2026
(Unaudited)
    
As of December 31,
2025
  
Supplier
  
Amount
    
% of Total
    
Amount
    
% of Total
  
E
  
$
3,408,229
      
32
%
  
$
2,613,964
      
29
%
J
    
2,652,872
      
25
%
    
2,573,966
      
28
%
K    
-
      
-
      
1,052,064
      
12
%
Total
  
$
6,061,101
      
57
%
  
$
6,239,994
      
69
%

21
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 - COMMITMENTS AND CONTINGENCIES

Litigation

The Company may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity.

On July 22, 2022, Xiongjian Chen (the “Plaintiff”) filed a complaint against Cenntro Electric Group Limited (“CENN”), Cenntro Automotive Group Limited (“CAG”), Cenntro Enterprise Limited (“CEL”) and Peter Z. Wang (“Wang,” together with CENN, CAG and CEL, the “Defendants”) in the United States District Court for the District of New Jersey. The complaint alleges eleven causes of action sounding in contract and tort against the Defendants, all pertaining to stock options issued to Mr. Chen pursuant to his employment as Chief Operating Officer of CAG. With respect to the four contract claims, Plaintiff alleges breach of contract claims pertaining to an employment agreement between Plaintiff and CAG and a purported letter agreement between Plaintiff and CEL. With respect to the seven tort claims, Plaintiff alleges claims regarding purported misrepresentations and promises made concerning the treatment of Plaintiff’s stock options upon a corporate transaction, including claims for tortious interference, fraud, promissory estoppel, negligent misrepresentation, unjust enrichment and conversion. The complaint seeks, among other things, monetary damages (including compensatory and consequential damages) in the amount of $19 million, plus interest, attorneys’ fees and expenses. Defendants moved to dismiss the complaint against all Defendants for failure to state a claim and for lack of personal jurisdiction over defendants CAG and CEL. On April 30, 2023, the District Court dismissed the claims against CAG and CEL for lack of personal jurisdiction. In addition, the District Court dismissed all the claims against Wang and CENN without prejudice and permitted the Plaintiff to amend his complaint within 30 days to address the deficiencies in his claims against Wang and CENN. On May 28, 2023, Plaintiff filed an amended complaint. On July 20, 2023 the Defendants filed a motion seeking the dismissal of that amended complaint. On September 22, 2023,the Plaintiff filed to oppose our Motion to Dismiss and Motion to Strike. The Defendants filed our reply briefs by the deadline on November 9, 2023. On January 25, 2024, the Magistrate Judge entered an Order granting Plaintiff’s Motion to Amend and denying our Motion to Strike as moot. On November 12, 2024, District Court issued an Order, dismissing Plaintiff’s all claims except with respect to the promissory estoppel claim against Peter Wang. On November 26, 2024, the defendants filed a Motion for Reconsideration of the Court’s denial of Cenntro’s Motion to Dismiss Plaintiff’s promissory estoppel claim against Peter Wang. Concurrently, on same date Plaintiff moved for reconsideration of the Court’s decision to dismiss the case as against CAG for lack of personal jurisdiction. On December 30, 2024, the Defendant filed a Reply in Further Support of Peter Wang’s Motion for Reconsideration, which, in accordance with the Court’s practices, was filed as part of a Motion for Leave to File a Reply Brief, against which the Plaintiff filed an Opposition on January 17, 2025. On May 30, 2025, the Court issued the order denying both sides’ respective motions for reconsideration. On June 10, 2025, Plaintiff’s counsel informed us that they do not intend to file a second amended complaint, which means that CAC, CAG, CEL and CENN will be dismissed from the case; and that the case will proceed to discovery solely on Plaintiff’s one claim against Wang for promissory estoppel. The corporate defendants have since been dismissed, leaving the Company’s Chief Executive Officer, Wang, as the sole defendant. Under an executive indemnification agreement, the Company may, subject to its terms and applicable law, be required to cover certain defense costs and liabilities arising from claims related to Wang’s service. At the in-person conference on August 20, 2025, the Court ordered deadlines for completing various stages of discovery in the case, initially setting May 15, 2026 as the deadline for all fact discover. The schedule was later adjourned due to Wang’s change of counsel. On July 24, 2026, the parties advised the Court that a dispute over Plaintiff’s proposed spoliation interrogatories remained pending and that party depositions would begin after the related spoliation issues are resolved. The Company anticipate remote financial consequences will incur to the company.

22
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

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

On April 10, 2024, CEGL filed a lawsuit against MHP for breach under the Master Consulting Services Agreement and SAP S/4HANA SOW by failure to properly implement the SAP S/4HANA globally as set forth in those contracts, and for breach of implied covenants of good faith and fair dealing, causing CEGL to suffer significant damages; and demanded a jury trial on all issues which are triable. Under this claim, CEGL is seeking for a remittance of $512,226 paid to date and a recission of the remaining contract with MHP. The litigation was removed to Federal Court on May 7, 2024 where it is pending. Following the completion of discovery, the mediation scheduled for November 19, 2025 proceeded with counsel representing CEGL. No agreement was reached during the mediation session, and the parties did not engage in substantive settlement discussions. On July 17, 2026, MHP filed a motion for summary judgment seeking judgment on its breach of contract counterclaim in the amount of $1,767,516.91 and dismissal of CEGL’s claims. The motion remains pending before the Court.

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

On April 16, 2025, Shenzhen Jiangxin Automation Technology Co., Ltd. (“Jiangxin”) filed a lawsuit with the People’s Court of Yuhang District, Hangzhou, against Hangzhou Ronda Tech Co., Limited (“Ronda”), seeking payment of equipment purchase price totaling RMB 170,555 plus accrued interest. Jiangxin claims that Ronda has failed to pay the remaining balance due under three Equipment Purchase Agreements signed during 2021 and 2022. On September 26, 2025, Ronda submitted its defense and counterclaim, asserting that Jiangxin had not fulfilled its contractual obligations, including the delivery of complete technical documents, installation and test run, and therefore the conditions for payment had not been satisfied. On June 29, 2026, the court issued a first-instance judgment, ordering Ronda to pay Jiangxin RMB 140,000 within ten days after the judgment becomes effective, while dismissing Jiangxin’s remaining claims, including its claim for accrued interest, and dismissing all of Ronda’s counterclaims. The first-instance judgment is subject to appeal and has not yet become final. The Company will continue to monitor the status of any appeal proceedings and enforcement of the judgment.

On December 2 2025, Wuxi Hefu Metal Products Technology Co., Ltd. (“Hefu”) filed a lawsuit with the People’s Court of Yuhang District, Hangzhou, against Hangzhou Ronda Tech Co., Limited (“Ronda”), seeking payment of mold development fees totaling RMB 476,314.2 plus accrued interest. Hefu alleges that under the Automotive Parts Product Development Agreement and its supplementary agreement signed on September 20, 2022, it completed the development and delivery of the molds in accordance with the contractual requirements, but Ronda failed to pay the remaining balance of the mold development fees. Hefu further applied for property preservation, and on December 15, 2025, the court issued a ruling to freeze Ronda’s bank deposits in the amount of RMB 476,314.2 or seize other assets of equivalent value. On January 5, 2026, Ronda filed a counterclaim against Hefu, seeking the return of previously paid mold development fees of RMB 730,680, plus interest, alleging that Hefu’s products had quality issues and failed to satisfy the contractual requirements. On January 7, 2026, the court organized a pre-trial mediation between the parties. On March 25, 2026, the court held a hearing. On April 22, 2026, the court issued a first-instance judgment ordering Ronda to pay Hefu RMB 476,314.20 in mold fees, plus overdue payment interest from December 11, 2025 until full payment, and rejected all of Ronda’s counterclaims. On May 6, 2026, Ronda filed an appeal seeking reversal of the first-instance judgment and support for its counterclaim for the return of previously paid mold development fees of RMB 730,680, plus interest. The second-instance hearing was held on August 11, 2026, but no judgment has been issued, and the court has granted the parties a two-month mediation period.

On March 4, 2026, American Quartz Group, Inc. (“AQGI”) filed an Unlawful Detainer action against Bison Motors Inc. (“Bison”) seeking possession of the premises. Bison subsequently filed a demurrer in response. On March 25, 2026, Bison filed a separate complaint against AQGI asserting claims including forcible detainer and conversion, seeking restoration of possession, return of inventory, and damages. On April 2, 2026, AQGI dismissed the Unlawful Detainer action. Bison’s separate action against AQGI remains pending, and Bison subsequently filed an ex parte application for temporary injunctive relief to restore its access to and use of the premises. Following a hearing held on May 12, 2026, the court granted Bison’s ex parte application and ordered AQGI not to interfere with Bison’s access to and use of the premises. On May 22, 2026, AQGI filed a new Unlawful Detainer action against Bison, seeking possession of the premises, past-due rent of US$148,413.12, daily damages, attorneys’ fees and forfeiture of the lease agreement. On June 12, 2026, Bison filed a demurrer to AQGI’s new Unlawful Detainer complaint, asserting that the underlying three-day notice was defective. Following a hearing held on July 17, 2026, the court overruled Bison’s demurrer and ordered Bison to file an answer to AQGI’s complaint by July 27, 2026. On July 27, 2026, Bison served its answer, denying AQGI’s material allegations, disputing the validity of the underlying three-day notice and asserting multiple affirmative defenses. AQGI’s new Unlawful Detainer action remains pending, and no trial date has been set.

On October 24, 2025, Ride Man LLC (“Ride Man”) filed a civil complaint against Cenntro Automotive Corporation and Cenntro, Inc. (collectively, the “Company”) in the Superior Court of New Jersey, Ocean County, alleging breach of warranty and violations of the New Jersey Consumer Fraud Act in connection with the purchase of certain commercial electric vehicles. Ride Man alleges that four Logistar 400 vehicles purchased from the Company were defective and failed to perform as warranted, and that the Company did not fulfill its repair and warranty obligations. The complaint seeks rescission of the purchase, refund of the purchase price, and recovery of related damages and costs. On April 29, 2026, the court entered defaults against both defendants. On July 17, 2026, the Company moved to vacate the defaults. The Company also sought dismissal of the disclaimed implied warranty claims and the insufficiently pleaded New Jersey Consumer Fraud Act claim. The motion is scheduled for consideration on August 14, 2026 and remains pending.

NOTE 18 - RELATED PARTY TRANSACTIONS AND BALANCES

The table below sets forth the major related parties and their relationships with the Company:

Name of related parties:
  
Relationship with the Company
Zhejiang RAP
  
An entity significantly influenced by Hangzhou Ronda Tech Co., Limited, the Company’s subsidiary
Billy Rafael Romero Del Rosario
  
A shareholder who owns 1% equity interest of Cenntro Electric CICS, S.R.L. and is the CEO of Cenntro Electric CICS, S.R.L. before April 1, 2025. Since April 1, 2025, Billy Rafael Romero Del Rosario was not a related party of the Company with the disposal of Cenntro Electric CICS, S.R.L.
Zhongchai Holding (Hong Kong) Limited (“Zhongchai”)
  
An entity ultimately controlled by Peter Z. Wang, the CEO of the Company
Hangzhou Greenland Energy Technologies Co., Ltd.(“Greenland”)
  
An entity ultimately controlled by Peter Z. Wang, the CEO of the Company
HEVI Corp.
  
An entity ultimately controlled by Peter Z. Wang, the CEO of the Company

23
CENNTRO INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 - RELATED PARTY TRANSACTIONS AND BALANCES (CONTINUED)

Related party transactions

During the six months ended June 30, 2026 and 2025, the Company had the following material related party transactions for the continuing operation.


   
For the Six Months Ended
June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Accrual of interest expense of loan
            
Zhongchai
  
$
29,387
    
$
-
  
                 
Interest expense to a related party
                
Zhongchai
    
-
      
16,042
  
                 
Repayment of loans to a related party
                
Zhongchai
    
350,000
      
-
  
                 
Interests-bearing loan from a related party
                
Zhongchai
    
-
      
1,000,000
  
                 
Interests-bearing loan to a related party
                
Greenland
    
-
      
27,760
  
                 
Prepayment of operating fund to a related party
                
Billy Rafael Romero Del Rosario (1)
    
-
      
25,378
  
                 
Reimbursement from a related party
                
Billy Rafael Romero Del Rosario
    
-
      
88,646
  

Amounts due from Related Parties

The following table presents amounts due from related parties as of June 30, 2026 and December 31, 2025.

   
June 30, 2026
(Unaudited)
    
December
31,
2025
  
Zhejiang RAP (1)
  
$
12,618
    
$
12,243
  
HEVI CORP. (2)
    
-
      
25,462
  
Total amounts due from a related party
    
12,618
      
37,705
  
Less: amounts due from a related party, held for discontinued operations
    
-
      
-
  
Amounts due from a related party, held for continuing operations
  
$
12,618
    
$
37,705
  

(1)
The balance mainly represents the interest income receivable from the related party.

(2)
The balance mainly represents the receivable from sales of spare parts from the related party, which was collected as of June 30, 2026.

Amounts due to a Related Party

The following table presents amounts due to a related party as of June 30, 2026 and December 31, 2025.

   
June 30,
2026(Unaudited)
    
December
31,
2025
  
Zhongchai (1)
  
$
569,062
    
$
889,675
  
Total amounts due to a related party
    
569,062
      
889,675
  
Less: amounts due to a related party, held for discontinued operations
    
-
      
-
  
Amounts due to a related party, held for continuing operations
  
$
569,062
    
$
889,675
  

(1)
On April 15, 2025, Zhongchai entered into a loan agreement (the “Loan Agreement”) with the Company, which provides for the Company’s capacity to borrow up to $1.0 million as evidenced by a promissory note issued by the Company to the Lender dated as of April 15, 2025 (the “Promissory Note”). The Company intends to use the proceeds received from the Promissory Note for working capital purposes. The Promissory Note has a maturity date of April 14, 2026, and further extend to October 14, 2026, and accrues interest at a rate of 7.50% per annum. Both parties also made supplementary agreement that all advances provided prior to April 15, 2025 shall bear no interest.

NOTE 19 - COMMON STOCK

As of December 31, 2022, the issued and outstanding ordinary shares are 30,084,199 (equivalent to 501,403 shares after giving effect to the reverse stock split effective on April 13, 2026). During the year ended December 31, 2023, investor warrants were exercised via cashless option by the investors for 360,710 ordinary shares (equivalent to 6,012 shares after giving effect to the reverse stock split effective on April 13, 2026) of the Company. On September 1, 2023 the Company held its annual general meeting of shareholders where among other proposals, the shareholders of the Company did approve the consolidation of the common stock of the Company on a one-for-ten (1:10) basis with effect from December 8, 2023. 383,869 ordinary shares (equivalent to 6,398 shares after giving effect to the reverse stock split effective on April 13, 2026) were issued during the share consolidation. As of December 31, 2023, the issued and outstanding ordinary shares are 30,828,778 (equivalent to 513,813 shares after giving effect to the reverse stock split effective on April 13, 2026).

During the year ended December 31, 2024, investor warrants were exercised via cashless option by the investors for 37,819 ordinary shares (equivalent to 630 shares after giving effect to the reverse stock split effective on April 13, 2026) of the Company. With fractional shares of 17 (equivalent to 1 share after giving effect to the reverse stock split effective on April 13, 2026) issued due to reverse stock split, as of December 31, 2024, the issued and outstanding ordinary shares are 30,866,614 (equivalent to 514,444 shares after giving effect to the reverse stock split effective on April 13, 2026).

During the year ended December 31, 2025, investor warrants were exercised via cashless option by the investors for 14,655,367 ordinary shares (equivalent to 244,256 shares after giving effect to the reverse stock split effective on April 13, 2026) of the Company. 42,390,850 shares (equivalent to 706,514 shares after giving effect to the reverse stock split effective on April 13, 2026) were converted from convertible bonds convertible bonds. As of December 31, 2025, the issued and outstanding ordinary shares are 87,912,831 (equivalent to 1,465,214 shares after giving effect to the reverse stock split effective on April 13, 2026).

On April 13, 2026, the Company effected a 1-for-60 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every sixty (60) shares of the Company’s common stock were automatically combined into one (1) share of common stock, with 238 fractional shares rounded up to the nearest whole share.

On May 12, 2026, the Company completed an offshore private placement, issuing 1,000,000 shares of $0.0001 par common stock to five individual investors for aggregate gross proceeds of $3.93 million.

As of June 30, 2026, the issued and outstanding ordinary shares are 2,465,452.

On July 22, 2026, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation, effective July 20, 2026, in connection of the increase of the authorized shares of common stock from 16,666,667 shares, par value $0.0001 per share, to 3,000,000,000 shares, par value $0.0001 per share, and preferred stock from 1,666,667 shares, par value $0.0001 per share, to 100,000,000 shares, par value $0.0001 per share (the “Capital Stock Increase”). No other changes were made to the Company’s Amended and Restated Certificate of Incorporation.

NOTE 20 - SUBSEQUENT EVENT

On July 22, 2026, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation, effective July 20, 2026, in connection of the increase of the authorized shares of common stock from 16,666,667 shares, par value $0.0001 per share, to 3,000,000,000 shares, par value $0.0001 per share, and preferred stock from 1,666,667 shares, par value $0.0001 per share, to 100,000,000 shares, par value $0.0001 per share (the “Capital Stock Increase”). No other changes were made to the Company’s Amended and Restated Certificate of Incorporation.

The Company has evaluated subsequent events through the date of issuance of the unaudited condensed consolidated financial statements, there were no subsequent events with material financial impact on the unaudited condensed consolidated financial statements.

24
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introductory Note

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

A. Key Components of Results of Operations

Net revenues

Up until December 31, 2021, we generate revenue primarily through the sale of ECVs to our channel partners. Beginning in 2022, we experimented with different go-to-market strategies across regions. In Europe, while we initially tested an EV center approach by acquiring CAE, a German manufacturer and ECV seller, we returned to our distributor-focused model in 2024 given its proven effectiveness. In North America, we implemented a hybrid approach that combines direct sales to end-customers with strategic distributor partnerships. Historically (i.e. up until end of 2021), these revenues were generated solely by the sale of the Metro®.  Starting from the last quarter of 2021, we began generating revenue from the sales of the Logistar™ 200, Logistar™ 100, Logistar™ 260, Teemak™, Neibor® 150, Antric® and Avantier™ in Europe, Clubcar, Teemak™, Logistar™ 210, Logistar™ 260 and iChassis™ in Asia, and Avantier™, Logistar™ 210, Logistar™ 400 and Logistar™ 450 in the US, Avantier™ in Africa. We estimate that in late 2026, we will start generating revenue from Bison Motor™, hydrogen-powered heavy-duty vehicles to meet market demand and increased sales from iChassis™ that consists of a programmable “smart” chassis that is currently used by third-party integrated it with their controlling software for various autonomous driving commercial vehicle applications.

Net revenues during the six months ended 2026 and 2025 were generated from (a) vehicles sales, which primarily represent net revenues from sales of Metro® vehicles (including vehicle kits), Logistar™ 200, Logistar™ 210, Logistar™ 260, Logistar™ 450, Antric®, Avantier™, Logistar™ 100, Clubcar and 1-ton Electric Flatbed Truck, (b) sales of ECV spare-parts related to our Metro® vehicles, and (c) other sales, which primarily were: (i) the sales of inventory of outsourced ECV batteries, and (ii) charges on services provided to channel partners for technical developments and assistance with vehicle homologation or certification.

Cost of goods sold

Cost of goods sold mainly consists of production-related costs including costs of raw materials, consumables, direct labor, overhead costs, depreciation of plants and equipment, manufacturing waste treatment processing fees, shipping cost and inventory write-downs. We incur cost of goods sold in relation to (i) vehicle sales and spare-part sales, including, among others, purchases of raw materials, labor costs, and manufacturing expenses that related to ECVs, and (ii) other sales, including cost and expenses that are not related to ECV sales.

Cost of goods sold also includes inventory write-downs. Inventories are stated at the lower of cost or net realizable value. The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and is comprised of direct materials, direct labor cost and an appropriate proportion of overhead. Net realizable value is based on estimated selling prices fewer selling expenses and any further costs of completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances. Write-downs are recorded in the cost of goods sold in our statements of operations and comprehensive loss.

25
Operating expenses

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

Research and Development Expenses

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

Selling and Marketing Expenses

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

General and Administrative Expenses

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

Provision for credit losses

We adopted ASC 326 Financial Instruments – Credit Losses using the modified retrospective approach through a cumulative-effect adjustment to accumulated deficit from January 1, 2023 and interim periods therein. We used an expected credit loss model for the impairment of accounts receivable as of period ends. We believe the aging of accounts receivable is a reasonable parameter to estimate expected credit loss, and determines expected credit losses for accounts receivables using an aging schedule as of period ends. The expected credit loss rates under each aging schedule were developed on basis of the average historical loss rates from previous years, and adjusted to reflect the effects of those differences in current conditions and forecasted changes. We measured the expected credit losses of accounts receivable on a collective basis. When an accounts receivable does not share risk characteristics with other accounts receivables, we will evaluate such accounts receivable for expected credit loss on an individual basis. Allowance for credit losses balances are written off and deducted from allowance. when receivables are deemed uncollectible. after all collection efforts have been exhausted and the potential for recovery is considered remote. We expect provision for credit losses to decrease in the future as we shift our sales more to FOB terms, when goods will be delivered only if material payment are received.

Other income (expenses)

Interest expense, net

Interest expense, net, consists of interest on outstanding loans and the convertible promissory notes.

26
Gain (loss) from long-term investments

Entities over which we have the ability to exercise significant influence but do not have a controlling interest through investment in common shares, or in-substance common shares, are accounted for using the equity method. Under the equity method, we initially record our investment at cost and subsequently recognize our proportionate share of each such entity’s net income or loss after the date of investment into the statements of operations and comprehensive loss and accordingly adjust the carrying amount of the investment. When our share of losses in the equity of such entity equals or exceeds our interest in the equity of such entity, we do not recognize further losses, unless we have incurred obligations or made payments or guarantees on behalf of such entity. An impairment charge is recorded when the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. The adjusted carrying amount of the assets become new cost basis.

Discontinued operations

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

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

Key Operating Metrics

We prepare and analyze operating and financial data to assess the performance of our business and allocate our resources. The following table sets forth our key performance indicators for the six months ended June 30, 2026 and 2025.

   
Six Months ended June
30,
  
   
2026
    
2025
  
(Expressed in U.S. Dollars)
  
(Unaudited)
  
Gross margin of vehicle sales
    
8.15
%
    
1.33
%

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

27
Results of Operations

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

   
Three Months ended June 30,
    
Six Months ended June 30,
  
   
2026
    
2025
    
2026
    
2025
  
(Expressed in U.S. Dollars)
  
(Unaudited)
    
(Unaudited)
  
Combined Statements of Operations Data:
                        
Net revenues
    
6,221,822
      
6,406,918
      
7,433,982
      
8,549,976
  
Cost of goods sold
    
(5,809,002
)
    
(6,425,822
)
    
(6,784,034
)
    
(8,247,353
)
Gross profit (loss)
    
412,820
      
(18,904
)
    
649,948
      
302,623
  
Operating Expenses:
                                
Selling and marketing expenses
    
(670,974
)
    
(227,580
)
    
(965,241
)
    
(1,004,297
)
General and administrative expenses
    
(3,831,516
)
    
(5,167,754
)
    
(7,240,475
)
    
(10,101,922
)
Research and development expenses
    
(465,267
)
    
(648,861
)
    
(943,400
)
    
(1,433,039
)
Impairment loss
    
(1,902,577
)
    
-
      
(1,902,577
)
    
-
  
Provision for credit losses
    
(26,513
)
    
(2,035,343
)
    
(62,831
)
    
(2,035,343
)
Total operating expenses
    
(7,911,698
)
    
(8,079,538
)
    
(12,129,375
)
    
(14,574,601
)
                                 
Loss from operations
    
(7,498,878
)
    
(8,098,442
)
    
(11,479,427
)
    
(14,271,978
)
                                 
OTHER INCOME (EXPENSE):
                                
Interest expense, net
    
(153,186
)
    
(156,396
)
    
(241,256
)
    
(275,084
)
Gain (loss) from long-term investments
    
4,263
      
3
      
(41
)
    
(36
)
Change in fair value of convertible promissory notes and derivative liability
    
1,098,426
      
(134,161
)
    
1,333,290
      
(137,290
)
Loss from Note Amendment
    
-
      
(1,756,137
)
    
-
      
(1,756,137
)
Gain from early termination of lease contract
    
-
      
-
      
-
      
1,138
  
Change in fair value of equity securities
    
-
      
259,565
      
-
      
516,277
  
Foreign currency exchange (loss) gain, net
    
(82,854
)
    
567,141
      
(189,848
)
    
971,332
  
Gain from disposal of Cenntro Electric CICS, SRL’s equity
    
-
      
1,157,556
      
-
      
1,157,556
  
Loss on deconsolidation of a subsidiary due to insolvency
    
(1,902,577
)
    
-
      
(1,902,577
)
    
-
  
Gain (loss) from cross-currency swaps
    
167
      
26,445
      
19,517
      
(9,695
)
Other income (expense), net
    
733,427
      
(70,378
)
    
583,588
      
225,214
  
Net loss from continuing operations before tax
    
(7,801,212
)
    
(8,204,804
)
    
(11,876,754
)
    
(13,578,703
)
Income tax benefit
    
122,143
      
15,408
      
135,068
      
27,040
  
Net loss from continuing operations
    
(7,679,069
)
    
(8,189,396
)
    
(11,741,686
)
    
(13,551,663
)
Discontinued operations
                                
Loss from discontinued operations, net of tax
    
(2,935,552
)
    
(1,705,812
)
    
(2,795,767
)
    
(2,009,202
)
Net loss
    
(10,614,621
)
    
(9,895,208
)
    
(14,537,453
)
    
(15,560,865
)
Less: net loss attributable to non-controlling interests
    
(45,829
)
    
(5,871
)
    
(60,562
)
    
(17,192
)
Net loss attributable to the Company’s shareholders
    
(10,568,792
)
    
(9,889,337
)
    
(14,476,891
)
    
(15,543,673
)

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

Net Revenues

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

 
 
Three Months ended June 30,
    
Six Months ended June 30,
  
 
 
2026
    
2025
    
2026
    
2025
  
 
 
Amount
    
%
    
Amount
    
%
    
Amount
    
%
    
Amount
    
%
  
 
(Expressed in U.S. Dollars)
  
(Unaudited)
    
(Unaudited)
  
 
Net revenues:
                                                
 
Vehicle Sales
  
$
4,706,282
      
75.6
%
  
$
6,078,798
      
94.9
%
  
$
5,320,493
      
71.6
%
  
$
7,890,062
      
92.3
%
 
Spare-part sales
    
1,435,596
      
23.1
%
    
259,222
      
4.0
%
    
2,000,807
      
26.9
%
    
430,037
      
5.0
%
 
Other sales
    
79,944
      
1.3
%
    
68,898
      
1.1
%
    
112,682
      
1.5
%
    
229,877
      
2.7
%
 
Total net revenues
  
$
6,221,822
      
100.0
%
  
$
6,406,918
      
100.0
%
  
$
7,433,982
      
100.0
%
  
$
8,549,976
      
100.0
%

Net revenues for the six months ended June 30, 2026 were approximately $7.4 million, a decrease of approximately $1.1 million or 13.1% from approximately $8.5 million for the six months ended June 30, 2025. The decrease in net revenues in 2026 was primarily due to the decrease in vehicle sales of approximately $2.6 million, offset by the increase in spare-part sales by approximately $1.6 million due to the increase in sales of iChassis™. The net revenues in Europe market for the six months ended June 30, 2026 were approximately $2.9 million, a decrease of approximately $2.7 million from approximately $5.6 million for the six months ended June 30, 2025. While the net revenues in America market for the six months ended June, 2026 were approximately $1.8 million, representing an increase of approximately $0.9 million from approximately $1.0 million for the six months ended June 30, 2025.

28
Net revenues for the three months ended June 30, 2026 were approximately $6.2 million, a decrease of approximately $0.2 million or 2.9% from approximately $6.4 million for the three months ended June 30, 2025. The decrease in net revenues in 2026 was primarily due to the decrease in vehicle sales of approximately $1.4 million, offset by the increase in spare-part sales by approximately $1.2 million due to the increase in sales of iChassis™. The net revenues in Europe market for the three months ended June 30, 2026 were approximately $2.6 million, a decrease of approximately $2.3 million from approximately $4.9 million for the three months ended June 30, 2025. While the net revenues in America market for the three months ended June 30, 2026 were approximately $1.8 million, representing an increase of approximately $1.1 million from approximately $0.7 million for the three months ended June 30, 2025.

For the six months ended June 30, 2026, we sold 563 ECVs, including 10 fully assembled Metro® units, 132 fully assembled Logistar™ 100 units, 14 fully assembled Logistar™ 260 units, 4 fully assembled Teemak™ units, 141 fully assembled Logistar™ 210 units, 11 fully assembled Logistar™ 450 units, 231 fully assembled Avantier™ units, 8 Antric® units, 2 Clubcar units, and 10 fully assembled 1-ton Electric Flatbed Truck, compared with 559 ECVs for the six months end ed June 30, 2025, including 30 fully assembled Metro® units, 28 fully assembled Logistar™ 200 units, 58 fully assembled Logistar™ 100 units, 33 fully assembled Teemak™ units, 2 fully assembled Logistar™ 260 units, 1 fully assembled Logistar™ 400 units, 80 fully assembled Logistar™ 450 units, 7 fully assembled Logistar™ 210 units, 222 fully assembled Avantier™ units, 14 Antric® units, 57 Clubcar units, 21 fully assembled Seres 5 units,  5 fully assembled Joylong-A4 units and 1 fully assembled Joylong-EA6 units.

For the six months ended June 30, 2026, we also sold 183 iChassis™ units, other than the 563 ECVs.

For the three months ended June 30, 2026, we sold 506 ECVs, including 7 fully assembled Metro® units, 122 fully assembled Logistar™ 100 units, 1 fully assembled Teemak™ units, 134 fully assembled Logistar™ 210 units, 11 fully assembled Logistar™ 450 units, 224 fully assembled Avantier™ units, 5 Antric® units and 2 Clubcar units, compared with 430 ECVs for the three months ended June 30, 2025, including 10 fully assembled Metro® units, 21 fully assembled Logistar™ 200 units, 56 fully assembled Logistar™ 100 units, 1 fully assembled Teemak™ units, 1 fully assembled Logistar™ 400 units, 5 fully assembled Logistar™ 210 units, 191 fully assembled Avantier™ units, 7 Antric® units, 53 Clubcar units, 69 fully assembled Logistar™ 450 units and 16 fully assembled Seres 5 units.

For the three months ended June 30, 2026, we also sold 111 iChassis™ units, other than the 506 ECVs.

Geographically, the vast majority of our net revenues were generated from sales in European during the six months ended June 30, 2026. For the six months ended June 30, 2026, net revenues from Europe, North America, Asia (including China) and Africa as a percentage of total revenues was 39.5%, 24.6%, 30.8% and 5.1%, respectively, compared to 65.8%, 11.2%, 22.6% and 0.4%, respectively for the corresponding period in 2025.

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

For the six months ended June 30, 2026, net revenues from vehicle sales in Europe and North America, Asia (including China) and Africa as a percentage of total vehicle net revenues was 48.1%, 33.6%, 11.2% and 7.1%, respectively, compared to 68.3%, 11.0%, 20.3% and 0.4%, respectively, for the corresponding period in 2025.

For the three months ended June 30, 2026, net revenues from vehicle sales in Europe and North America, Asia (including China) and Africa as a percentage of total vehicle net revenues was 48.0%, 36.6%, 9.9% and 5.5%, respectively, compared to 78.8%, 11.5%, 9.2% and 0.6%, respectively, for the corresponding period in 2025.

29
Cost of goods sold

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

     
Three Months ended June 30,
    
Six Months ended June 30,
  
     
2026
    
2025
    
2026
    
2025
  
     
Amount
    
%
    
Amount
    
%
    
Amount
    
%
    
Amount
    
%
  
 
(Expressed in U.S. Dollars)
  
(Unaudited)
    
(Unaudited)
  
 
Cost of goods sold:
                                                
 
Vehicle Sales
  
$
(3,670,174
)
    
63.2
%
  
$
(5,217,636
)
    
81.2
%
  
$
(4,170,610
)
    
61.5
%
  
$
(6,833,600
)
    
82.9
%
 
Spare-part sales
    
(1,357,082
)
    
23.4
%
    
(184,363
)
    
2.9
%
    
(1,826,277
)
    
26.9
%
    
(310,763
)
    
3.8
%
 
Other sales
    
(65,237
)
    
1.1
%
    
(71,986
)
    
1.1
%
    
(70,638
)
    
1.0
%
    
(151,153
)
    
1.8
%
 
Inventory write-down
    
(716,509
)
    
12.3
%
    
(951,837
)
    
14.8
%
    
(716,509
)
    
10.6
%
    
(951,837
)
    
11.5
%
 
Total cost of goods sold
  
$
(5,809,002
)
    
100.0
%
  
$
(6,425,822
)
    
100.0
%
  
$
(6,784,034
)
    
100.0
%
  
$
(8,247,353
)
    
100.0
%

Cost of goods sold for the six months ended June 30, 2026 was approximately $6.8 million, a decrease of approximately $1.5 million or approximately 17.7% from approximately $8.2 million for the six months ended June 30, 2025.  The decrease of cost of vehicle sales was mainly caused by the decrease in the cost of vehicle sales of approximately $2.7 million, offset by the increase in the cost of spare-part sales of approximately $1.5 million.
 
Cost of goods sold for the three months ended June 30, 2026 was approximately $5.8 million, a decrease of approximately $0.6 million or approximately 9.6% from approximately $6.4 million for the three months ended June 30, 2025. The decrease of cost of vehicle sales was mainly caused by the decrease in the cost of vehicle sales of approximately $1.5 million, offset by the decrease in the cost of spare-part sales of approximately $1.2 million.

Gross Profit/(Loss)

Gross profit for the six months ended June 30, 2026 was approximately $0.6 million, an increase of approximately $0.3 million from approximately $0.3 million of gross profit for the six months ended June 30, 2025. For the six months ended June 30, 2026 and 2025, our overall gross margin was approximately 8.7% and 3.5%, respectively. Our gross margin of vehicle sales for the six months ended June 30, 2026 and 2025 was 8.1% and 1.3%, respectively. The increase of our overall gross profit was caused by the increase in the gross profit of our vehicle sales of approximately $0.3 million.
 
Gross profit for the three months ended June 30, 2026 was approximately $0.4 million, a change of approximately $0.4 million from approximately $0.02 million of gross loss for the three months ended June 30, 2025. For the three months ended June 30, 2026 and 2025, our overall gross margin was approximately 6.6% and negative 0.3%, respectively. Our gross margin of vehicle sales for the three months ended June 30, 2026 and 2025 was 6.8% and negative 1.5%, respectively. The increase of our overall gross profit was caused by the increase in the gross profit of our vehicle sales of approximately $0.4 million.

Selling and Marketing Expenses

Selling and marketing expenses for the six months ended June 30, 2026 were approximately $1.0 million, which remained stable compared with approximately $1.0 million for the six months ended June 30, 2025.

Selling and marketing expenses for the three months ended June 30, 2026 were approximately $0.7 million, an increase of approximately $0.4 million or approximately 194.8% from approximately $0.3 million for the three months ended June 30, 2025. The increase in selling and marketing expenses in 2026 was primarily due to the increase in freight expenses of approximately $0.4 million, resulting from higher customer shipment volumes.

30
General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2026 were approximately $7.2 million, a decrease of approximately $2.9 million or approximately 28.3% from approximately $10.1 million for the six months ended June 30, 2025. The decrease in general and administrative expenses in 2026 was primarily attributed to a decrease in salary and social insurance, leasing cost, and share-based compensation of approximately $0.5 million, $1.1 million, and $0.7 million, respectively,  reflecting the Company’s ongoing cost optimization initiatives.

General and administrative expenses for the three months ended June 30, 2026 were approximately $3.8 million, a decrease of approximately $1.3 million or approximately 25.9% from approximately $5.2 million for the three months ended June 30, 2025. The decrease in general and administrative expenses in 2026 was primarily attributed to a decrease in leasing cost and share-based compensation of approximately $0.6 million and $0.6 million, respectively, reflecting the Company’s ongoing cost optimization initiatives.

Research and Development Expenses

Research and development expenses for the six months ended June 30, 2026 were approximately $0.9 million, a decrease of approximately $0.5 million or approximately 34.2% from approximately $1.4 million for the six months ended June 30, 2025. The decrease in research and development expenses in 2026 was primarily attributed to the decrease in salary expense and share-based compensations of approximately $0.4 million and $0.1 million, respectively.

Research and development expenses for the three months ended June 30, 2026 were approximately $0.5 million, a decrease of approximately $0.2 million or approximately 28.3% from approximately $0.6 million for the three months ended June 30, 2025. The decrease in research and development expenses in 2026 was primarily attributed the decrease in salary expense and share-based compensations of approximately $0.1 million and $0.1 million respectively.

Interest expense, net

Interest expense, net, mainly consists of interest expense on convertible bonds, offset by the interest income from deposit, short-term investment and unpaid purchases from HWE. Net interest expense was approximately $0.2 million for the six months ended June 30, 2026, representing a decrease of approximately $0.1 million compared to the approximately $0.3 million in interest expenses for the six months ended June 30, 2025.

Interest expense, net, mainly consists of interest expense on convertible bonds, offset by the interest income from deposit, short-term investment and unpaid purchases from HWE. Net interest expense was approximately $0.2 million for the three months ended June 30, 2026, which was relatively stable compared to the approximately $0.2 million in interest expenses for the three months ended June 30, 2025.

Other income (expense), net

Other income, net for the six months ended June 30, 2026 was approximately $0.6 million, representing an increase of approximately $0.4 million compared to approximately $0.2 million of other income, net for the six months ended June 30, 2025. The increase of other income in 2026 compared to 2025 was primarily attributable to the increase in income from early termination and modification of lease of approximately $0.8 million, and partially offset by lawsuit compensation of Sevic litigation of $0.2 million and loss on liquidation of $0.2 million.

Other income, net for the three months ended June 30, 2026 was approximately $0.7 million, representing a change of approximately $0.7 million compared to approximately $0.07 million of other expense, net for the three months ended June 30, 2025. The change of other expense in 2026 compared to 2025 was mainly attributable to the increase in income from early termination and modification of lease of approximately $0.8 million and the increase in income on disposal of PPE of approximately $0.1 million.

Change in fair value of convertible promissory notes and derivative liability

A gain in change in fair value of convertible promissory notes and derivative liability for the six months ended June 30, 2026 was approximately $1.3 million, and a loss in change in fair value of convertible promissory notes and derivative liability for the six months ended June 30, 2025 was approximately $0.1 million, respectively.

31
A gain in change in fair value of convertible promissory notes and derivative liability for the three months ended June 30, 2026 was approximately $1.1 million, and a loss in change in fair value of convertible promissory notes and derivative liability for the three months ended June 30, 2025 was approximately $0.1 million, respectively.

Change in fair value of equity securities

A gain from the change in fair value of equity securities for the six months ended June 30, 2026 and 2025 was approximately nil and $0.5 million, respectively.

A gain from the change in fair value of equity securities for the three months ended June 30, 2026 and 2025 was approximately nil and $0.3 million, respectively.

Loss from Note Amendment

A loss from Note Amendment for the six months ended June 30, 2026 and 2025 was nil and approximately $1.8 million, respectively.

A loss from Note Amendment for the three months ended June 30, 2026 and 2025 was nil and approximately $1.8 million, respectively.

Gain from disposal of Cenntro Electric CICS, SRL’s equity

A gain from disposal of Cenntro Electric CICS, SRL’s equity for the six months ended June 30, 2026 and 2025 was nil and approximately $1.2 million, respectively.
 
A gain from disposal of Cenntro Electric CICS, SRL’s equity for the three months ended June 30, 2026 and 2025 was nil and approximately $1.2 million, respectively.

Loss on deconsolidation of a subsidiary due to insolvency

Loss on deconsolidation of a subsidiary due to insolvency for the six months ended June 30, 2026 and 2025 was approximately $1.9 million and nil, respectively, which was resulting from the liquidation of Antric.
 
Loss on deconsolidation of a subsidiary due to insolvency for the three months ended June 30, 2026 and 2025 was approximately $1.9 million and nil, respectively, which was resulting from the liquidation of Antric.

Non-GAAP Financial Measures

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

In addition to our results determined in accordance with GAAP, we believe Adjusted EBITDA, a non-GAAP measure is useful in evaluating operational performance. We use Adjusted EBITDA to evaluate ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing operating performance.
 
Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income (or net loss) before net interest expense, income tax expense, depreciation and amortization as further adjusted to exclude the impact of stock-based compensation expense and other non-recurring expenses including expenses related to TME Acquisition, expenses related to one-off payment inherited from the original Naked Brand Group, impairment of goodwill, convertible bond issuance fee, loss on redemption of convertible promissory notes, and change in fair value of convertible promissory notes and derivative liability.
 
We present Adjusted EBITDA because we consider it to be an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Management uses Adjusted EBITDA:
 

 •
as a measurement of operating performance because it assists us in comparing the operating performance of our business on a consistent basis, as it removes the impact of items not directly resulting from our core operations;

•
for planning purposes, including the preparation of our internal annual operating budget and financial projections;

32

 •
to evaluate the performance and effectiveness of our operational strategies; and

•
to evaluate our capacity to expand our business.

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


 •
such measures do not reflect our cash expenditures;

•
such measures do not reflect changes in, or cash requirements for, our working capital needs;

•
although depreciation and amortization are recurring, non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and

•
the exclusion of stock-based compensation expense, which has been a significant recurring expense and will continue to constitute a significant recurring expense for the foreseeable future, as equity awards are expected to continue to be an important component of our compensation strategy.

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

     
Three Months ended
June 30,
    
Six Months ended June 30,
  
     
2026
    
2025
    
2026
    
2025
  
 
(Expressed in U.S. Dollars)
  
(Unaudited)
    
(Unaudited)
  
 
Net loss
  
$
(10,614,621
)
  
$
(9,895,208
)
  
$
 (14,537,453
)
  
$
(15,560,865
)
 
Interest expense, net
    
153,186
       156,396
      
241,256
      
275,084
  
 
Income tax benefit
    
(122,143
)
     (15,408
)
    
(135,068
)
    
(27,040
)
 
Depreciation and amortization
    
555,521
      
555,647
      
1,079,283
      
1,105,925
  
 
Share-based compensation expense
    
-
      
719,937
      
665,261
      
1,459,588
  
 
Change in fair value of convertible promissory notes and derivative liability
    
(1,098,426
)
    
134,161
      
(1,333,290
)
    
137,290
  
 
Loss on deconsolidation of a subsidiary due to insolvency
    
1,902,577
      
-
      
1,902,577
       -
  
 
Loss from Note Amendment
    
-
      
1,756,137
      
-
      
1,756,137
  
 
Adjusted EBITDA
  
$
(9,223,906
)
  
$
(6,588,338
)
  
$
(12,117,434
)
  
$
(10,853,881
)

B. Liquidity and Capital Resources

We have historically funded working capital and other capital requirements primarily through bank loans, equity financings and short-term loans. Also, the reverse recapitalization we have completed at the end of December 2021  and in the mid-April 2026 provided significant funding for the Company’s operations. Our Cash is required primarily to purchase raw materials, and pay salaries, office expenses and other operating expenses.
 
33
As of June 30, 2026 we had approximately $4.3 million in cash and cash equivalents and approximately $1.5 million of accounts receivables as compared to approximately $6.0 million in cash and cash equivalents and $3.2 million in accounts receivable as of June 30, 2025. For the six months ended June 30, 2026 and 2025, net cash used in operating activities was approximately $5.5 million and $9.4 million, respectively.
 
Short-Term Liquidity Requirements

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

 •
The costs of bringing our new facilities into operation;

•
The timing and costs involved in rolling out new ECV models to market;

•
Our ability to manage the costs of manufacturing our ECVs;

•
The costs of maintaining, expanding and protecting our intellectual property portfolio, including potential litigation costs and liabilities;

•
Revenues received from sales of our ECVs;

•
The costs of additional general and administrative personnel, including accounting and finance, legal and human resources, as well as costs related to litigation, investigations, or settlements;

•
Our ability to collect future revenues; and

•
Other risks discussed in the section titled “Risk Factors.”

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

In the long-term, we plan to regionalize the manufacturing and supply chain relating to certain components of our ECVs in several geographic markets. Through our supply chain development know-how, we intend to establish supply chain relationships especially in the North America to support anticipated manufacturing and assembly needs in these markets, thereby reducing the time in transit and potentially other landed costs elements associated with importing our components and spare parts from China. As part of our growth strategy, we plan to expand our channel partner network, and local assembly facilities to regionalize our manufacturing and supply chains to better serve our global customers, especially to expand our after-sales-market services offerings.
 
We intend to further expand our technology through continued investment in research and development. Since inception in 2013 through June 30, 2026, we have spent over approximately $97.7 million in research and development activities related to our operations. We plan to increase our research and development expenditure over the long term as we build on our technologies in vehicle development, driving control, cloud-based platforms, and innovations for promoting sustainable energy.
 
For our long-term business plan, we plan to fund current and future planned operations mainly through cash on hand, cash flow from operations, lines of credit and additional equity and debt financings to the extent available on commercially favorable terms.
 
34
Working Capital

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

     
Six Months Ended June
30,
  
     
2026
    
2025
  
 
(Expressed in U.S. Dollars)
  
(Unaudited)
  
 
Net cash used in operating activities
  
$
(5,520,152
)
  
$
(9,360,191
)
 
Net cash provided by (used in) investing activities
    
80,456
      
(601,069
)
 
Net cash provided by financing activities
    
5,028,300
      
2,934,554
  
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash
    
126,120
      
157,307
  
 
Net decrease in cash, cash equivalents, and restricted cash
    
(285,276
 )
   
(6,869,399
)
 
Cash and cash equivalents, and restricted cash at beginning of the period-continuing
    
4,638,328
      
12,820,459
  
 
Cash and cash equivalents, and restricted cash at beginning of the period-discontinued
    
48,863
      
140,029
  
 
Cash and cash equivalents, and restricted cash at end of the period - continuing
    
4,401,915
      
6,085,569
  
 
Cash and cash equivalents, and restricted cash at end of the period - discontinued
  
$
-
    
$
5,520
  

Operating Activities

Our net cash used in operating activities was approximately $5.5 million and $9.4 million for the six months ended June 30, 2026 and 2025, respectively.

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

Investing Activities

Net cash provided by investing activities was approximately $0.1 million for the six months ended June 30, 2026. Net cash provided by investing activities for the six months ended June 30, 2026 was primarily attributable to proceeds from disposal of property, plant and equipment and repayment of loans by third parties of approximately $0.1 million and $0.1 million, respectively, and offset by purchase of property, plant and equipment of approximately $0.1 million.

Financing Activities

Net cash provided by financing activities was approximately $5.0 million for the six months ended June 30, 2026. Net cash provided by financing activities for the six months ended June 30, 2026 was primarily attributable to proceeds from loans proceed from third parties and proceeds from bank loans of approximately $4.4 million and $2.3 million, and partially offset by repayment to bank loan of approximately $1.3 million.

35
Contractual Obligations

For a discussion of material contractual obligations and commitments, see Note 17 “Commitments and Contingencies” to our unaudited condensed consolidated financial statements included in this report.

For a discussion of other contractual commitments, including bank loans and third-party loan repayment obligations, see Note 11 “Short-term and Long-term Bank Loans”  and Note 10 “Accrued Expenses and Other Current Liabilities” to our unaudited condensed consolidated financial statements.

We lease offices space under non-cancellable operating leases. As of June 30, 2026, the minimum future commitments under these agreements are as follows.
 
   
Less than one year
    
One to three years
    
Total
  
Operating lease obligations
    
691,800
      
830,437
      
1,522,237
  
Total
    
691,800
      
830,437
      
1,522,237
  

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, the reported amounts of revenue and expenses during the reporting period and the related disclosures in the unaudited condensed consolidated financial statements and accompanying footnotes. Out of our significant accounting policies, which are described in “Note 2—Summary of Significant Accounting Policies” of our unaudited condensed consolidated financial statements for the six months ended June 30, 2026, included elsewhere in this Quarterly 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.

Impairment of long-lived assets

The Company evaluates the recoverability of long-lived assets or asset group with determinable useful lives whenever events or changes in circumstances indicate that an asset or a group of assets’ carrying amount may not be recoverable. The Company measures the carrying amount of long-lived asset against the estimated undiscounted future cash flows expected to result from the use of the assets or asset group and their eventual disposition. The carrying amount of the long-lived asset or asset group is not recoverable when the sum of the undiscounted expected future net cash flows is less than the carrying value of the asset being evaluated. Impairment loss is calculated as the amount by which the carrying value of the asset exceeds its fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets or asset group, when the market prices are not readily available. The adjusted carrying amount of the assets become new cost basis and are depreciated over the assets’ remaining useful lives. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The impairment test is performed at the asset group level.

Accounts receivable and allowance for credit losses

Accounts receivable are recognized and carried at net realizable value.

Management used an expected credit loss model for the impairment of accounts receivable as of period ends. Management believes the aging of accounts receivable is a reasonable parameter to estimate expected credit loss, and determines expected credit losses for accounts receivables using an aging schedule as of period ends. The expected credit loss rates under each aging schedule were developed on basis of the average historical loss rates from previous years, and adjusted to reflect the effects of those differences in current conditions and forecasted changes. Management measured the expected credit losses of accounts receivable on a collective basis. When an accounts receivable does not share risk characteristics with other accounts receivables, management will evaluate such accounts receivable for expected credit loss on an individual basis. Allowance for credit losses balance are written off and deducted from allowance, when receivables are deemed uncollectible, after all collection efforts have been exhausted and the potential for recovery is considered remote.

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

Inventories

Inventories are stated at the lower of cost or net realizable value. The cost of raw materials is determined on the basis of weighted average. The cost of finished goods is determined on the basis of weighted average and comprises direct materials, direct labor cost and an appropriate proportion of overhead.

Net realizable value is based on estimated selling prices less selling expenses and any further costs of completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances. Loss on inventory write-off, including losses from physical inventory counts or obsolescence where no future economic benefit is expected, are recognized in cost of goods sold in the period incurred.

36
Fair value measurement

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

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

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

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

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

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

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

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

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

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

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

37
As a practical expedient, the Company uses Net Asset Value (“NAV”) or its equivalent to measure the fair value of its certain fund investment. The Company’s investments valued at NAV as a practical expedient are: private equity funds, which represent the investment in equity security on the unaudited condensed consolidated balance sheet.

Revenue recognition

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

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

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

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

The Company acts as a principal in the revenue generating process and should recognize revenue on a gross basis. Revenues are measured as the amount of consideration the Company expects to receive in exchange for transferring products to customers. Consideration is recorded net of sales returns and VAT. Sales returns is estimated based on historical experiences, which were insignificant for the six months ended June 30, 2026 and 2025. The consideration is fixed, with no variable consideration. All transactions are settled in cash within the normal credit period, and there is no financing component.

Shipping and handling costs for product shipments occur prior to the customer obtaining control of the goods are accounted for as fulfilment costs rather than separate performance obligations and recorded as sales and marketing expenses.

The following table disaggregates the Company’s revenues by product line for the six months ended June 30, 2026 and 2025:

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Vehicles sales
  
$
5,307,845
    
$
7,976,499
  
Spare-parts sales
    
2,000,807
      
505,779
  
Other service income
    
112,682
      
229,877
  
Net revenues
    
7,421,334
      
8,712,155
  
Less: Net revenues, discontinued operation
    
12,648
      
(162,179
)
Net revenues, continuing operation
  
$
7,433,982
    
$
8,549,976
  

38
The Company’s revenues are derived from Europe, Asia and America. The following table sets forth disaggregation of revenue by customer location.

   
For the Six Months Ended June 30,
  
   
2026
    
2025
  
   
(Unaudited)
    
(Unaudited)
  
Primary geographical markets
            
Europe
  
$
2,922,570
    
$
5,786,495
  
Asia
    
2,290,151
      
1,931,593
  
America
    
1,829,902
      
960,227
  
Others
    
378,711
      
33,840
  
Net revenues
    
7,421,334
      
8,712,155
  
Less: Net revenues, discontinued operation
    
12,648
      
(162,179
)
Net revenues, continuing operation
  
$
7,433,982
    
$
8,549,976
  

Contract Balances

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

Contract liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration. The consideration received remains a contractual liability until goods or services have been provided to the customer. For the six months ended June 30, 2026 and 2025, the Company recognized $365,239 and $568,035 revenue that was included in contractual liabilities as of January 1, 2026 and 2025, respectively.

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

   
June 30,
2026
    
December
31,
2025
  
   
(Unaudited)
        
Accounts receivable, net
  
$
1,492,819
    
$
1,426,094
  
Less: accounts receivable, net, held for discontinued operation
    
-
      
(144,856
)
Accounts receivable, net, held for continuing operation
    
1,492,819
      
1,281,238
  
                 
Contract liabilities
  
$
5,679,876
    
$
3,106,185
  
Less: contract liabilities, held for discontinued operation
    
-
      
(84,641
)
Contract liabilities, held for continuing operation
    
5,679,876
      
3,021,544
  

39
In July 2025, the FASB issued ASU 2025-05, which amends ASC 326-20 to address the measurement of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The update introduces a practical expedient available to all entities and an accounting policy election specifically for non-public business entities that adopt the practical expedient, aiming to simplify and reduce the cost complexity associated with estimating expected credit losses for such financial assets. The guidance was developed in conjunction with the Private Company Council to respond to stakeholder concerns regarding the burdens of existing credit loss estimation requirements for these transactions. The Company is currently assessing the impact that adopting this new accounting standard will have on its unaudited condensed consolidated financial statements. The Company is currently evaluating the impact of adopting this standard on its unaudited condensed consolidated financial statements and related disclosures and expects to adopt the guidance in its fiscal year beginning January 1, 2027.

 In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments in this update improve interim financial reporting by clarifying and simplifying certain disclosure requirements and aligning interim reporting with existing annual disclosure requirements in specific areas. The amendments are intended to reduce complexity while maintaining decision-useful information for investors. The Company is currently evaluating the impact of adopting this standard on its unaudited condensed consolidated financial statements and related disclosures and expects to adopt the guidance when it becomes effective for the Company.

Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated balance sheets, statements of operations and comprehensive loss and statements of cash flows.
 
40
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is not required to provide the information required by this item.

ITEM 4.
CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Roles 12a-15(e) or 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

41
Material Weaknesses in Internal Control over Financial Reporting

There are inherent limitations on the effectiveness of any system of internal controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective internal controls and procedures can only provide reasonable assurance of achieving their control objectives.

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 the annual or interim financial statements will not be prevented or detected on a timely basis.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026, as required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act. Based on this evaluation, management concluded that the Company’s disclosure controls and procedures was not effective as of June 30, 2026, due to material weaknesses in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) that have been previously identified but continue to exist. See Part II, Item 9A of the 2025 Form 10-K for additional information.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the first half of fiscal 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Remediation

As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, we began implementing a remediation plan to address the material weakness mentioned above. The weakness will not be considered remediated, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. While management has taken steps to remediate these control weaknesses, the material weaknesses are still unresolved. Consequently, our internal control over financial reporting was not effective as of June 30, 2026.

Unless and until these material weaknesses are remediated, or if new material weaknesses arise in the future, material misstatements could occur and go undetected in our interim or annual Consolidated Financial Statements, and we may be required to restate our financial statements. In addition, we may experience delays in satisfying our reporting obligations or to comply with United States Securities and Exchange Commission rules and regulations, which could result in, among other things, regulatory or enforcement actions, securities litigation, limitations on our ability to access capital markets, debt rating agency downgrades or rating withdrawals, or loss in confidence of our investors, any one of which could adversely affect the valuation of our common stock and our business prospects. We can give no assurance that the measures we have taken and plan to take in the future will remediate the material weaknesses identified or that any additional material weaknesses will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting.

PART II

ITEM 1.
LEGAL PROCEEDINGS

The Company may be involved in various legal proceedings, claims and other disputes arising from the commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity. Please refer to the description as contained in “Item 8 Financial Statements and Supplementary Data” on page F-1 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and the information described below.

42
On July 22, 2022, Xiongjian Chen (“Plaintiff”) filed a complaint against Cenntro Electric Group Limited (“CENN”), Cenntro Automotive Group Limited (“CAG”), Cenntro Enterprise Limited (“CEL”) and Peter Z. Wang (“Wang,” together with CENN, CAG and CEL, the “Defendants”) in the United States District Court for the District of New Jersey. The complaint alleges eleven causes of action sounding in contract and tort against the Defendants, all pertaining to stock options issued to Mr. Chen pursuant to his employment as Chief Operating Officer of CAG. With respect to the four contract claims, Plaintiff alleges breach of contract claims pertaining to an employment agreement between Plaintiff and CAG and a purported letter agreement between Plaintiff and CEL. With respect to the seven tort claims, Plaintiff alleges claims regarding purported misrepresentations and promises made concerning the treatment of Plaintiff’s stock options upon a corporate transaction, including claims for tortious interference, fraud, promissory estoppel, negligent misrepresentation, unjust enrichment and conversion. The complaint seeks, among other things, money damages (including compensatory and consequential damages) in the amount of $19 million, plus interest, attorneys’ fees and expenses. Defendants moved to dismiss the complaint against all Defendants for failure to state a claim and for lack of personal jurisdiction over defendants CAG and CEL. On April 30, 2023, the District Court dismissed the claims against CAG and CEL for lack of personal jurisdiction. In addition, the District Court dismissed all the claims against Wang and CENN without prejudice and permitted the Plaintiff to amend his complaint within 30 days to address the deficiencies in his claims against Wang and CENN. On May 28, 2023, Plaintiff filed an amended complaint. On July 20, 2023 the Defendants filed a motion seeking the dismissal of that amended complaint. On September 22, 2023,the Plaintiff filed to oppose our Motion to Dismiss and Motion to Strike. The Defendants filed our reply briefs by the deadline on November 9, 2023. On January 25, 2024, the Magistrate Judge entered an Order granting Plaintiff’s Motion to Amend and denying our Motion to Strike as moot. On November 12, 2024, District Court issued an Order, dismissing Plaintiff’s all claims except with respect to the promissory estoppel claim against Peter Wang. On November 26, 2024, the defendants filed a Motion for Reconsideration of the Court’s denial of Cenntro’s Motion to Dismiss Plaintiff’s promissory estoppel claim against Peter Wang. Concurrently, on same date Plaintiff moved for reconsideration of the Court’s decision to dismiss the case as against CAG for lack of personal jurisdiction. On December 30, 2024, the Defendant filed a Reply in Further Support of Peter Wang’s Motion for Reconsideration, which, in accordance with the Court’s practices, was filed as part of a Motion for Leave to File a Reply Brief, against which the Plaintiff filed an Opposition on January 17, 2025. On May 30, 2025, the Court issued an order denying both sides’ respective motions for reconsideration. On June 10, 2025, Plaintiff’s counsel informed the Company that they do not intend to file a second amended complaint, which we believe means that CAC, CAG, CEL and CENN will be dismissed from the case; and that the case will proceed to discovery solely on Plaintiff’s one claim against Wang for promissory estoppel. The corporate defendants have since been dismissed, leaving the Company’s Chief Executive Officer, Wang, as the sole defendant. Under an executive indemnification agreement, the Company may, subject to its terms and applicable law, be required to cover certain defense costs and liabilities arising from claims related to Wang’s service. On July 14, 2025, Wang filed his answer to Plaintiff’s first amended complaint. At the in-person conference on August 20, 2025, the Court ordered deadlines for completing various stages of discovery in the case, initially setting May 15, 2026 as the deadline for all fact discovery. The schedule was later adjourned due to Wang’s change of counsel. On July 24, 2026, the parties advised the Court that a dispute over Plaintiff’s proposed spoliation interrogatories remained pending and that party depositions would begin after the related spoliation issues are resolved. The Company anticipate remote financial consequences will be incurred by the Company.

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

43
On April 10, 2024, CEGL filed a lawsuit against MHP for breach under the Master Consulting Services Agreement and SAP S/4HANA SOW by failure to properly implement the SAP S/4HANA globally as set forth in those contracts, and for breach of implied covenants of good faith and fair dealing, causing CEGL to suffer significant damages; and demanded a jury trial on all issues which are triable. Under this claim, CEGL is seeking for a remittance of $512,226 paid to date and a recission of the remaining contract with MHP. The litigation was removed to Federal Court on May 7, 2024 where it is pending. Following the completion of discovery, the mediation scheduled for November 19, 2025 proceeded with counsel representing CEGL. No agreement was reached during the mediation session, and the parties did not engage in substantive settlement discussions. On July 17, 2026, MHP filed a motion for summary judgment seeking judgment on its breach of contract counterclaim in the amount of $1,767,516.91 and dismissal of CEGL’s claims. The motion remains pending before the Court.

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

On April 16, 2025, Shenzhen Jiangxin Automation Technology Co., Ltd. (“Jiangxin”) filed a lawsuit with the People’s Court of Yuhang District, Hangzhou, against Hangzhou Ronda Tech Co., Limited (“Ronda”), seeking payment of equipment purchase price totaling RMB 170,555 plus accrued interest. Jiangxin claims that Ronda has failed to pay the remaining balance due under three Equipment Purchase Agreements signed during 2021 and 2022. On September 26, 2025, Ronda submitted its defense and counterclaim, asserting that Jiangxin had not fulfilled its contractual obligations, including the delivery of complete technical documents, installation and test run, and therefore the conditions for payment had not been satisfied. On June 29, 2026, the court issued a first-instance judgment, ordering Ronda to pay Jiangxin RMB 140,000 within ten days after the judgment becomes effective, while dismissing Jiangxin’s remaining claims, including its claim for accrued interest, and dismissing all of Ronda’s counterclaims. The first-instance judgment is subject to appeal and has not yet become final. The Company will continue to monitor the status of any appeal proceedings and enforcement of the judgment.

On December 2 2025, Wuxi Hefu Metal Products Technology Co., Ltd. (“Hefu”) filed a lawsuit with the People’s Court of Yuhang District, Hangzhou, against Hangzhou Ronda Tech Co., Limited (“Ronda”), seeking payment of mold development fees totaling RMB 476,314.2 plus accrued interest. Hefu alleges that under the Automotive Parts Product Development Agreement and its supplementary agreement signed on September 20, 2022, it completed the development and delivery of the molds in accordance with the contractual requirements, but Ronda failed to pay the remaining balance of the mold development fees. Hefu further applied for property preservation, and on December 15, 2025, the court issued a ruling to freeze Ronda’s bank deposits in the amount of RMB 476,314.2 or seize other assets of equivalent value. On January 5, 2026, Ronda filed a counterclaim against Hefu, seeking the return of previously paid mold development fees of RMB 730,680, plus interest, alleging that Hefu’s products had quality issues and failed to satisfy the contractual requirements. On January 7, 2026, the court organized a pre-trial mediation between the parties. On March 25, 2026, the court held a hearing. On April 22, 2026, the court issued a first-instance judgment ordering Ronda to pay Hefu RMB 476,314.20 in mold fees, plus overdue payment interest from December 11, 2025 until full payment, and rejected all of Ronda’s counterclaims. On May 6, 2026, Ronda filed an appeal seeking reversal of the first-instance judgment and support for its counterclaim for the return of previously paid mold development fees of RMB 730,680, plus interest. The second-instance hearing was held on August 11, 2026, but no judgment has been issued, and the court has granted the parties a two-month mediation period.

On March 4, 2026, American Quartz Group, Inc. (“AQGI”) filed an Unlawful Detainer action against Bison Motors Inc. (“Bison”) seeking possession of the premises. Bison subsequently filed a demurrer in response. On March 25, 2026, Bison filed a separate complaint against AQGI asserting claims including forcible detainer and conversion, seeking restoration of possession, return of inventory, and damages. On April 2, 2026, AQGI dismissed the Unlawful Detainer action. Bison’s separate action against AQGI remains pending, and Bison subsequently filed an ex parte application for temporary injunctive relief to restore its access to and use of the premises. Following a hearing held on May 12, 2026, the court granted Bison’s ex parte application and ordered AQGI not to interfere with Bison’s access to and use of the premises. On May 22, 2026, AQGI filed a new Unlawful Detainer action against Bison, seeking possession of the premises, past-due rent of US$148,413.12, daily damages, attorneys’ fees and forfeiture of the lease agreement. On June 12, 2026, Bison filed a demurrer to AQGI’s new Unlawful Detainer complaint, asserting that the underlying three-day notice was defective. Following a hearing held on July 17, 2026, the court overruled Bison’s demurrer and ordered Bison to file an answer to AQGI’s complaint by July 27, 2026. On July 27, 2026, Bison served its answer, denying AQGI’s material allegations, disputing the validity of the underlying three-day notice and asserting multiple affirmative defenses. AQGI’s new Unlawful Detainer action remains pending, and no trial date has been set.

On October 24, 2025, Ride Man LLC (“Ride Man”) filed a civil complaint against Cenntro Automotive Corporation and Cenntro, Inc. (collectively, the “Company”) in the Superior Court of New Jersey, Ocean County, alleging breach of warranty and violations of the New Jersey Consumer Fraud Act in connection with the purchase of certain commercial electric vehicles. Ride Man alleges that four Logistar 400 vehicles purchased from the Company were defective and failed to perform as warranted, and that the Company did not fulfill its repair and warranty obligations. The complaint seeks rescission of the purchase, refund of the purchase price, and recovery of related damages and costs. On April 29, 2026, the court entered defaults against both defendants. On July 17, 2026, the Company moved to vacate the defaults. The Company also sought dismissal of the disclaimed implied warranty claims and the insufficiently pleaded New Jersey Consumer Fraud Act claim. The motion is scheduled for consideration on August 14, 2026 and remains pending.

44
ITEM 1A.
RISK FACTORS

You should carefully consider the risks discussed in the section entitled “Risk Factors” in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, which could materially affect our business, financial condition, or future results. The risks described in the Form 10-K are not the only risks facing the company. Additional risks and uncertainties not currently known to us or that we do not currently deem material, may also materially adversely affect our business, results of operations, cash flows, and financial position.

ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On May 12, 2026, the Company entered into a securities purchase agreement with certain accredited investors, which was amended by the first amendment to the securities purchase agreement, dated May 19, 2026, pursuant to which the Company agreed to issue and sell, in a private placement (the “Private Placement”), an aggregate of 1,000,000 shares of common stock, par value $0.0001 per share (the “Common Stock”) at a purchase price of $3.93 per share, for gross proceeds of approximately $3,930,000.

The Private Placement closed on June 2, 2026. The Common Stock were issued and sold by the Company to the investors in reliance upon the exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof, and Regulation S promulgated thereunder for transactions not involving a public offering. Each investor was required to represent that it is not a “U.S. person” in accordance with Regulation S in the case of the Common Stock sold outside the United States. The Company did not engage in general solicitation or advertising and did not offer securities to the public in connection with the issuance and sale of Common Stock described in this section.

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.
MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.
OTHER INFORMATION

Trading Arrangements of Section 16 Reporting Persons.

During the quarter ended June 30, 2026, no person who is required to file reports pursuant to Section 16(a) of the Securities and Exchange Act of 1934, as amended, with respect to holdings of, and transactions in, the Company’s common shares (i.e. directors and certain officers of the Company) maintained, adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1(c) arrangement”, as those terms are defined in Section 229.408 of the regulations of the SEC.

Regained Compliance with Nasdaq Minimum Bid Price Requirement

On April 27, 2026, the Company received formal written notice from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company has regained compliance with the $1.00 minimum bid price requirement for continued listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”) and that this matter is now closed.

45
Increase of Authorized Shares of Common Stock

On July 22, 2026, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation, effective July 20, 2026, in connection of the increase of the authorized shares of common stock from 16,666,667 shares, par value $0.0001 per share, to 3,000,000,000 shares, par value $0.0001 per share, and preferred stock from 1,666,667 shares, par value $0.0001 per share, to 100,000,000 shares, par value $0.0001 per share. No other changes were made to the Company’s Amended and Restated Certificate of Incorporation.

ITEM 6.
Exhibits

EXHIBIT INDEX

Exhibit
No.
  
Description of Exhibit
 
Certificate of Amendment to Amended and Restated Articles of Incorporation filed with the Secretary of State of Nevada (incorporated by reference Exhibit 3.1 to the Company’s Current Report on Form 8-K, File No. 001-38544, filed with the SEC on July 28, 2026).
 
Certificate of Change filed with the Secretary of State of Nevada (incorporated by reference Exhibit 3.1 to the Company’s Current Report on Form 8-K, File No. 001-38544, filed with the SEC on April 15, 2026).
 
Certificate of Amendment to Amended and Restated Articles of Incorporation filed with the Secretary of State of Nevada (incorporated by reference Exhibit 3.2 to the Company’s Current Report on Form 8-K, File No. 001-38544, filed with the SEC on April 15, 2026).
 
Certification of Principal Executive Officer required by Rule 13a-14(a).
 
Certification of Principal Financial Officer required by Rule 13a-14(a).
 
Certification required by Section 1350 of Chapter 63 of Title 18 of the United States Code.
101.
  
INS* Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.
  
SCH* Inline XBRL Taxonomy Extension Schema Document
101.
  
CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.
  
DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.
  
 LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.
  
PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*
  
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)
*
Filed herewith.
**
Furnished herewith.

46
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CENNTRO INC.
  
   
Dated: August 14, 2026.
  
   
 
CENNTRO INC.
     
 
By:
/s/ Peter Z. Wang
   
Peter Z. Wang
   
Chief Executive Officer
   
(Principal Executive Officer)
     
 
By:
/s/ Edward Ye
   
Edward Ye
   
Chief Financial Officer
   
(Principal Accounting Officer)


47
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