NOTE 15 - 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.

In October 2021, Sevic Systems SE (“Sevic”), a former channel partner, commenced a lawsuit against Shengzhou Machinery, one of Cenntro’s wholly owned subsidiaries, relating to a breach of contract for the sale of goods (the “Sevic Lawsuit”). Sevic filed its complaint with the People’s Court of Keqiao District, Shaoxing City, Light Textile City (the “People’s Court”). In the Sevic Lawsuit, Sevic alleges that the Shengzhou Machinery provided it with certain unmarketable goods and requests that the People’s Court (i) terminate two signed purchase orders signed on July 22, 2019 under its sales contract with Shengzhou Machinery signed on August 13, 2019 and (ii) award Sevic money damages for the cost of goods of $465,400, as well as interest and incidental losses, including freight and storage costs, for total damages of approximately $628,109. The parties entered into mediation and on July 27, 2023, the People’s Court issued a civil mediation letter stating that i) both Sevic and Shengzhou Machinery agreed to terminate (x) two purchase orders signed on July 22, 2019 and (y) the sales contract signed on August 13, 2019; ii) Shengzhou Machinery shall pay Sevic a sum of approximately $13,908 by August 7, 2023; iii) Sevic voluntarily waived all other claims; and iv) Sevic shall pay the case acceptance fee and the property preservation application fee totaling approximately $3,429. After the completion of the meditation, no other disputes were outstanding between the two parties.

On March 25, 2022, Shengzhou Hengzhong Machinery Co., Ltd. (“Shengzhou Machinery”), an affiliate of Cenntro Automotive Corporation, filed a demand for arbitration against Tropos Technologies, Inc. with the American Arbitration Association (“AAA”), asserting claims for breach of contract and unjust enrichment. Shengzhou Machinery is seeking payment of $1,126,640 (exclusive of interest, costs, and attorneys’ fees) for outstanding invoices owed by Tropos Technologies, Inc. to Shengzhou Machinery. As of the date of, Tropos Technologies, Inc. has not yet formally responded to the demand. On February 16, 2023, AAA appointed an arbitrator and both parties are waiting for further proceedings under the arbitration process. On April 25, 2023, Tropos Technologies, Inc. filed a motion to dismiss the arbitration demand. On May 23, 2023, Shengzhou Machinery filed a response in opposition to the motion to dismiss the arbitration demand. ~~As of~~A hearing on the ~~date of this report,~~motion was held on November 7, 2023, and the parties ~~are awaiting further proceedings under~~were directed by the ~~arbitration process.~~arbitrator to submit some supplemental briefs before the arbitrator rules on the motion.

In June 2022, Sevic Systems SE (“Sevic”) filed for injunctive relief in a corporate court in Brussels, Belgium, alleging CAE infringement of Sevic’s intellectual property (“IP”) rights. The injunctive action was also directed against LEIE Center SRL (“LEIE”) and Cedar Europe GmbH (“Cedar”), two distribution partners of CAE. There, Sevic claims it acquired all IP rights to an electric vehicle, the so-called CITELEC model (“CITELEC”), fully and exclusively from the French company SH2M Sarl (“SH2M”) under Mr. Pierre Millet. Sevic claims these rights were acquired under a 2019 IP transfer agreement. According to Sevic, the METRO model (“METRO”) produced by Cenntro Electro Group Ltd. (“Cenntro”) and distributed by CAE derives directly from the CITELEC. The distribution of the METRO, therefore, allegedly infringes on Sevic’s IP rights. In its action, Sevic relies on (Belgian) copyright law and unfair business practices. On February 2, 2023, the president of the commercial court of Brussels rendered a judgment, declaring i) the claim against Cedar was inadmissible and ii) The main claim against CAE and LEIE was founded. According to the president’s opinion the CITELEC-model can enjoy copyright protection and determined it was sufficiently proven that Sevic acquired the copyrights of the CITELEC-model. The president then concluded that the distribution of the METRO-model in Belgium constituted a violation of article XI. 165 §1 of the Belgian Code of Economic Law and thereby ordered the cessation of the distribution of the METRO-model, a penalty in the form of a fine of EUR20,000.00 per sold vehicle in Belgium and EUR5,000.00 for each other infringement in Belgium after the judgement was served with a maximum fine of EUR500,000.00 for LEIE and EUR1,000,000.00 fine for CAE. Because CAE has not sold any METRO-models in Belgium, the Company believes the judgement is incorrect and intends to appeal it, however, the Company has accrued the related liability according to the judgement made.

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~~CENNTRO ELECTRIC GROUP LIMITED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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, 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.

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CENNTRO ELECTRIC GROUP LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of the date of this report on Form 10-Q, there are three ongoing civil litigation cases between Hangzhou Ronda Tech Co., Limited (“Ronda”), one of Cenntro’s wholly owned subsidiaries, and Fujian Newlongma Automotive Co., Ltd. (“Newlongma”), one of Ronda’s suppliers:

(a) On February 6, 2023, Ronda commenced a lawsuit against Newlongma in the Hangzhou Yuhang District People’s Court, under which Ronda plead for (i) the termination of the vehicle purchase orders that Ronda placed with Newlongma on February 26, 2022; (ii) recovery of advance payments for total amount of approximately $438,702; and (iii) compensation for damages caused equal to approximately $453,290. The case mediation date was March 3, 2023 and was subsequently docketed on July 3, 2023. Since then, Newlongma filed a jurisdictional objection and the Court dismissed that jurisdictional objection. AsSubsequently Newlongma filed a counterclaim and the court hosted a partial exchange of evidence between the ~~date of this report~~parties on ~~Form 10-Q, the proceeding trial date has not been set.~~October 17, 2023. The next court hearing is expected to take place on November 14, 2023.

(b) On March 30, 2023, Ronda filed a lawsuit against Newlongma in the Hangzhou Yuhang District People’s Court, pleading for compensation of damages for cost of auto parts for approximately $301,514. Newlongma filed a jurisdiction objection and the Yuhang District People’s Court ruled to transfer the case to the Yongding District People’s Court of Longyan City, Fujian Province, to which Ronda appealed. The Hangzhou Intermediate People’s Court ruled to revoke the decision of the Yuhang District People’s Court, and to transfer the case to the Xinluo District People’s Court of Longyan City, Fujian Province. The case ~~was docketed~~is currently being transferred. As of the date of this report on ~~July 19, 2023. and~~Form 10-Q, the proceeding of trial date ~~was~~has not been set ~~on August 15, 2023.~~yet.

(c) On May 8, 2023, Newlongma filed a complaint against Ronda in the Longyan Yongding District People’s Court, pleading for (i) termination of the cooperation agreement between Ronda and Newlongma; (ii) retention of the advance payments by Ronda for total amount of approximately $543,977; and (iii) Ronda’s payment of outstanding bills for ~~$604,396.~~ $604,396 and Ronda ~~filed a jurisdictional objection and~~appealed. The Longyan Intermediate People’s Court of Fujian Province ruled to transfer the case to the People’s Court ~~dismissed that jurisdictional objection. Ronda has since appealed that ruling.~~of Yuhang District. As of the date of this report on Form 10-Q, the proceeding of trial date has not been set yet.

1819

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CENNTRO ELECTRIC GROUP LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 16 - RELATED PARTY TRANSACTIONS

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

Name of related parties:		Relationship with the Company
Mr. Yeung Heung Yeung		A principal shareholder of the Company
Shenzhen Yuanzheng Investment Development Co. Ltd (“Shenzhen Yuanzheng“)		Controlled by Mr. Yeung Heung Yeung
Zhejiang RAP		An entity significantly influenced by Hangzhou Ronda Tech Co., Limited
Jiangsu Rongyuan		An entity significantly influenced by Hangzhou Ronda Tech Co., Limited
Hangzhou Hezhe Energy Technology Co., Ltd (“Hangzhou Hezhe”)		An entity significantly influenced by Hangzhou Ronda Tech Co., Limited
Bendon Limited		Controlled by Mr. Justin Davis-Rice, a director of CEGL. As for the resignation of Mr. Justin Davis-Rice in the second half of 2022, it was not a related party as of ~~June~~September 30, 2023.
Shanghai Hengyu Enterprise Management Consulting Co., Ltd (“Shanghai Hengyu”)		Ultimately controlled by Mr. Peter Wang
Antric GmbH		Invested by the Company. On August 22, 2023, the Company acquired the remaining equity interests, thus it was 100% controlled by CEGL and not a related party as of September 30, 2023.

Related party transactions

During the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the Company had the following material related party transactions.

	For the Six Months Ended June 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022

Interest income from a related party
Zhejiang RAP	$	6,524	$	6,976	$	9,639	$	10,264
Bendon Limited		-		58,260		-		90,972

Purchase of raw materials from related parties
Hangzhou Hezhe		196,908		1,254,934		196,603		1,402,983

Service provided by a related party
Shanghai Hengyu		-		5,248		-		5,147
Zhejiang Zhongchai		-		4,322		-		4,239

Interest expense on loans provided by related parties
Mr. Yeung Heung Yeung		-		2,532		-		2,532
Others		-		1,116		-		1,095

Payment on the purchase of the raw materials
Hangzhou Hezhe		53,839		-		54,979		1,245,317

Repayment of interest-bearing Loan from related parties
Shenzhen Yuanzheng		-		410,777		-		402,925
Yeung Hueng Yeung		-		1,331,091
Yueng Hueng Yueng						-		1,331,091

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CENNTRO ELECTRIC GROUP LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Amounts due from a related party

The following table presents amounts due from related parties as of ~~June~~September 30, 2023 and December 31, 2022.

	June 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Hangzhou Hezhe ⁽¹⁾	$	212,320	$	366,936	$	210,335	$	366,936
Total	$	212,320	$	366,936	$	210,335	$	366,936

(1)

The balance mainly represents the prepayment for raw material to the related party.

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~~CENNTRO ELECTRIC GROUP LIMITED~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Amounts due to related parties

The following table presents amounts due to related parties as of ~~June~~September 30, 2023 and December 31, 2022.

	June 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Zhejiang RAP	$	16,483	$	23,882	$	13,284	$	23,882
Jiangsu Rongyuan		22,061		23,194		21,926		23,194
Shanghai Hengyu		2,758		2,900		2,741		2,900
Antric GmbH		-		666,396		-		666,396
Total	$	41,302	$	716,372	$	37,951	$	716,372

NOTE 17 - SUBSEQUENT EVENT

The Company has evaluated subsequent events through the date of issuance of the condensed consolidated financial statements, ~~and aside from the following~~ there were no subsequent events with material financial impact on the condensed consolidated financial statements: On August 11, 2023 the Company entered into an amendment agreement to retroactively amend the maturity date of the outstanding principal in the amount of $9,953,281 pursuant to a convertible promissory note for an additional six months from July 19, 2023 to January 19, 2024, the terms and conditions of which are outlined in Note 13 of this quarterly report on Form 10-Q.statements.

2021

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CENNTRO ELECTRIC GROUP LIMITED

MANAGEMENT’S DISCUSSION AND ANALYSIS

(Unaudited)

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 combined business Cenntro Electric Group Limited ACN 619 054 938 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 ~~generated~~generate revenue primarily through the sale of ECVs to our channel partners. Starting in 2022, especially after the acquisition of CAE and the termination of the channel partners in North America, we have started to transform our go-to-market model to also include Cenntro Branded EV Centers globally. Historically ~~(i.e.~~(i.e., up until end of 2021), these revenues were generated solely by the sale of the Metro®. Starting from the last quarter of 2021, we began generating revenue from the sales of the Logistar™ 200, Logistar™ 100, Logistar™ 260, Teemak™ and Neibor® 150 in Europe.

Net revenues ended ~~June~~September 30, 2023 and 2022 were generated from (a) vehicles sales, which primarily represent net revenues from sales of Metro® vehicles (including vehicle kits), Logistar™ 200, Logistar™ 260 and Logistar™ 100, (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 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~~

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

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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.

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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 will continue to monitor general and administrative expenses, we expect general and administrative expenses to materially increase over the next two years in connection with the execution of our growth strategy, including the regionalization of our manufacturing and supply chain and expanded product offerings and expenses relating to being a public company.

Provision for doubtful accounts

A provision for doubtful accounts is recorded for periods in which we determine a loss is probable, based on our assessment of specific factors, such as troubled collections, historical experience, accounts aging, ongoing business relations and other factors. Account balances are charged off against the provision after all means of collection have been exhausted and the potential for recovery is considered remote.

Impairment loss for long-lived assets

We evaluate 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. We measure the carrying amount of long-lived ~~asset~~assets 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~~becomes 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.

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Other income (expenses)

Interest expense, net

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

Income(loss) from and impairment on equity method 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~~becomes new cost basis.

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~~nine months ended ~~June~~September 30, 2023 and 2022.

	Six Months ended June 30,						Nine Months ended September 30,
	2023			2022			2023			2022
(Expressed in U.S. Dollars)	(Unaudited)						(Unaudited)
Gross margin of vehicle sales		16.7	%		8.7	%		16.3	%		-3.6	%

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

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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,						Three Months ended September 30,						Nine Months ended September 30,
	2023			2022			2023			2022			2023			2022			2023			2022
(Expressed in U.S. Dollars)	(Unaudited)						(Unaudited)						(Unaudited)						(Unaudited)
Combined Statements of Operations Data:
Net revenues		4,237,520			3,204,689			7,708,064			5,035,322			5,762,831			2,096,590			13,470,895			7,131,912
Cost of goods sold		(3,090,275	)		(3,036,237	)		(6,366,075	)		(4,503,840	)		(5,045,364	)		(2,730,920	)		(11,411,439	)		(7,234,760	)
Gross profit/(loss)		1,147,245			168,452			1,341,989			531,482			717,467			(634,330	)		2,059,456			(102,848	)
Operating Expenses:
Selling and marketing expenses		(2,742,749	)		(1,531,460	)		(4,611,734	)		(2,626,568	)		(2,626,829	)		(1,633,340	)		(7,238,563	)		(4,259,908	)
General and administrative expenses		(9,285,213	)		(12,014,453	)		(16,643,477	)		(20,226,284	)		(9,071,910	)		(6,220,227	)		(25,715,387	)		(26,446,511	)
Research and development expenses		(2,143,070	)		(1,389,153	)		(3,712,989	)		(1,814,512	)		(1,634,796	)		(1,796,268	)		(5,347,785	)		(3,610,780	)
Total operating expenses		(14,171,032	)		(14,935,066	)		(24,968,200	)		(24,667,364	)		(13,333,535	)		(9,649,835	)		(38,301,735	)		(34,317,199	)

Loss from operations		(13,023,787	)		(14,766,614	)		(23,626,211	)		(24,135,882	)		(12,616,068	)		(10,284,165	)		(36,242,279	)		(34,420,047	)

Other Income (Expense):
Interest expense, net		1,262			222,672			(53,153	)		286,873			(84,573	)		(110,659	)		(137,726	)		176,214
(Loss) Income from equity method investments		(148,645	)		4,941			(129,603	)		10,878			(107,069	)		36,441			(236,672	)		47,319
Other (expense) income, net		(1,119,295	)		784,220			(761,219	)		734,981			(111,815	)		(3,483,975	)		(873,034	)		(2,748,994	)
Loss on redemption of convertible promissory notes		1,900						(101	)		-			966						865			-
Loss from acquisition of Antric														(1,316,772	)		-			(1,316,772	)		-
Convertible bond issuance cost																	(5,589,336	)					(5,589,336	)
Loss on exercise of warrants		(14,745	)					(227,615	)		-			(1,134	)					(228,749	)		-
Change in fair value of convertible promissory notes and derivative liability		199,698						73,425			-			15,143			4,280,538			88,568			4,280,538
Change in fair value of equity securities		60,452						713,468			-			(1,879,593	)		19,052			(1,166,125	)		19,052
Impairment of Long-term investments		(8,538	)					(1,154,666	)		-			(2,668	)		-			(1,157,334	)		-
Loss before income taxes		(14,051,698	)		(13,754,781	)		(25,165,675	)		(23,103,150	)		(16,103,583	)		(15,132,104	)		(41,269,258	)		(38,235,254	)
Income tax expense		(25,468	)		48,861			(25,468	)		48,861			384			43,366			(25,084	)		92,228
Net loss		(14,077,166	)		(13,705,920	)		(25,191,143	)		(23,054,289	)		(16,103,199	)		(15,088,738	)		(41,294,342	)		(38,143,026	)
Less: net loss attributable to non-controlling interests		(2,682	)		(633,922	)		(158,710	)		(670,641	)		(534	)		(668,512	)		(159,244	)		(1,339,153	)
Net loss attributable to shareholders of the Company		(14,074,484	)		(13,071,998	)		(25,032,433	)		(22,383,648	)		(16,102,665	)		(14,420,226	)		(41,135,098	)		(36,803,873	)

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Comparison of the Three and ~~Six months~~Nine Months ended ~~June~~September 30, 2023 and 2022

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,										Three Months ended September 30,										Nine Months ended September 30,
	2023					2022					2023					2022					2023					2022					2023					2022
	Amount		%			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%			Amount		%
(Expressed in U.S. Dollars)	(Unaudited)										(Unaudited)										(Unaudited)										(Unaudited)
Net revenues:
Vehicle Sales	$	4,385,086		103.5	%	$	3,134,559		97.8	%	$	7,226,049		93.7	%	$	4,852,930		96.4	%	$	5,506,589		95.6	%	$	1,913,550		91.3	%	$	12,732,639		94.5	%	$	6,766,480		94.9	%
Spare-part sales		-253,334		-6.0	%		-16,798		-0.5	%		344,702		4.5	%		84,626		1.7	%		241,930		4.2	%		123,234		5.9	%		586,632		4.4	%		207,860		2.9	%
Other sales		105,768		2.5	%		86,928		2.7	%		137,313		1.8	%		97,766		1.9	%		14,312		0.2	%		59,806		2.9	%		151,624		1.1	%		157,572		2.2	%
Total net revenues	$	4,237,520				$	3,204,689		100.00	%	$	7,708,064		100.00	%	$	5,035,322		100.00	%	$	5,762,831		100.00	%	$	2,096,590		100.00	%	$	13,470,895		100.00	%	$	7,131,912		100.00	%

Net revenues for the ~~six~~nine months ended ~~June~~September 30, 2023 were approximately ~~$7.7~~$13.5 million, an increase of approximately ~~$2.7~~$6.3 million or ~~53.1%~~88.9% from approximately ~~$5.0~~$7.1 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The increase in net revenues in 2023 was primarily attributed to an increase in vehicle sales by approximately ~~$2.4~~$6.0 million due to the improvement of average selling price from approximately ~~$14,400~~$16,625 to ~~$19,797~~$19,234, and an increase in spare-part sales by approximately ~~$0.3~~$0.4 million.

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Net revenues for the three months ended ~~June~~September 30, 2023 were approximately ~~$4.2~~$5.8 million, an increase of approximately ~~$1.0~~$3.7 million or ~~32.2%~~174.9% from approximately ~~$3.2~~$2.1 million for the three months ended ~~June~~September 30, 2022. The increase in net revenues in 2023 was primarily attributed to an increase in vehicle sales by approximately ~~$1.3~~$3.6 million due to the ~~improvement~~increase of ~~average selling price from approximately $16,852 to $18,581, offset by a decrease~~sales volume of 228 units, and an increase in spare-part sales by approximately ~~$0.2~~$0.1 million.

For the ~~six~~nine months ended ~~June~~September 30, 2023, we sold ~~364~~662 ECVs, including ~~156~~234 fully assembled Metro® units, ~~102~~150 fully assembled Logistar™ 200, 49157 fully assembled Logistar™ 100, 26 fully assembled Teemak™, 4784 fully assembled Logistar™ 260, ~~and~~1 fully assembled Logistar™ 400, 21 fully assembled Avantier™, 8 Neibor® 150 units ,and one Antric® V5, compared with ~~337~~407 ECVs for the ~~six~~nine months ended ~~June~~September 30, 2022, including ~~155~~171 fully assembled Metro® vehicle units, 48 vehicle kits, ~~132~~186 fully assembled Logistar™ 200 units, one fully assembled Teemak™ unit and one fully assembled Neibor® 150 unit. Other than the ECVs, we also sold 104 iChassis™ units during the period.

For the three months ended ~~June~~September 30, 2023, we sold ~~235~~298 ECVs, including ~~139~~78 fully assembled Metro® units, 5448 fully assembled Logistar™ 200, 10108 fully assembled Logistar™ 100, ~~one~~4 fully assembled Teemak™, 2337 fully assembled Logistar™ 260, 1 fully assembled Logistar™ 400, 21 fully assembled Avantier™ and ~~8 Neibor® 150 units,~~one Antric® V5, compared with ~~186~~70 ECVs for the three months ended ~~June~~September 30, 2022, including ~~115~~16 fully assembled Metro® vehicle units 70and 54 fully assembled Logistar™ 200 units. Other than the ECVs, we also sold 103 iChassis™ units ~~one fully assembled Teemak™ unit.~~during the period.

Geographically, the vast majority of our net revenues were generated from vehicle sales in the European Union during the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022. For the ~~six~~nine months ended ~~June~~September 30, 2023, net revenues from Europe, North America, and Asia (including China) as a percentage of total revenues was ~~71.8%~~74.5%, ~~1.3%~~3.4%, and ~~27.0%~~22.1%, respectively, compared to ~~58.9%~~78.8%, ~~8.5%~~6.4%, and ~~32.7%~~13.9%, respectively for the corresponding period in 2022.

~~The vast majority of our net revenues were generated from vehicle sales in~~

For the ~~European Union during the three~~nine months ended June 30, 2023 and 2022. For the three months ended June 30, 2023, net revenues from Europe, North America, and Asia (including China) as a percentage of total revenues was 58.3%, 1.5%, and 40.2%, respectively, compared to 73.2%, 0.3%, and 26.5%, respectively for the corresponding period in 2022.

~~For the six months ended June~~September 30, 2023, net revenues from vehicle sales in Europe, North America, and Asia (including China) as a percentage of total vehicle net revenues was ~~74.8%~~77.6%, ~~0.8%~~3.3%, and ~~24.4%~~19.1%, respectively, compared to ~~59.1%~~81.4%, ~~8.8%~~6.3%, and ~~32.1%, respectively, for the corresponding period in 2022.~~

For the three months ended June 30, 2023, net revenues from vehicle sales in Europe, North America, and Asia (including China) as a percentage of total vehicle net revenues was 62.5%, 0.6%, and 36.9%, respectively, compared to 72.2%, 0.3%, and 27.5%12.3%, respectively, for the corresponding period in 2022.

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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,												Three Months ended September 30,												Nine Months ended September 30,
	2023						2022						2023						2022						2023						2022						2023						2022
	Amount			%			Amount			%			Amount			%			Amount			%			Amount			%			Amount			%			Amount			%			Amount			%
(Expressed in U.S. Dollars)	(Unaudited)												(Unaudited)												(Unaudited)												(Unaudited)
Cost of goods sold:
Vehicle Sales	$	(3,228,346	)		104.5	%	$	(2,452,858	)		80.8	%	$	(6,023,108	)		94.6	%	$	(3,832,462	)		85.1	%	$	(4,639,338	)		92.0	%	$	(2,590,747	)		94.9	%	$	(10,662,446	)		93.4	%	$	(6,423,209	)		88.8	%
Spare-part sales		263,139			-8.5	%		51,385			-1.7	%		(201,085	)		3.2	%		(46,639	)		1.0	%		(383,722	)		7.6	%		(118,420	)		4.3	%		(584,807	)		5.1	%		(165,059	)		2.3	%
Other sales		(125,068	)		4.0	%		(36,297	)		1.2	%		(141,882	)		2.2	%		(26,272	)		0.6	%		(22,304	)		0.4	%		(33,193	)		1.2	%		(164,186	)		1.5	%		(59,465	)		0.8	%
Inventory write-down								(598,467	)		19.7	%		-			-			(598,467	)		13.3	%		-			-			11,440			-0.4	%		-			-			(587,027	)		8.1	%
Total cost of goods sold	$	(3,090,275	)		100.00	%		(3,036,237	)		100.00	%	$	(6,366,075	)		100.00	%	$	(4,503,840	)		100.00	%	$	(5,045,364	)		100.00	%		(2,730,920	)		100.00	%	$	(11,411,439	)		100.00	%	$	(7,234,760	)		100.00	%

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Cost of goods sold for the ~~six~~nine months ended ~~June~~September 30, 2023 was approximately ~~$6.4~~$11.4 million, an increase of approximately ~~$1.9~~$4.2 million or approximately ~~41.3%~~57.7% from approximately ~~$4.5~~$7.2 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The increase of cost of vehicle sales was mainly caused by the increased per vehicle cost of newly introduced model of Logistar® ~~200~~260, Logistar® 400 and Logistar® 260. The increase cost per vehicle was also partly attributable to the additional ocean shipping between continents, as the Company shift from recognizing revenue with FOB terms to recording revenue on local direct pricing in the European and the US market which covered ocean shipping,Avantier™, offset by the decrease of inventory write down of approximately $0.6 million.

Cost of goods sold for the three months ended ~~June~~September 30, 2023 was approximately ~~$3.1~~$5.0 million, ~~a slight decrease~~an increase of approximately ~~$0.05~~$2.3 million or approximately ~~1.8%~~84.7% from approximately ~~$3.0~~$2.7 million for the three months ended ~~June~~September 30, 2022.

Gross Profit/(Loss)

Gross Profit for the ~~six~~nine months ended ~~June~~September 30, 2023 was approximately ~~$1.3~~$2.1 million, an increase of approximately ~~$0.8~~$2.2 million from approximately ~~$0.5~~$0.1 million of gross ~~profit~~loss for the ~~six~~nine months ended ~~June~~September 30, 2022. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, our overall gross margin was approximately ~~17.4%~~15.3% and ~~10.6%~~-1.4%, respectively. Our gross margin of vehicle sales for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 was ~~16.7%~~16.3% and ~~8.7%~~-3.6%, respectively. The increase of our overall gross profit was caused by less impairment of inventory recognized in the ~~six~~nine months ended ~~June~~September 30, 2023 compared with the same period in 2022. The increase of our gross profit for vehicle sales was mainly attributed to i) the realized gross margin of Teemak™ and our newly introduced Logsitar®260 was approximately 25% and 12%, respectively. Both of the models only began sales in 2023; ii) thereThere was no inventory write-down ~~to Metro®~~ for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to an inventory write-down ~~to Metro®~~ of approximately $0.6 million in the same period of 2022.

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Gross Profit for the three months ended ~~June~~September 30, 2023 was approximately ~~$1.1~~$0.7 million, an increase of approximately ~~$1.0~~$1.4 million from approximately ~~$0.2~~$0.6 million of gross ~~profit~~loss for the three months ended ~~June~~September 30, 2022. For the three months ended ~~June~~September 30, 2023 and 2022, our overall gross margin was approximately ~~27.1%~~12.4% and ~~5.3%~~-30.3%, respectively. Our gross margin of vehicle sales for the three months ended ~~June~~September 30, 2023 and 2022 was ~~26.4%~~15.8% and ~~2.7%~~-34.8%, respectively. The increase of our overall gross profit was caused by less impairment of inventory recognized in the three months ended ~~June~~September 30, 2023 compared with the same period in 2022. The increase of our gross profit for vehicle sales was mainly attributed to i) the realized gross margin of Metro® was approximately 17.8% for the three months ended June 30, 2023 compared to -12.8% in the same period of 2022 including an inventory write-down of approximately $0.6 million for the period, and ii) the realized gross margin of the newly introduced Logsitar®260 for the three months ended June 30, 2023 was approximately 37.1%. Logsitar®260 only began sales in 2023.

Selling and Marketing Expenses

Selling and marketing expenses for the ~~six~~nine months ended ~~June~~September 30, 2023 were approximately ~~$4.6~~$7.2 million, an increase of approximately ~~$2.0~~$3.0 million or approximately ~~75.6%~~69.9% from approximately ~~$2.6~~$4.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The increase in selling and marketing expenses in 2023 was primarily attributed to the increase in salary expenses, share-based compensations and ~~legal and~~marketing related professional fee of approximately ~~$1.5~~$1.7 million, $0.2 million and ~~$0.2~~$1.0 million, respectively.

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Selling and marketing expenses for the three months ended ~~June~~September 30, 2023 were approximately ~~$2.7~~$2.6 million, an increase of approximately ~~$1.2~~$1.0 million or approximately ~~79.1%~~60.8% from approximately ~~$1.5~~$1.6 million for the three months ended ~~June~~September 30, 2022. The increase in selling and marketing expenses in 2023 was primarily attributed to the increase in salary expenses and ~~legal and~~marketing related professional fee of approximately ~~$1.0~~$0.2 million and ~~$0.2~~$0.8 million, ~~respectively~~respectively.

General and Administrative Expenses

General and administrative expenses for the ~~six~~nine months ended ~~June~~September 30, 2023 were approximately ~~$16.6~~$25.7 million, a decrease of approximately ~~$3.6~~$0.7 million or approximately ~~17.7%~~2.8% from approximately ~~$20.2~~$26.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The decrease in general and administrative expenses in 2023 was primarily attributed to a decrease in in salary and social insurance, and stripping fee of approximately ~~$5.2~~$4.1 million and $1.8 million, respectively, offset by the increase in share-based compensation, lease ROU amortization and office expenses of approximately ~~$0.8~~$1.6 million, ~~$0.7~~$1.4 million and ~~$1.9~~$1.7 million, respectively.

General and administrative expenses for the three months ended ~~June~~September 30, 2023 were approximately ~~$9.3~~$9.1 million, ~~a decrease~~an increase of approximately ~~$2.7~~$2.9 million or approximately ~~22.7%~~45.8% from approximately ~~$12.0~~$6.2 million for the three months ended ~~June~~September 30, 2022. The ~~decrease~~increase in general and administrative expenses in 2023 was primarily attributed to ~~a decrease~~an increase in salary and social insurance and legal, share-based compensation and ~~professional~~Right of ~~approximately $4.8~~Use amortization $1.2 million, $0.8 million and ~~$1.1~~$0.7 million, respectively, offset by i) the increase in freight, ROU interest expense, rental expense, depreciation, ROU amortization and office expenses of approximately $0.4 million, $0.3 million, $0.2 million, $0.2 million, $0.4 million and $1.1 million, respectively, and ii) the increase in others of approximately $0.4 million mainly including compensation insurance and tax expense on deposit interest income.respectively.

Research and Development Expenses

Research and development expenses for the ~~six~~nine months ended ~~June~~September 30, 2023 were approximately ~~$3.7~~$5.3 million, an increase of approximately ~~$1.9~~$1.7 million or approximately ~~104.6%~~48.1% from approximately ~~$1.8~~$3.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The increase in research and development expenses in 2023 was primarily attributed to the increase in design and development expenditures and salary expense of approximately ~~$1.2~~$0.5 million and ~~$0.8~~$1.1 million, respectively.

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Research and development expenses for the three months ended ~~June~~September 30, 2023 were approximately ~~$2.1~~$1.6 million, ~~an increase~~a decrease of approximately ~~$0.8~~$0.2 million or approximately ~~54.3%~~9.0% from approximately ~~$1.4~~$1.8 million for the three months ended ~~June~~September 30, 2022. The ~~increase~~decrease in research and development expenses in 2023 was primarily attributed to i) the ~~increase~~decrease in design and development expenditures ~~and salary expense~~ of approximately ~~$0.8~~$0.5 million, ~~and $0.2 million, respectively,~~ offset by the ~~decrease~~increase in ~~legal and professional fee~~salary expense of approximately $0.2 million.

Interest income (expense), net

Interest expense, net, mainly consists of interest on convertible bonds. Net interest expense was approximately ~~$0.05~~$0.1 million for the ~~six~~nine months ended ~~June~~September 30, 2023, an increase of approximately $0.3 million or approximately ~~118.5%~~178.2% compared to the approximately ~~$0.3~~$0.2 million in interest income for the ~~six~~nine months ended ~~June~~September 30, 2022. The increase was primarily attributable to ~~(i)~~ an increase in interest expense to convertible bonds of approximately $0.7 million (ii) offset by the increase in interest income of approximately $0.3 million from bank deposit and $0.09 million from HWE. Loans from related parties and third parties were fully settled as of April 13, 2023.$0.2 million.

Interest expense, net, mainly consists of interest on convertible bonds. Net interest expense was approximately ~~one thousand U.S dollar~~$ 0.08 million for the three months ended ~~June~~September 30, 2023, ~~an increase~~a slight decrease of approximately ~~$0.2~~$0.03 million or approximately ~~99.4%~~23.6% compared to the approximately ~~$0.2~~$0.1 million in interest income for the three months ended ~~June~~September 30, 2022. The increase was primarily attributable to ~~(i) an increase~~a decrease in interest expense to convertible bonds of approximately ~~$0.3~~$0.4 million, offset by the increase in interest income of approximately ~~$0.1~~$0.3 million.

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Other income (expense), net

Other expense, net for the ~~six~~nine months ended ~~June~~September 30, 2023 was approximately ~~$0.8~~$0.9 million, representing a ~~change~~decrease of approximately ~~$1.5~~$1.9 million compared to approximately ~~$0.7~~$2.7 million of other ~~income,~~expense, net for the ~~six~~nine months ended ~~June~~September 30, 2022. The change of other income in 2023 compared to 2022 was primarily attributable to (i) ~~an increase of approximately $0.3 million in interest income from commercial bank's financing products during the first half year in 2023, offset by an increase of approximately $1.9 million~~a decrease in loss on foreign currency ~~exchange.~~exchange of approximately $1.5 million, (ii) an increase in gain on investment of approximately $0.2 million.

Other expense, net for the three months ended ~~June~~September 30, 2023 was approximately ~~$1.1~~$0.1 million, representing a ~~change~~decrease of approximately ~~$1.9~~$3.4 million compared to approximately ~~$0.8~~$3.5 million of other ~~income,~~expense, net for the three months ended ~~June~~September 30, 2022. The change of other income in 2023 compared to 2022 was primarily attributable to ~~(i) an increase~~a decrease of approximately ~~$0.2 million in interest income from commercial bank's financing products during the first half year in 2023, offset by an increase of approximately $2.0~~$3.4 million in loss on foreign currency exchange.

Change in fair value of convertible promissory notes and derivative liability

A gain in the change in fair value of convertible promissory notes and derivative liability for the ~~six and three~~nine months ended ~~June~~September 30, 2023 and 2022 was approximately ~~$0.07~~$0.09 million and ~~$0.2~~$4.3 million, respectively. The implied price volatility of the convertible promissory notes and derivative liability were relatively stable during the 6nine months ended 2023.

A gain in the change in fair value of convertible promissory notes and derivative liability for the three months ended September 30, 2023 and 2022 was approximately $0.02 million and $4.3 million, respectively.

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Change in fair value of equity securities

A loss in the change in fair value of equity securities for the nine months ended September 30, 2023 was approximately $1.2 million compared to approximately $0.2 million of a gain in the change in fair value of equity securities for the ~~six~~nine months ended ~~June~~September 30, ~~2023 was approximately $0.7 million.~~2022. The gain was attributed to an upward adjustment of approximately $0.2 million due to the fair value change of our investment on participating shares in Micro Money Fund SPC with an original investment value of $5 million and an upward adjustment of approximately $0.5 million from our investment on partnership shares in MineOne Fix Income Investment I L.P with an original investment value of $25 million.

~~A gain in the change in fair value of equity securities for the three months ended June 30, 2023 was approximately $0.06 million. The gain~~decrease was attributed to a downward adjustment of approximately ~~$0.2~~$1.9 million due to the fair value change of our investment on participating shares in Micro Money Fund SPC with an original investment value of $5 million, offset by an upward adjustment of approximately ~~$0.3~~$0.7 million from our investment on partnership shares in MineOne Fix Income Investment I L.P with an original investment value of $25 million.

A loss in the change in fair value of equity securities for the three months ended September 30, 2023 was approximately $1.9 million compared to approximately $0.2 million of a gain in the change in fair value of equity securities for the three months ended September 30, 2022. The decrease was attributed to a downward adjustment of approximately $2.1 million due to the fair value change of our investment on participating shares in Micro Money Fund SPC with an original investment value of $5 million, offset by an upward adjustment of approximately $0.2 million from our investment on partnership shares in MineOne Fix Income Investment I L.P with an original investment value of $25 million.

Loss from acquisition of Antric

A loss from acquisition of Antric for the nine months ended September 30, 2023 was approximately $1.3 million compared to nil of loss from acquisition of Antric for the nine months ended September 30, 2022.

A loss from acquisition of Antric for the three months ended September 30, 2023 was approximately $1.3 million compared to nil of loss from acquisition of Antric for the three months ended September 30, 2022.

Impairment of Long-term investments

Impairment of Long-term investments for the nine months ended September 30, 2023 was approximately $1.2 million compared nil of loss from acquisition of Antric for the nine months ended September 30, 2022.

Impairment of Long-term investments for the three months ended September 30, 2023 was approximately three thousand dollar compared nil of loss from acquisition of Antric for the three months ended September 30, 2022.

Non-GAAP Financial Measures

Adjusted EBITDA for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022

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

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

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

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

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

to evaluate our capacity to expand our business.

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

such measures do not reflect our cash expenditures;

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

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

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

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

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

	Three Months ended June 30,						Six Months ended June 30,						Three Months ended September 30,						Nine Months ended September 30,
	2023			2022			2023			2022			2023			2022			2023			2022
(Expressed in U.S. Dollars)	(Unaudited)						(Unaudited)						(Unaudited)						(Unaudited)
Net loss	$	(14,077,166	)	$	(13,705,920	)	$	(25,191,143	)	$	(23,054,289	)	$	(16,103,199	)	$	(15,088,738	)	$	(41,294,342	)	$	(38,143,026	)
Interest expense, net		(1,262	)		(222,672	)		53,153			(286,873	)		84,573			110,659			137,726			(176,214	)
Income tax expense		25,468			(48,861	)		25,468			(48,861	)		(384	)		(43,366	)		25,084			(92,228	)
Depreciation and amortization		455,779			344,507			786,411			484,937			425,218			431,290			1,213,489			916,227
Share-based compensation expense		1,256,484			1,110,440			2,410,291			1,309,856			2,154,710			1,314,446			4,565,001			2,624,302
Loss on redemption of convertible promissory notes		(1,900	)					101			-			(966	)		-			(865	)		-
Loss on exercise of warrants		14,745						227,615						1,134			-			228,749
Convertible bond issuance fee														-			5,589,336			-			5,589,336
Change in fair value of convertible promissory notes and derivative liability		(199,697	)					(73,425	)		-			(15,143	)		(4,280,538	)		(88,568	)		(4,280,538	)
Loss from acquisition of Antric														1,316,772			-			1,316,772			-
Expenses related to TME Acquisition					348,987						348,987			-			-			--			348,987
Expenses related to one-off payment inherited from the original Naked Brand Group											8,299,178			-			-			-			8,299,178
Adjusted EBITDA		(12,527,549	)		(12,173,520	)	$	(21,761,529	)	$	(12,947,065	)		(12,135,425	)		(11,966,911	)	$	(33,896,954	)	$	(24,913,976	)

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B. Liquidity and Capital Resources

We have historically funded working capital and other capital requirements primarily through bank loans, equity ~~financings~~financing and short-term loans. Also, the reverse recapitalization ~~we have~~ completed at the end of December 2021 provided significant funding for the Company’s operations. Cash is required primarily to purchase raw materials, repay debts and pay salaries, office expenses and other operating expenses.

As of ~~June 30, 2023,~~September 30,2023, we had approximately ~~$60.4~~$44.6 million in cash and cash equivalents, approximately ~~$2.6~~$4.6 million of accounts receivables, and approximately ~~$41.8~~$43.1 million of inventory ~~and approximately $30.5 million in investment in equity securities~~ as compared to approximately $~~183.0~~200.4 million in cash and cash equivalents, ~~$2.5~~$2.4 million in accounts receivable, and ~~$20.9~~$22.2 million in inventory as of ~~June 30, 2022.~~September 30,2022. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, net cash used in operating activities was approximately ~~$35.5~~$45.6 million and ~~$29.1~~$47.7 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~~twelve-month period following the date of issuance of this 10Q. Our current business strategy for the next twelve months includes (i) the continued rollout of our new ECV models in North America and Europe, as applicable, (ii) the establishment of local assembly facilities in the United States and the European Union and (iii) additional plants and equipment for the expansion of our Changxing ~~factory~~¹.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.”

¹ ~~NTD: Company to provide any additional business plans requiring material capital over the next twelve months.~~

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

Long-Term Liquidity Requirements

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

We intend to further expand our technology through continued investment in research and development. Since inception in 2013 through ~~June~~September 30, 2023, we have spent over approximately $~~85.2~~86.8 million in research and development activities related to our operations. We plan to increase our research and development expenditure over the long term as we build on our technologies in vehicle development, driving control, cloud-based platforms, and innovations for promoting sustainable energy.

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

Working Capital

As of ~~June~~September 30, 2023, our working capital was approximately ~~$97.0~~$84.0 million, as compared to a working capital of approximately ~~$206.8~~$196.0 million as of ~~June~~September 30, 2022. The approximately ~~$109.6~~$112.0 million decrease in working capital during 2023 was primarily due to the decrease of cash and cash equivalents ~~and~~of approximately $155.8 million, the decrease of prepayment and other current assets of approximately ~~$122.6~~$3.9 million, ~~and $3.2~~the increase of operating lease liabilities of approximately $2.9 million, ~~respectively,~~ offset by the increase in inventories ~~and convertible bonds~~ of approximately $20.9 million and ~~$11.9 million, respectively.~~decrease in convertible bonds of approximately $30.1 million.

Cash Flow

	Six Months Ended June 30,						Nine Months ended September 30,
	2023			2022			2023			2022
(Expressed in U.S. Dollars)	(Unaudited)						(Unaudited)
Net cash used in operating activities	$	(35,499,138	)	$	(29,071,262	)	$	(45,588,906	)	$	(47,682,208	)
Net cash (used in) provided by investing activities		(9,988,522	)		(17,112,002	)		(12,913,713	)		(30,687,751	)
Net cash provided by financing activities		(45,583,321	)		(30,960,641	)		(48,136,596	)		23,158,355
Effect of exchange rate changes on cash		(2,543,188	)		(981,467	)		(2,614,204	)		(5,456,868	)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(93,614,168	)		(78,125,372	)		(109,253,419	)		(60,668,472	)
Cash and cash equivalents, and restricted cash at beginning of the year		154,096,801			261,664,962			154,096,801			261,664,962
Cash and cash equivalents, and restricted cash at end of the period	$	60,482,633		$	183,539,590		$	44,843,382		$	200,996,490

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Operating Activities

Our net cash used in operating activities was approximately $~~35.6~~45.6 million, ~~$29.1~~$47.7 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

Net cash used in operating activities for the ~~six~~nine months ended ~~June~~September 30, 2023 was primarily attributable to (i) our net loss of approximately ~~$25.2~~$41.3 million and adjusted for non-cash items of approximately ~~$7.3~~$16.3 million, which primarily consisted of impairment of long-term investments, foreign currency exchange loss, net, share based compensation expense, ~~depreciation and amortization~~loss (gain) on disposal of long-term investment and amortization of operating lease right-of-use asset of approximately $1.2 million, ~~$2.4~~$2.9 million, ~~$0.8~~$4.6 million, $1.2 million and ~~$1.8~~$3.2 million, respectively, (ii) the increase in inventories, accounts receivable, prepayment and other current assets, accrued expense and other current liabilities and operating lease liabilities and of approximately ~~$10.4~~$11.7 million, ~~$2.1~~$4.2 million, ~~$3.9~~$2.4 million, $1.8 million and ~~$1.8~~$2.8 million, respectively, (iii) increase in deferred revenue of approximately ~~$1.5~~$1.3 million.

Investing Activities

Net cash used in investing activities was approximately ~~$10.0~~$12.9 million for the ~~six~~nine months ended ~~June~~September 30, 2023. Net cash used in investing activities for the ~~six~~nine months ended ~~June~~September 30, 2023 was primarily attributable to cash paid purchase for land use rights and property of approximately $2.2 million, additions in long-term investments as a minority interest of approximately $0.7 million, approximately ~~$5.1~~$7.3 million in purchase of plant and equipment and approximately $1.9 million net cash paid in acquisition of 35% of CAE's share and including related expenses.

Financing Activities

Net cash provided by financing activities was approximately ~~$45.6~~$48.1 million for the ~~six~~nine months ended ~~June~~September 30, 2023. Net cash provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2023 was primarily attributable to approximately ~~$45.6~~$47.5 million paid due to redemption of convertible ~~bonds.~~bonds and approximately $0.6 million of repayments of bank loans.

Contractual Obligations

In February 2021, we signed a non-cancellable operating lease agreement for warehouse and trial production use in Freehold, New Jersey (Willowbrook Road) of approximately 9,750 square feet. The lease period began in February 2021 and ends in January 2025. The annual base rent for this facility is $175,500 starting from February 2023. The lease rent fee will be adjusted upward by 3% annually afterwards. We signed the first addendum to lease on December 7, 2022 and the renewal period is two years commencing on February 1, 2023 and terminating on January 31, 2025, the annual base rent for the first twelve months the period is $175,500 and the annual base rent for the second twelve months the period is $180,765.

In June 2021, we signed two non-cancellable operating lease agreements for approximately ~~11,700~~11,690 square feet and 3,767 square feet, respectively, of two floors of an office building in Hangzhou, China. The lease period for each lease agreement began in June 2021 and ends in May 2025. Pursuant to each agreement, we paid the first six months of our rent obligations in June 2021 and thereafter will be obligated to make rental payments in advance semi-annually. The total annual base rent under these two lease agreements is $171,397 for the term ending May 2022 and $173,987 for the term ending May 2023.

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On December 4, 2021, we entered into an entrustment agreement with Cedar Europe GmbH, a company organized under the laws of Germany (“Cedar”) pursuant to which we entrusted Cedar to, in Cedar’s name, obtain a lease agreement for facilities in Germany and operate such lease facility under Cedar’s name in exchange for the Cenntro’s responsibility for all expenditures and costs of the lease. On December 24, 2021, Cedar entered into a lease agreement for an approximately 27,220 square feet facility in Dusseldorf, Germany, where we now house our European Operations Facility. The lease period began on January 1, 2022 and ends on December 31, 2024. Pursuant to such lease agreement, the total annual base rent is €354,787 (or approximately $383,512) for the lease term. Cedar transferred the leasing property to CEGE on February 1, 2023.

On January 20, 2022, we entered into an operating lease agreement (the “Jacksonville Lease”), between CAC, as tenant, the Company, as guarantor, and JAX Industrial One, LTD., a Florida limited liability company, as landlord, for a facility of approximately 100,000 square feet in Jacksonville, Florida. The lease period commenced on May, 2022 and ends 120 months following a five-month rent abatement period. Pursuant to the Jacksonville Lease, minimum annual rent is approximately $695,000, $722,800, and $751,710, for the first three years, sequentially, and rising thereafter.

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On July 28, 2022, we signed a non-cancellable operating lease agreement for approximately 12,000 square feet as an EV center in Jacksonville, Florida. The lease period began on September 1, 2022 and ends on August 31, 2029, the first annual base rent is $150,000 and the annual increase is 4%.

On August 4, 2022, we signed a non-cancellable operating lease agreement in Mexico as a facility. For the first 12 months, the rentable area is 58,413 square feet. Starting on the month 13 to month 18, the rentable area is 85,554 square feet, and as of month 19 of the Rent Commencement Date and for the remainder of the initial term, the rentable area is 112,694 square feet. The lease period commenced on January, 2023 and ends 8.5 years. The monthly rent is $29,225.38 and the annual increase is the higher of a) the consumer price index, or b) 2.5%.

On December 15, 2022, we signed a non-cancellable operating lease agreement for approximately 41,160 square feet as a facility in Howell, New Jersey. The lease period began on February 1, 2023 and ends five years, the first annual base rent is $493,920 and the annual increase is 3%

On December 29, 2022, we signed a non-cancellable operating lease agreement with BAL Freeway Associates, LLC for approximately 64,000 square feet as a facility. The lease period commenced on April 1, 2023 and ends five years following a one-month rent abatement period. The base rent for the first year is $115,200 per month. The monthly rent for the following four years is $119,808, $124,600.32, $129,584.33 and $134,767.71, respectively.

On November 28, 2022, we signed a non-cancellable operating lease agreement for approximately 6,510 square feet as an EV center in Dominica Republic. The lease period commenced on December 1, 2022 and ends five years. The rent is $9,000 per month and the annual increase is 5%.

On December 8, 2022, we signed a non-cancellable operating lease agreement for approximately 10,656 square feet as a headquarters and service center in Dominica Republic. The lease period commenced on February 15, 2023 and ends five years. The rent is $9,000 per month and the annual increase is 5%.

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On March 22, 2023, we signed a non-cancellable operating lease agreement for approximately 26,579 square feet as a local plant in Colombia, the lease period began on May 1, 2023 and the lease term is two years. The rent is COP 46,796,001.49 (or approximately $10,344.77) per month and the value of the lease fee shall be readjusted in a proportion equal to the consumer price index (CPl) certified by DANE as of December 31 of the immediately preceding year, plus two (2) points.

On May 19, 2023, we completed the acquisition with Cenntro Elecautomotiv, S.L., our EVC in Spain. On April 3, 2023, Cenntro Elecautomotiv, S.L. signed a non-cancellable operating lease agreement for approximately 1,765 square feet as a local office in Barcelona, Spain, the lease period began on April 3, 2023 and the lease term is five years. The monthly rent is €1,776 (or approximately $1,919.9) plus value-added tax with a two-month rent abatement period. In addition, Cenntro Elecautomotiv, S.L. signed a non-cancellable operating lease agreement for approximately 3,471 square feet as a service center in Barcelona, Spain on August 9, 2022, the lease period began on August 1, 2022 and the lease term is ten years. The annual rent is €36,000 (or approximately $38,916) and shall be readjusted depending on the changes of the consumer price index (CPl) determined by the National Bureau of Statistics and its substitute institutions. Legal defense is €6,000 (or approximately $6,486).

On April 4, 2023, we signed a non-cancellable operating lease agreement for approximately 2,500 squares feet in Freehold, New Jersey. The lease period commenced on July 17, 2023 and ends on July 31, 2025. The annual base rent for the first twelve months of the period is $33,525 and the annual base rent for the second twelve months of the period is $35,201.

On February 16, 2022, we signed a non-cancellable operating lease agreement for apartment 53D in the building at 555 Tenth Avenue, New York, NY 10018. The term is one year and one month, beginning on March 5, 2022 and ending on April 4, 2023. The monthly rent is $5,750. On February 1, 2023, we signed a renewal lease agreement. The term of this lease is one year, beginning on April 5, 2023 and ending on April 4, 2024. The monthly rent is $5,950.

On March 25, 2022, we completed the acquisition of TME, and change its name to Cenntro Automotive Europe GmbH ("CAE”). TME signed a non-cancellable operating lease agreement for approximately 5,212 square meters in 2019, the lease period starts on July 1, 2019 and ends on June 30, 2024, the monthly rent is €18,891 (or approximately $20,468).

We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our Audited Financial Statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

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Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated and combined financial statements, the reported amounts of revenue and expenses during the reporting period and the related disclosures in the consolidated and combined financial statements and accompanying footnotes. Out of our significant accounting policies, which are described in “Note 2—Summary of Significant Accounting Policies” of our consolidated and combined financial statements for the ~~six~~nine months ended ~~June~~September 30, 2023, included elsewhere in this Semi-annual Report, certain accounting policies are deemed “critical,” as they require management’s highest degree of judgment, estimates and assumptions. While management believes its judgments, estimates and assumptions are reasonable, they are based on information presently available and actual results may differ significantly from those estimates under different assumptions and conditions.

Basis of presentation

The accompanying consolidated balance sheet as of December 31, 2022, which has been derived from audited financial statements, and the unaudited condensed consolidated financial statements as of ~~June 30, 2023~~September 30,2023 and for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

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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. Management believes that the disclosures made are adequate to provide a fair presentation. The interim financial information should be read in conjunction with the financial statements and the notes for the fiscal year ended December 31, 2022. The results of operations for the ~~six~~nine months ended ~~June~~September 30, 2023 are not necessarily indicative of the results for the full year or any future periods.

Use of estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include provision for doubtful accounts, 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. Changes in facts and circumstances may result in revised estimates. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.

Recently issued accounting standards pronouncement

Except for the ASUs (“Accounting Standards Updates”) issued but not yet adopted disclosed in “Note 2 (z) Recent Accounting Standards” of the Company 2022 Form 10-K, there is no ASU issued by the FASB that is expected to have a material impact on the Company’s consolidated results of operations or financial position.

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. Revenue is recognized at a point in time once the Company has determined that the customer has obtained control over the product. Revenue is recognized net of return allowance and any taxes collected from customers, which are subsequently remitted to governmental authorities. Significant judgement is required to estimate return allowances. The Company reasonably ~~estimate~~estimates the possibility of return based on the historical experience, changes in judgments on these assumptions and estimates could materially impact the amount of net revenues recognized.

~~Table of Contents~~

Shipping and handling costs for product shipments ~~occur~~occurring 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.

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The following table disaggregates the Company’s revenues by product line for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022:

	For the Six Months Ended June 30,				For the Nine Months ended September 30,
	2023		2022		2023		2022
Vehicles sales	$	7,226,049	$	4,852,930	$	12,732,639	$	6,766,480
Spare-parts sales		344,702		84,626		586,632		207,860
Other service income		137,313		97,766		151,624		157,572
Net revenues	$	7,708,064	$	5,035,322	$	13,470,895	$	7,131,912

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,				For the Nine Months ended September 30,
		2023		2022		2023		2022
Primary geographical markets	Primary geographical markets
Europe		$	5,531,486	$	2,963,630	$	10,035,492	$	5,621,459
Asia			2,079,876		1,644,209		2,983,555		1,052,819
America			96,702		427,483		451,848		457,634
Total		$	7,708,064	$	5,035,322	$	13,470,895	$	7,131,912

Contract Balances

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

Contractual liabilities primarily represent the Company’s obligation to transfer additional goods or services to a customer for which the Company has received consideration. The consideration received remains a contractual liability until goods or services have been provided to the customer. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the Company recognized ~~$479,499~~$484,477 and ~~$1,038,005~~$1,079,090 revenue that was included in contractual liabilities, ~~as of December 31, 2022 and 2021,~~ respectively.

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

	June 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Accounts receivable, net	$	2,646,333	$	565,398	$	4,645,738	$	565,398
Contractual liabilities	$	3,314,661	$	2,388,480	$	3,084,737	$	2,388,480

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Recently issued accounting standards pronouncement

~~The following table reconciles the Company‘s balance sheet under U.S. GAAP with its balance sheet under IFRS as of 30 June 2023 and audited balance sheet as of 31 December 2022, respectively:~~

For the Periods Ended
Unaudited 30 June 2023 31 December 2022

Balance Sheet:
U.S. GAAP
IFRS
Difference
IFRS U.S. GAAP
IFRS
Difference
IFRS
Current assets
Cash and cash equivalents

60,390,172

-

60,390,172

153,966,777

-

153,966,777

Restricted cash

92,461

-

92,461

130,024

-

130,024

Accounts receivable, net

2,646,333

-

2,646,333

565,398

-

565,398

Inventories

41,798,511

-

41,798,511

31,843,371

-

31,843,371

Prepayment and other current assets

18,339,914

-

18,339,914

16,138,330

-

16,138,330

Deferred cost-current

10,273

-

10,273

-

-

-

Amount due from a related party

212,320

-

212,320

366,936

-

366,936

Total current assets 123,489,984 - 123,489,984 203,010,836 - 203,010,836

Non-current assets
Long-term investment, net

4,959,769

-

4,959,769

5,325,741

-

5,325,741

Investment in equity securities

30,472,663

-

30,472,663

29,759,195

-

29,759,195

Property, plant and equipment, net

18,508,847

-

18,508,847

14,962,591

-

14,962,591

Intangible assets, net

6,439,333

-

6,439,333

4,563,792

-

4,563,792

Right-of-use assets

19,734,961

-

19,734,961

8,187,149

-

8,187,149

Deferred cost - non-current

207,974

-

207,974

-

-

-

Other non-current assets, net

2,232,206

-

2,232,206

2,039,012

-

2,039,012

Total non-current assets 82,555,753 - 82,555,753 64,837,480 - 64,837,480
Total assets 206,045,737 - 206,045,737 267,848,316 - 267,848,316

Current liabilities
Accounts payable

3,364,228

-

3,364,228

3,383,021

-

3,383,021

Accrued expense and other current liabilities

3,543,840

-

3,543,840

5,048,641

-

5,048,641

Contractual liabilities

3,314,661

-

3,314,661

2,388,480

-

2,388,480

Operating lease liabilities, current

4,303,890

-

4,303,890

1,313,334

-

1,313,334

Convertible promissory notes

11,904,153

-

11,904,153

57,372,827

-

57,372,827

Deferred government grant, current

53,046

-

53,046

26,533

-

26,533

Amount due to related parties

41,302

-

41,302

716,372

-

716,372

Total current liabilities 26,525,120 - 26,525,120 70,249,208 - 70,249,208

Non-current liabilities
Deferred government grant, non-current

968,079

-

968,079

497,484

-

497,484

Derivative liability - investor warrant

12,205,830

-

12,205,830

14,334,104

-

14,334,104

Derivative liability - placement agent warrant

3,456,137

-

3,456,137

3,456,404

-

3,456,404

Operating lease liabilities, non-current

16,001,387

-

16,001,387

7,421,582

-

7,421,582

Total non-current liabilities 32,631,433 - 32,631,433 25,709,574 - 25,709,574
Total liabilities 59,156,553 - 59,156,553 95,958,782 - 95,958,782

Equity
Ordinary shares (No par value; 304,449,091 and 300,841,995 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)

-

-

-

-

-

-

Additional paid-in capital

399,517,411

182,274,066
(1)

581,791,477

397,497,817

182,125,475
(1)

579,623,292

Accumulated other comprehensive loss

(7,770,097
)

7,770,097

-

(5,306,972
)

5,306,972

-

Reserves

-

19,385,768
(2)

19,385,768

-

21,997,484
(2)

21,997,484

Accumulated deficit

(244,856,609
)

(209,429,931
)

(454,286,540
)

(219,824,176
)

(209,429,931
)

(429,254,107
)
Total Stockholders' Equity 146,890,705 - 146,890,705 172,366,669 - 172,366,669

Non-controlling interests

(1,521
)

-

(1,521
)

(477,135
)

-

(477,135
)

Total Equity 146,889,184 - 146,889,184 171,889,534 - 171,889,534
Total Liabilities and Equity 206,045,737 - 206,045,737 267,848,316 - 267,848,316

~~(1)~~

Includes (i) $(29,714,747) (2022: $(27,304,456)) in share-based compensation payments. (ii) $2,558,882 recognized in 2023 from the acquisition of 35% of CAE’s equity interest, and (iii) additional equity of $209,429,931 recognized in 2021 from the difference between the deemed transaction price and net assets acquired related to the Combination under IFRS.

~~(2)~~

Includes (i) a reclassification of Accumulated other comprehensive loss under U.S. GAAP of $(7,770,097) (2022: $(5,306,972)), (ii) a reclassification of Additional paid-in capital under U.S. GAAP of $29,714,747 (2022: $27,304,456) in share-based compensation payments to Reserves under IFRS, and (iii) a reclassification of Additional paid-in capital under U.S. GAAP of $(2,558,882) recognized in 2023 from the acquisition of 35% of CAE’s equity interest to Reserve under IFRS.

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The following table reconciles the Company’s statement of operations under U.S. GAAP for the three months ended 30 June 2023 and 2022 with its statement of operations under IFRS for the three months ended 30 June 2023 and 2022, respectively:

For the Three Months Ended
Unaudited 30 June 2023 Unaudited 30 June 2022
U.S. GAAP
IFRS
Difference
IFRS U.S. GAAP
IFRS
Difference
IFRS
Net revenues
4,237,520

-

4,237,520

3,204,689

-

3,204,689

Cost of goods sold
(3,090,275
)

-

(3,090,275
)

(3,036,237
)

-

(3,036,237
)
Gross profit 1,147,245 - 1,147,245 168,452 - 168,452

Selling and marketing expenses
(2,742,749
)

-

(2,742,749
)

(1,531,460
)

-

(1,531,460
)
General and administrative expenses
(9,285,213
)

-

(9,285,213
)

(12,014,453
)

-

(12,014,453
)
Research and development expenses
(2,143,070
)

-

(2,143,070
)

(1,389,153
)

-

(1,389,153
)
Total operating expenses (14,171,032 ) - (14,171,032 ) (14,935,066 ) - (14,935,066 )

Loss from operations (13,023,787 ) - (13,023,787 ) (14,766,614 ) - (14,766,614 )

Interest income (expense), net
1,262

-

1,262

222,672

-

222,672

(Loss) income from long-term investment
(148,645
)

-

(148,645
)

4,941

-

4,941

Impairment of long-term investment
(8,538
)

(8,538
)

-

-

-

Gain (loss) on redemption of convertible promissory notes
1,900

-

1,900

-

-

-

Loss on exercise of warrants
(14,745
)

-

(14,745
)

-

-

-

Change in fair value of convertible promissory notes and derivative liability
199,698

-

199,698

-

-

-

Change in fair value of equity securities
60,452

60,452

-

-

-

Other (expense) income, net
(1,119,295
)

-

(1,119,295
)

784,220

-

784,220

Loss before income taxes (14,051,698 ) - (14,051,698 ) (13,754,781 ) - (13,754,781 )
Income tax expense
(25,468
)

-

(25,468
)

48,861

-

48,861

Net loss (14,077,166 ) - (14,077,166 ) (13,705,920 ) - (13,705,920 )
Less: net loss attributable to non-controlling interests
(2,682
)

-

(2,682
)

(633,922
)

-

(633,922
)
Net loss attributable to the Company’s shareholders (14,074,484 ) - (14,074,484 ) (13,071,998 ) - (13,071,998 )

-

Other comprehensive loss
-

Foreign currency translation adjustment
(2,824,971
)

-

(2,824,971
)

(4,078,240
)

-

(4,078,240
)
Total comprehensive loss (16,902,137 ) - (16,902,137 ) (17,784,160 ) - (17,784,160 )
Less: total comprehensive loss attributable to non-controlling interests
(2,683
)

-

(2,683
)

(483,216
)

-

(483,216
)
Total comprehensive loss attributable to the Company’s shareholders (16,899,454 ) - (16,899,454 ) (17,300,944 ) - (17,300,944 )

~~Table of Contents~~

The following table reconciles the Company’s statement of operations under U.S. GAAP for the six months ended 30 June 2023 and 2022 with its statement of operations under IFRS for the six months ended 30 June 2023 and 2022, respectively:

For the Six Months Ended
Unaudited 30 June 2023 Unaudited 30 June 2022
U.S. GAAP
IFRS
Difference
IFRS U.S. GAAP
IFRS
Difference
IFRS
Net revenues
7,708,064

-

7,708,064

5,035,322

-

5,035,322

Cost of goods sold
(6,366,075
)

-

(6,366,075
)

(4,503,840
)

-

(4,503,840
)
Gross (Loss) Profit 1,341,989 - 1,341,989 531,482 - 531,482

Selling and marketing expenses
(4,611,734
)

-

(4,611,734
)

(2,626,568
)

-

(2,626,568
)
General and administrative expenses
(16,643,477
)

-

(16,643,477
)

(20,226,284
)

-

(20,226,284
)
Research and development expenses
(3,712,989
)

-

(3,712,989
)

(1,814,512
)

-

(1,814,512
)
Total operating expenses (24,968,200 ) - (24,968,200 ) (24,667,364 ) - (24,667,364 )

Loss from operations (23,626,211 ) - (23,626,211 ) (24,135,882 ) - (24,135,882 )

Interest (expense) income, net
(53,153
)

-

(53,153
)

286,873

-

286,873

(Loss) income from long-term investment
(129,603
)

-

(129,603
)

10,878

-

10,878

Impairment of long-term investment
(1,154,666
)

(1,154,666
)

-

-

-

Loss on redemption of convertible promissory notes
(101
)

-

(101
)

-

-

-

Loss on exercise of warrants
(227,615
)

(227,615
)

-

-

-

Change in fair value of convertible promissory notes and derivative liability
73,425

-

73,425

-

-

-

Change in fair value of equity securities
713,468

713,468

-

-

-

Other (expense) income, net
(761,219
)

-

(761,219
)

734,981

-

734,981

Loss before income taxes (25,165,675 ) - (25,165,675 ) (23,103,150 ) - (23,103,150 )
Income tax expense
(25,468
)

-

(25,468
)

48,861

-

48,861

Net loss (25,191,143 ) - (25,191,143 ) (23,054,289 ) - (23,054,289 )
Less: net loss attributable to non-controlling interests
(158,710
)

-

(158,710
)

(670,641
)

-

(670,641
)
Net loss attributable to the Company’s shareholders (25,032,433 ) - (25,032,433 ) (22,383,648 ) - (22,383,648 )

-

Other comprehensive loss
-

Foreign currency translation adjustment
(2,487,693
)

-

(2,487,693
)

(3,825,086
)

-

(3,825,086
)
Total comprehensive loss (27,678,836 ) - (27,678,836 ) (26,879,375 ) - (26,879,375 )
Less: total comprehensive loss attributable to non-controlling interests
(183,278
)

-

(183,278
)

(540,805
)

-

(540,805
)
Total comprehensive loss attributable to the Company’s shareholders (27,495,558 ) - (27,495,558 ) (26,338,570 ) - (26,338,570 )

As set forth above, the material differences between the U.S. GAAP and IFRS presentation with respect to the Group’s combined balance sheet as of 30 June 2023 and combined balance sheet as of 31 December 2022 are as follows:

~~The reclassification of “Accumulated other comprehensive loss” under U.S. GAAP to “Reserves” under IFRS;~~

~~The reclassification of amounts of share-based payments from “Additional paid-in capital” under U.S. GAAP to “Reserves” under IFRS;~~

~~The reclassification of the amount recognized from the acquisition of 35% of CAE’s equity interest from “Additional paid-in capital” under U.S. GAAP to “Reserves” under IFRS; and~~

~~Additional equity recognized from the difference between the total deemed transaction price and net assets acquired related to the Combination under IFRS.~~

In 2021, the Company was deemed to have incurred non-cash listing costs of approximately $209.4 million as a result of the IFRS accounting treatment of the Combination, as Cenntro was deemed to have received a 67% controlling interest in CEGL (formerly NBG) and the Group was deemed to have incurred listing costs equaling the difference between the total deemed transaction price and total net assets. Under U.S. GAAP, the Combination is accounted for as a reverse recapitalization, which is equivalent to the issuance of shares by Cenntro for the net assets of CEGL (formerly NBG), accompanied by a recapitalization).

As set forth above, there is no difference between the U.S. GAAP and IFRS presentation as it relates to our combined statement of operations and comprehensive loss for the six months ended 30 June 2023.

~~Table of Contents~~

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

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.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of ~~June~~September 30, 2023, 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~~September 30, 2023, 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 2022 Form 10-K/A 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~~third quarter of fiscal 2023 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/A for the fiscal year ended December 31,2022, 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.

Table of Contents

The following table reconciles the Company‘s balance sheet under U.S. GAAP with its balance sheet under IFRS as of 30 September 2023 and audited balance sheet as of 31 December 2022, respectively:

	For the Periods Ended
	Unaudited 30 September 2023									31 December 2022
Balance Sheet:	U.S. GAAP			IFRS Difference			IFRS			U.S. GAAP			IFRS Difference			IFRS
Current assets
Cash and cash equivalents		44,645,341			-			44,645,341			153,966,777			-			153,966,777
Restricted cash		198,041			-			198,041			130,024			-			130,024
Accounts receivable, net		4,645,738			-			4,645,738			565,398			-			565,398
Inventories		43,081,772			-			43,081,772			31,843,371			-			31,843,371
Prepayment and other current assets		17,360,617			-			17,360,617			16,138,330			-			16,138,330
Deferred cost -current		14,281			-			14,281			-			-			-
Amounts due from a related party		210,335			-			210,335			366,936			-			366,936
Total current assets		110,156,125			-			110,156,125			203,010,836			-			203,010,836

Non-current assets
Long-term investment, net		3,557,697			-			3,557,697			5,325,741			-			5,325,741
Investment in equity securities		28,593,070			-			28,593,070			29,759,195			-			29,759,195
Property, plant and equipment, net		20,132,381			-			20,132,381			14,962,591			-			14,962,591
Intangible assets, net		6,384,532			-			6,384,532			4,563,792			-			4,563,792
Right-of-use assets		20,679,376			-			20,679,376			8,187,149			-			8,187,149
Deferred cost - non-current		206,700			-			206,700			-			-			-
Other non-current assets, net		2,152,968			-			2,152,968			2,039,012			-			2,039,012
Total non-current assets		81,706,724			-			81,706,724			64,837,480			-			64,837,480
Total assets		191,862,849			-			191,862,849			267,848,316			-			267,848,316

Current liabilities
Accounts payable		4,842,645			-			4,842,645			3,383,021			-			3,383,021
Accrued expense and other current liabilities		3,663,756			-			3,663,756			5,048,641			-			5,048,641
Contractual liabilities		3,084,737			-			3,084,737			2,388,480			-			2,388,480
Operating lease liabilities, current		4,548,226			-			4,548,226			1,313,334			-			1,313,334
Convertible promissory notes		9,953,562			-			9,953,562			57,372,827			-			57,372,827
Deferred government grant, current		52,721			-			52,721			26,533			-			26,533
Amount due to related parties		37,951			-			37,951			716,372			-			716,372
Total current liabilities		26,183,598			-			26,183,598			70,249,208			-			70,249,208

Non-current liabilities
Deferred government grant, non-current		948,971			-			948,971			497,484			-			497,484
Derivative liability - investor warrant		12,191,457			-			12,191,457			14,334,104			-			14,334,104
Derivative liability - placement agent warrant		3,455,328			-			3,455,328			3,456,404			-			3,456,404
Operating lease liabilities, non-current		17,074,145			-			17,074,145			7,421,582			-			7,421,582
Total non-current liabilities		33,669,901			-			33,669,901			25,709,574			-			25,709,574
Total liabilities		59,853,499			-			59,853,499			95,958,782			-			95,958,782

Equity
Ordinary shares (No par value; 304,449,091 and 300,841,995 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)		-			-			-			-			-			-
Additional paid-in capital		401,672,121			180,119,356	(1)		581,791,477			397,497,817			182,125,475	(1)		579,623,292
Accumulated other comprehensive loss		(8,701,442	)		8,701,442			-			(5,306,972	)		5,306,972			-
Reserves		-			20,609,133	(2)		20,609,133			-			21,997,484	(2)		21,997,484
Accumulated deficit		(260,959,274	)		(209,429,931	)		(470,389,205	)		(219,824,176	)		(209,429,931	)		(429,254,107	)
Total Stockholders' Equity		132,011,405			-			132,011,405			172,366,669			-			172,366,669

Non-controlling interests		(2,055	)		-			(2,055	)		(477,135	)		-			(477,135	)

Total Equity		132,009,350			-			132,009,350			171,889,534			-			171,889,534
Total Liabilities and Equity		191,862,849			-			191,862,849			267,848,316			-			267,848,316

(1)

Includes (i) $(31,869,457) (2022: $(27,304,456)) in share-based compensation payments. (ii) $2,558,882 recognized in 2023 from the acquisition of 35% of CAE’s equity interest, and (iii) additional equity of $209,429,931 recognized in 2021 from the difference between the deemed transaction price and net assets acquired related to the Combination under IFRS.

(2)

Includes (i) a reclassification of Accumulated other comprehensive loss under U.S. GAAP of $(8,701,442) (2022: $(5,306,972)), (ii) a reclassification of Additional paid-in capital under U.S. GAAP of $31,869,457 (2022: $27,304,456) in share-based compensation payments to Reserves under IFRS, and (iii) a reclassification of Additional paid-in capital under U.S. GAAP of $(2,558,882) recognized in 2023 from the acquisition of 35% of CAE’s equity interest to Reserve under IFRS.

Table of Contents

The following table reconciles the Company’s statement of operations under U.S. GAAP for the three months ended 30 September 2023 and 2022 with its statement of operations under IFRS for the three months ended 30 September 2023 and 2022, respectively:

	For the Three Months Ended
		Unaudited 30 September 2023								Unaudited 30 September 2022
		U.S. GAAP			IFRS Difference		IFRS			U.S. GAAP			IFRS Difference		IFRS
Net revenues			5,762,831			-		5,762,831			2,096,590			-		2,096,590
Cost of goods sold			(5,045,364	)		-		(5,045,364	)		(2,730,920	)		-		(2,730,920	)
Gross profit			717,467			-		717,467			(634,330	)		-		(634,330	)

Selling and marketing expenses			(2,626,829	)		-		(2,626,829	)		(1,633,340	)		-		(1,633,340	)
General and administrative expenses			(9,071,910	)		-		(9,071,910	)		(6,220,227	)		-		(6,220,227	)
Research and development expenses			(1,634,796	)		-		(1,634,796	)		(1,796,268	)		-		(1,796,268	)
Total operating expenses			(13,333,535	)		-		(13,333,535	)		(9,649,835	)		-		(9,649,835	)

Loss from operations			(12,616,068	)		-		(12,616,068	)		(10,284,165	)		-		(10,284,165	)

Interest (expense) income, net			(84,573	)		-		(84,573	)		(110,659	)		-		(110,659	)
(Loss) Income from long-term investment			(107,069	)		-		(107,069	)		36,441			-		36,441
Loss from acquisition of Antric Gmbh			(1,316,772	)		-		(1,316,772	)		-			-		-
Impairment of long-term investment			(2,668	)		-		(2,668	)		-			-		-
Gain on redemption of convertible promissory notes			966			-		966			-			-		-
Loss on exercise of warrants			(1,134	)		-		(1,134	)		-			-		-
Change in fair value of convertible promissory notes and derivative liability			15,143			-		15,143			4,280,538			-		4,280,538
Convertible bond issuance cost			-			-		-			(5,589,336	)		-		(5,589,336	)
Change in fair value of equity securities			(1,879,593	)		-		(1,879,593	)		19,052			-		19,052
Other expense, net			(111,815	)		-		(111,815	)		(3,483,975	)		-		(3,483,975	)
Loss before income taxes			(16,103,583	)		-		(16,103,583	)		(15,132,104	)		-		(15,132,104	)
Income tax expense			384			-		384			43,366			-		43,366
Net loss			(16,103,199	)		-		(16,103,199	)		(15,088,738	)		-		(15,088,738	)
Less: net loss attributable to non-controlling interests			(534	)		-		(534	)		(668,512	)		-		(668,512	)
Net loss attributable to the Company’s shareholders			(16,102,665	)		-		(16,102,665	)		(14,420,226	)		-		(14,420,226	)
														-
Other comprehensive loss														-
Foreign currency translation adjustment			(931,345	)		-		(931,345	)		(3,686,137	)		-		(3,686,137	)
Total comprehensive loss			(17,034,544	)		-		(17,034,544	)		(18,774,875	)		-		(18,774,875	)
Less: total comprehensive loss attributable to non-controlling interests			(534	)		-		(534	)		(454,156	)		-		(454,156	)
Total comprehensive loss attributable to the Company’s shareholders			(17,034,010	)		-		(17,034,010	)		(18,320,719	)		-		(18,320,719	)

Table of Contents

The following table reconciles the Company’s statement of operations under U.S. GAAP for the nine months ended 30 September 2023 and 2022 with its statement of operations under IFRS for the nine months ended 30 September 2023 and 2022, respectively:

	For the Nine Months Ended
	Unaudited 30 September 2023								Unaudited 30 September 2022
	U.S. GAAP			IFRS Difference		IFRS			U.S. GAAP			IFRS Difference		IFRS
Net revenues		13,470,895			-		13,470,895			7,131,912			-		7,131,912
Cost of goods sold		(11,411,439	)		-		(11,411,439	)		(7,234,760	)		-		(7,234,760	)
Gross profit		2,059,456			-		2,059,456			(102,848	)		-		(102,848	)

Selling and marketing expenses		(7,238,563	)		-		(7,238,563	)		(4,259,908	)		-		(4,259,908	)
General and administrative expenses		(25,715,387	)		-		(25,715,387	)		(26,446,511	)		-		(26,446,511	)
Research and development expenses		(5,347,785	)		-		(5,347,785	)		(3,610,780	)		-		(3,610,780	)
Total operating expenses		(38,301,735	)		-		(38,301,735	)		(34,317,199	)		-		(34,317,199	)

Loss from operations		(36,242,279	)		-		(36,242,279	)		(34,420,047	)		-		(34,420,047	)

Interest (expense) income, net		(137,726	)		-		(137,726	)		176,214			-		176,214
(Loss) income from long-term investment		(236,672	)		-		(236,672	)		47,319			-		47,319
Loss from acquisition of Antric Gmbh		(1,316,772	)		-		(1,316,772	)		-			-		-
Impairment of long-term investment		(1,157,334	)		-		(1,157,334	)		-			-		-
Gain on redemption of convertible promissory notes		865			-		865			-			-		-
Loss on exercise of warrants		(228,749	)		-		(228,749	)		-			-		-
Change in fair value of convertible promissory notes and derivative liability		88,568			-		88,568			4,280,538			-		4,280,538
Convertible bond issuance cost		-			-		-			(5,589,336	)		-		(5,589,336	)
Change in fair value of equity securities		(1,166,125	)		-		(1,166,125	)		19,052			-		19,052
Other expense, net		(873,034	)		-		(873,034	)		(2,748,994	)		-		(2,748,994	)
Loss before income taxes		(41,269,258	)		-		(41,269,258	)		(38,235,254	)		-		(38,235,254	)
Income tax (expense) benefit		(25,084	)		-		(25,084	)		92,228			-		92,228
Net loss		(41,294,342	)		-		(41,294,342	)		(38,143,026	)		-		(38,143,026	)
Less: net loss attributable to non-controlling interests		(159,244	)		-		(159,244	)		(1,339,153	)		-		(1,339,153	)
Net loss attributable to the Company’s shareholders		(41,135,098	)		-		(41,135,098	)		(36,803,873	)		-		(36,803,873	)
													-
Other comprehensive loss													-
Foreign currency translation adjustment		(3,419,038	)		-		(3,419,038	)		(7,511,222	)		-		(7,511,222	)
Total comprehensive loss		(44,713,380	)		-		(44,713,380	)		(45,654,248	)		-		(45,654,248	)
Less: total comprehensive loss attributable to non-controlling interests		(183,812	)		-		(183,812	)		(994,960	)		-		(994,960	)
Total comprehensive loss attributable to the Company’s shareholders		(44,529,568	)		-		(44,529,568	)		(44,659,288	)		-		(44,659,288	)

As set forth above, the material differences between the U.S. GAAP and IFRS presentation with respect to the Company’s combined balance sheet as of 30 September 2023 and combined balance sheet as of 31 December 2022 are as follows:

The reclassification of “Accumulated other comprehensive loss” under U.S. GAAP to “Reserves” under IFRS;

The reclassification of amounts of share-based payments from “Additional paid-in capital” under U.S. GAAP to “Reserves” under IFRS;

The reclassification of the amount recognized from the acquisition of 35% of CAE’s equity interest from “Additional paid-in capital” under U.S. GAAP to “Reserves” under IFRS; and

Additional equity recognized from the difference between the total deemed transaction price and net assets acquired related to the Combination under IFRS.

In 2021, the Company was deemed to have incurred non-cash listing costs of approximately $209.4 million as a result of the IFRS accounting treatment of the Combination, as Cenntro was deemed to have received a 67% controlling interest in CEGL (formerly NBG) and the Company was deemed to have incurred listing costs equaling the difference between the total deemed transaction price and total net assets. Under U.S. GAAP, the Combination is accounted for as a reverse recapitalization, which is equivalent to the issuance of shares by Cenntro for the net assets of CEGL (formerly NBG), accompanied by a recapitalization).

As set forth above, there is no difference between the U.S. GAAP and IFRS presentation as it relates to our combined statement of operations and comprehensive loss for the nine months ended 30 September 2023.

Table of Contents

PART II

ITEM 1.

LEGAL PROCEEDINGS

From time to time, we may be subject to various legal claims and proceedings that arise from the normal course of business activities, including, third party intellectual property infringement claims against us in the form of letters and other forms of communication. Litigation or any other legal or administrative proceeding, regardless of the outcome, could result in substantial cost, diversion of our resources, including management’s time and attention, and, depending on the nature of the claims, reputational harm. In addition, if any litigation results in an unfavorable outcome, there exists the possibility of a material adverse impact on our results of operations, prospects, cash flows, financial position and brand. Please refer to the description as contained in “Item 8 Financial Statements and Supplementary Data” on page F-1 of our Annual Report and the information described below.

~~Table of Contents~~

In October 2021, Sevic Systems SE (“Sevic”), a former channel partner, commenced a lawsuit against Shengzhou Machinery, one of Cenntro’s wholly owned subsidiaries, relating to a contract for the sale of goods (the “Sevic Lawsuit”). Sevic filed its complaint with the People’s Court of Keqiao District, Shaoxing City, Light Textile City (the “People’s Court”). In the Sevic Lawsuit, Sevic alleges that the Shengzhou Machinery provided it with certain unmarketable goods and requests that the People’s Court (i) terminate two signed purchase orders signed on July 22, 2019 under its sales contract with Shengzhou Machinery signed on August 13, 2019 and (ii) award Sevic money damages for the cost of goods of $465,400, as well as interest and incidental losses, including freight and storage costs, for total damages of approximately $628,109. The parties entered into mediation and on July 27, 2023, the People’s Court issued a civil mediation letter stating that i) both Sevic and Shengzhou Machinery agreed to terminate (x) two purchase orders signed on July 22, 2019 and (y) the sales contract signed on August 13, 2019; ii) Shengzhou Machinery shall pay Sevic a sum of approximately $13,908 by August 7, 2023; iii) Sevic voluntarily waived all other claims; and iv) Sevic shall pay the case acceptance fee and the property preservation application fee totaling approximately $3,429. After the completion of the meditation, no other disputes were outstanding between the two parties.

On March 25, 2022, Shengzhou Hengzhong Machinery Co., Ltd. (“Shengzhou Machinery”), an affiliate of Cenntro Automotive Corporation, filed a demand for arbitration against Tropos Technologies, Inc., a non-affiliated entity, with the American Arbitration Association (“AAA”), asserting claims for breach of contract and unjust enrichment. Shengzhou Machinery is seeking payment of $1,126,640 (exclusive of interest, costs, and attorneys’ fees) for outstanding invoices owed by Tropos Technologies, Inc. to Shengzhou Machinery. On February 16, 2023, AAA appointed an arbitrator and on April ~~25, 2023,~~25,2023, Tropos Technologies, Inc. filed a motion to dismiss the arbitration demand. On May ~~23, 2023,~~23,2023, Shengzhou Machinery filed a response in opposition to the motion to dismiss the arbitration demand. ~~As of~~A hearing on the ~~date of this report,~~motion was held on November 7, 2023, and the parties ~~are awaiting further proceedings under~~were directed by the ~~arbitration process.~~arbitrator to submit some supplemental briefs before the arbitrator rules on the motion.

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, 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 July 20, 2023, the Defendants filed a motion seeking the dismissal of Plaintiff’s amended complaint. On September 22, 2023, the Plaintiff filed a motion to strike our motion to dismiss. The Defendants filed reply briefs to Plaintiff’s motion to strike on November 9, 2023.

On February 6, 2023, Ronda commenced a lawsuit against Newlongma in the Hangzhou Yuhang District People's Court, under which Ronda plead for (i) the termination of the vehicle purchase orders that Ronda placed with Newlongma on February 26, 2022; (ii) recovery of advance payments for total amount of approximately $438,702; and (iii) compensation for damages caused equal to approximately $453,290. The case mediation date was March 3, 2023 and was subsequently docketed on July 3, 2023. Since then, Newlongma filed a jurisdictional objection, and the Court dismissed that jurisdictional objection. As of the date of this report on Form 10-Q, the proceeding trial date has not been set.

~~Table of Contents~~

On March 30, 2023, Ronda filed a lawsuit against Newlongma in the Hangzhou Yuhang District People's Court, pleading for compensation of damages for cost of auto parts for approximately $301,514. The case was docketed on July 19, 2023. and the trial date was set on August 15, 2023.

On May 8, 2023, Newlongma filed a complaint against Ronda in the Longyan Yongding District People's Court, pleading for (i) termination of the cooperation agreement between Ronda and Newlongma; (ii) retention of the advance payments by Ronda for total amount of approximately $543,977; and (iii) Ronda’s payment of outstanding bills for $604,396. Ronda filed a jurisdictional objection, and the Court dismissed that jurisdictional objection. Ronda has since appealed that ruling. As of the date of this report on Form 10-Q, the proceeding trial date has not been set yet.

ITEM 1A.

RISK FACTORS

You should carefully consider the risks discussed in the section entitled “Risk Factors” in the 2022 Form 10-K/A, which could materially affect our business, financial condition, or future results. The risks described in the 2022 Form 10-K/A 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.

Table of Contents

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no sales of unregistered equity securities that we have not previously disclosed in filings with the U.S. Securities and Exchange Commission.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

Exhibits

EXHIBIT INDEX

Exhibit No.		Description of Exhibit
31.1*		Certification of Principal Executive Officer required by Rule 13a-14(a).
31.2*		Certification of Principal Financial Officer required by Rule 13a-14(a).
32.1**		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.

4144

Table of Contents

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 ELECTRIC GROUP LIMITED

~~CENNTRO ELECTRIC GROUP LIMITED~~

Dated: ~~August~~November 14, 2023.

	CENNTRO ELECTRIC GROUP LIMITED

	By:	/s/ Peter Z. Wang
		Peter Z. Wang
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Edmond Cheng
		Edmond Cheng
		Chief Financial Officer
		(Principal Accounting Officer)

Australia		N/A
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

Title of each class:		Trading Symbol(s)	Name of each exchange on which registered:
Ordinary Shares		CENN	The Nasdaq Capital Market

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

PART I - FINANCIAL INFORMATION	1
Item 1. Condensed Consolidated Financial Statements (Unaudited)	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2122
Item 3. Quantitative and Qualitative Disclosure About Market Risk	39
Item 4. Controls and Procedures	39
PART II - OTHER INFORMATION	3943
Item 1. Legal Proceedings	3943
Item 1A. Risk Factors	4143
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4144
Item 3. Defaults Upon Senior Securities	4144
Item 4. Mine Safety Disclosures	4144
Item 5. Other Information	4144
Item 6. Exhibits	4144
SIGNATURES	4245

	For the Six Months Ended June 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022

CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash used in operating activities	$	(35,499,138	)	$	(29,071,262	)	$	(45,588,906	)	$	(47,671,865	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equity investment		(680,932	)		-			(680,932	)		(3,616,188	)
Purchase of equity securities								-			(5,000,000	)
Purchase of plant and equipment		(5,082,473	)		(145,857	)		(7,329,509	)		(1,479,712	)
Purchase of land use right and property		(2,200,559	)		(9,260,497	)		(2,183,430	)		(16,764,322	)
Purchase of other intangible assets								(7,502	)		-
Acquisition of CAE’s equity interests		(1,924,557	)		(3,612,717	)		(1,924,557	)		(3,612,717	)
Cash acquired from acquisition of CAE		-			1,118,700			-			1,118,700
Acquisition of Antric Gmbh’s equity interests								(1	)		-
Cash acquired from acquisition of Antric Gmbh								1,376			-
Payment of expense for Acquisition of CAE’s equity interests		-			(348,987	)		-			(348,987	)
Proceeds from disposal of property, plant and equipment		-			320			842			314
Loans provided to third parties		(100,000	)		(5,149,884	)		(790,000	)		(1,276,617	)
Repayment of loans from related parties		-			286,920			-			281,436
Net cash used in investing activities		(9,988,521	)		(17,112,002	)		(12,913,713	)		(30,698,093	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans to related parties		-			(1,741,868	)		-			(1,734,016	)
Repayment of loans to third parties		-			(1,155,829	)		-			(1,128,070	)
Repayment of bank loans								(602,477	)		-
Purchase of CAE’s loan		-			(13,228,101	)		-			(13,228,101	)
Reduction of capital		-			(13,930,000	)		-			(13,930,000	)
Proceed from issuance of convertible promissory notes								-			54,069,000
Redemption of convertible promissory notes		(45,583,321	)		-			(47,534,119	)		-
Proceed from exercise of share-based awards								-			14,386
Payment of expense for the reverse recapitalization		-			(904,843	)		-			(904,843	)
Net cash used in financing activities		(45,583,321	)		(30,960,641	)
Net cash (used in) provided by financing activities								(48,136,596	)		23,158,356

Effect of exchange rate changes on cash		(2,543,188	)		(981,467	)		(2,614,204	)		(5,456,870	)

Net decrease in cash, cash equivalents and restricted cash		(93,614,168	)		(78,125,372	)		(109,253,419	)		(60,668,472	)
Cash, cash equivalents and restricted cash at beginning of period		154,096,801			261,664,962			154,096,801			261,664,962
Cash, cash equivalents and restricted cash at end of period	$	60,482,633		$	183,539,590		$	44,843,382		$	200,996,490

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	1,051,054		$	374,745		$	1,200,673		$	371,999
Income tax paid	$	4,903		$	-		$	4,829		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Right of use assets obtained in exchange for operating lease obligations	$	-		$	7,613,564
Convention from debt to equity interest of HW Electro Co., Ltd.							$	1,000,000		$	-
Cashless exercise of warrants	$	2,168,185		$	-		$	2,168,185		$	-

			For the Three Months Ended June 30,						For the Six Months Ended June 30,								For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	Note		2023			2022			2023			2022			Note		2023			2022			2023			2022

Net revenues		2(c)	$	4,237,520		$	3,204,689		$	7,708,064		$	5,035,322			2(c)	$	5,762,831		$	2,096,590		$	13,470,895		$	7,131,912
Cost of goods sold				(3,090,275	)		(3,036,237	)		(6,366,075	)		(4,503,840	)				(5,045,364	)		(2,730,920	)		(11,411,439	)		(7,234,760	)
Gross profit				1,147,245			168,452			1,341,989			531,482					717,467			(634,330	)		2,059,456			(102,848	)

OPERATING EXPENSES:
Selling and marketing expenses				(2,742,749	)		(1,531,460	)		(4,611,734	)		(2,626,568	)				(2,626,829	)		(1,633,340	)		(7,238,563	)		(4,259,908	)
General and administrative expenses				(9,285,213	)		(12,014,453	)		(16,643,477	)		(20,226,284	)				(9,071,910	)		(6,220,227	)		(25,715,387	)		(26,446,511	)
Research and development expenses				(2,143,070	)		(1,389,153	)		(3,712,989	)		(1,814,512	)				(1,634,796	)		(1,796,268	)		(5,347,785	)		(3,610,780	)
Total operating expenses				(14,171,032	)		(14,935,066	)		(24,968,200	)		(24,667,364	)				(13,333,535	)		(9,649,835	)		(38,301,735	)		(34,317,199	)

Loss from operations				(13,023,787	)		(14,766,614	)		(23,626,211	)		(24,135,882	)				(12,616,068	)		(10,284,165	)		(36,242,279	)		(34,420,047	)

OTHER EXPENSE:
Interest income (expense), net				1,262			222,672			(53,153	)		286,873
(Loss) income from long-term investment				(148,645	)		4,941			(129,603	)		10,878
Interest (expense) income, net																		(84,573	)		(110,659	)		(137,726	)		176,214
(Loss) Income from long-term investment																		(107,069	)		36,441			(236,672	)		47,319
Loss from acquisition of Antric Gmbh																		(1,316,772	)		-			(1,316,772	)		-
Impairment of long-term investment		7(1)		(8,538	)		-			(1,154,666	)		-			7(1)		(2,668	)		-			(1,157,334	)		-
Gain (loss) on redemption of convertible promissory notes				1,900			-			(101	)		-
Gain on redemption of convertible promissory notes																		966			-			865			-
Loss on exercise of warrants				(14,745	)		-			(227,615	)		-					(1,134	)		-			(228,749	)		-
Change in fair value of convertible promissory notes and derivative liability				199,698			-			73,425			-					15,143			4,280,538			88,568			4,280,538
Convertible bond issuance cost																		-			(5,589,336	)		-			(5,589,336	)
Change in fair value of equity securities		8		60,452			-			713,468			-			8		(1,879,593	)		19,052			(1,166,125	)		19,052
Other (expense) income, net				(1,119,295	)		784,220			(761,219	)		734,981
Other expense, net																		(111,815	)		(3,483,975	)		(873,034	)		(2,748,994	)
Loss before income taxes				(14,051,698	)		(13,754,781	)		(25,165,675	)		(23,103,150	)				(16,103,583	)		(15,132,104	)		(41,269,258	)		(38,235,254	)
Income tax (expense) benefit		11		(25,468	)		48,861			(25,468	)		48,861
Income tax benefit (expense)																11		384			43,366			(25,084	)		92,228
Net loss				(14,077,166	)		(13,705,920	)		(25,191,143	)		(23,054,289	)				(16,103,199	)		(15,088,738	)		(41,294,342	)		(38,143,026	)
Less: net loss attributable to non-controlling interests				(2,682	)		(633,922	)		(158,710	)		(670,641	)				(534	)		(668,512	)		(159,244	)		(1,339,153	)
Net loss attributable to the Company’s shareholders			$	(14,074,484	)	$	(13,071,998	)	$	(25,032,433	)	$	(22,383,648	)			$	(16,102,665	)	$	(14,420,226	)	$	(41,135,098	)	$	(36,803,873	)

OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment				(2,824,971	)		(4,078,240	)		(2,487,693	)		(3,825,086	)				(931,345	)		(3,686,137	)		(3,419,038	)		(7,511,222	)
Total comprehensive loss				(16,902,137	)		(17,784,160	)		(27,678,836	)		(26,879,375	)				(17,034,544	)		(18,774,875	)		(44,713,380	)		(45,654,248	)

Less: total comprehensive loss attributable to non-controlling interests				(2,683	)		(483,216	)		(183,278	)		(540,805	)				(534	)		(454,156	)		(183,812	)		(994,960	)
Total comprehensive loss to the Company’s shareholders			$	(16,899,454	)	$	(17,300,944	)		(27,495,558	)		(26,338,570	)			$	(17,034,010	)	$	(18,320,719	)	$	(44,529,568	)	$	(44,659,288	)

	Ordinary shares				Additional paid in capital		Accumulated deficit			Accumulated other comprehensive loss			Total shareholders’ equity			Non- controlling interest			Total equity			Ordinary shares				Additional paid in capital		Accumulated deficit			Accumulated other comprehensive loss			Total shareholders’ equity			Non- controlling interest			Total equity
	Shares		Amount																			Shares		Amount
Balance as of December 31, 2021		261,256,254	$	-	$	374,901,939	$	(109,735,935	)	$	(1,392,699	)	$	263,773,305		$	-		$	263,773,305			261,256,254	$	-	$	374,901,939	$	(109,735,935	)	$	(1,392,699	)	$	263,773,305		$	-		$	263,773,305
Share-based compensation		-		-		1,309,856		-			-			1,309,856			-			1,309,856			-		-		2,624,302		-			-			2,624,302			-			2,624,302
Net loss		-		-		-		(22,383,648	)		-			(22,383,648	)		(670,641	)		(23,054,289	)		-		-		-		(36,803,873	)		-			(36,803,873	)		(1,339,153	)		(38,143,026	)
Acquisition of 65% of CAE’s equity interests		-		-		-		-			-			-			1,555,320			1,555,320			-		-		-		-			-			-			1,555,320			1,555,320
Exercise of share-based award																							51,468		-		14,385		-			-			14,385			-			14,385
Foreign currency translation adjustment		-		-		-		-			(3,954,922	)		(3,954,922	)		129,836			(3,825,086	)		-		-		-		-			(7,855,415	)		(7,855,415	)		344,193			(7,511,222	)
Balance as of June 30, 2022		261,256,254	$	-	$	376,211,795	$	(132,119,583	)	$	(5,347,621	)	$	238,744,591		$	1,014,515		$	239,759,106
Balance as of September 30, 2022																							261,307,722	$	-	$	377,540,626	$	(146,539,808	)	$	(9,248,114	)	$	221,752,704		$	560,360		$	222,313,062

Name	Date of Incorporation	Place of Incorporation	Percentage of direct or indirect economic interest
Cenntro Automotive Corporation (“CAC”)	March 22, 2013	Delaware, U.S.	100% owned by CEGL
Cenntro Electric Group, Inc. (“CEG”)	March 9, 2020	Delaware, U.S.	100% owned by CEGL
Cennatic Power, Inc. (“Cennatic Power”)	June 8, 2022	Delaware, U.S.	100% owned by CEGL
Teemak Power Corporation	January 31, 2023	Delaware, U.S.	100% owned by CEGL
Avantier Motors Corporation	November 27, 2017	Delaware, U.S.	100% owned by CEGL
Cenntro Electric CICS, SRL	November 30, 2022	Santo Domingo, Dominican Republic	99% owned by CEGL
Cennatic Energy S. de R.L. de C.V.	August 24, 2022	Monterrey, Mexico	100% owned by CEGL
Cenntro Automotive S.A.S.	January 16, 2023	Galapa, Colombia	100% owned by CEGL
Cenntro Electric Colombia S.A.S.	March 29, 2023	Atlántico, Colombia	100% owned by CEGL
Cenntro Automotive Group Limited (“CAG HK”)	February 15, 2016	Hong Kong	100% owned by CEGL
Hangzhou Ronda Tech Co., Limited (“Hangzhou Ronda”)	June 5, 2017	PRC	100% owned by CEGL
Hangzhou Cenntro Autotech Co., Limited (“Cenntro Hangzhou”)	May 6, 2016	PRC	100% owned by CEGL
Zhejiang Cenntro Machinery Co., Limited	January 20, 2021	PRC	100% owned by CEGL
Jiangsu Tooniu Tech Co., Limited	December 19, 2018	PRC	100% owned by CEGL
Hangzhou Hengzhong Tech Co., Limited	December 16, 2014	PRC	100% owned by CEGL
Teemak Power (Hong Kong) Limited (HK)	May 17, 2023	Hong Kong	100% owned by CEGL
Avantier Motors (Hong Kong) Limited	March 13, 2023	Hong Kong	100% owned by CEGL
Cenntro Automotive Europe GmbH (“CAE”)	May 21, 2019	Herne, Germany	100% owned by CEGL
Cenntro Electric B.V.	December 12, 2022	Amsterdam, Netherlands	100% owned by CEGL
Cenntro Elektromobilite Araçlar A.Ş	February 21, 2023	Turkey	100% owned by CEGL
Cenntro Elecautomotiv, S.L.	July 5, 2022	Barcelona, Spain	100% owned by CEGL
Cenntro Electric Group (Europe) GmbH (“Cenntro Electric”)	January 13, 2022	Düsseldorf, Germany	100% owned by CEGL
Simachinery Equipment Limited (“Simachinery HK”)	June 2, 2011	Hong Kong	100% owned by CEGL
Zhejiang Sinomachinery Co., Limited (“Sinomachinery Zhejiang”)	June 16, 2011	PRC	100% owned by CEGL
Shengzhou Cenntro Machinery Co., Limited (“Cenntro Machinery”)	July 12, 2012	PRC	100% owned by CEGL
Cenntro EV Center Italy S.R.L.	May 8, 2023	Italy	100% owned by CEGL
Antric Gmbh	August 21, 2020	Germany	100% owned by CEGL
Pikka Electric Corporation	August 3, 2023	Delaware, U.S.	100% owned by CEGL
Centro Technology Corporation	August 24, 2023	California, U.S.	100% owned by CEGL

	June 30, 2023				June 30, 2022				September 30, 2023				September 30, 2022
Cash paid for amounts included in the measurement of lease liabilities		$	1,817,787			$	552,812			$	2,836,188			$	663,112
Weighted average remaining lease term	6.42 years				8.87 years				6.34 years				8.60 years
Weighted average discount rate			6.09	%			2.87	%			6.23	%			3.25	%

	Operating Leases		Operating Leases
For the remaining of 2023	$	2,164,170	$	1,172,649
Years ended December 31,
2024		4,450,712		4,751,817
2025		3,657,598		4,030,334
2026		3,734,252		4,083,280
2027		3,860,963		4,218,766
2028 and thereafter		6,626,757		7,953,619
Total lease payments		24,494,452		26,210,465
Less: imputed interest		4,189,175		4,588,094
Total		20,305,277		21,622,371
Less: current portion		4,303,890		4,548,226
Non-current portion	$	16,001,387	$	17,074,145

	Liability component			Liability component
As of December 31, 2022	$	57,372,827		$	57,372,827
Convertible promissory notes issued during the year		-			-
Redemption of convertible promissory notes		(45,583,220	)		(47,534,984	)
Fair value change recognized		114,546			115,719
As of June 30, 2023		11,904,153
As of September 30, 2023					9,953,562

Fair Value Assumptions - Convertible Promissory Note	June 30, 2023			December 31, 2022			September 30, 2023			December 31, 2022
Face value principal payable		11,904,179			57,488,000			9,953,381			57,488,000
Original conversion price		1.2375			1.2375			1.2375			1.2375
Interest Rate		8.00	%		8.00	%		8.00	%		8.00	%
Expected term (years)		0.05			0.55			0.30			0.55
Volatility		63.10	%		75.13	%		55.25	%		75.13	%
Market yield (range)		9.63	%		18.02	%		15.42	%		18.02	%
Risk free rate		1.12	%		4.69	%		5.50	%		4.69	%
Issue date	July 20, 2022			July 20, 2022			July 20, 2022			July 20, 2022
Maturity date	July 19, 2023			July 19, 2023			January 19, 2024			July 19, 2023

	Investor warrants component			Placement agent warrants component			Investor warrants component			Placement agent warrants component
As of December 31, 2022	$	14,334,104		$	3,456,404		$	14,334,104		$	3,456,404
Warrants issued during the year		-			-			-			-
Exercise of warrants		(1,940,570	)		-			(1,939,436	)		-
Fair value change recognized		(187,704	)		(267	)		(203,211	)		(1,076	)
As of June 30, 2023		12,205,830			3,456,137
As of September 30, 2023								12,191,457			3,455,328

Fair Value Assumptions – Warrants	June 30, 2023			December 31, 2022			September 30, 2023			December 31, 2022
Expected term (years)		4.05			4.55			3.80			4.55
Volatility		76.02	%		77.72	%		77.97	%		77.72	%
Risk free rate		4.19	%		4.13	%		4.63	%		4.13	%

	Six months ended						Six months ended						Nine Months ended					Nine Months ended
	June 30, 2023,						June 30, 2022,						September 30, 2023,					September 30, 2022,
Customer		Amount		% of Total				Amount		% of Total			Amount		% of Total			Amount		% of Total
A		$	1,414,701		18	%		$	728,109		14	%	$	2,219,933		16	%	$	399		*	%
B			285,603		*				684,643		14	%		314,420		*			747,625		10	%
C			16,868		*				807,952		16	%
D			-		-				539,786		11	%
Total		$	1,717,172		18	%		$	1,450,937		55	%	$	2,534,353		16	%	$	748,024		10	%

	As of June 30, 2023,					As of December 31, 2022,					As of September 30, 2023,					As of December 31, 2022,
Customer	Amount		% of Total			Amount		% of Total			Amount		% of Total			Amount		% of Total
C	$	577,839		13	%	$	-		-		$	2,265,727		35	%	$	12,338		*
D		376,054		*			395,360		16	%		1,184,267		18	%		1,197,023		47	%
E		612,525		13	%		12,338		*			433,281		*			410,321		16	%
F		445,598		10	%		410,321		16	%		-		-			395,360		16	%
G		1,221,862		26	%		1,197,023		47	%
Total	$	3,233,878		62	%	$	2,015,042		79	%	$	3,883,275		53	%	$	2,015,042		79	%

	Six months ended June 30, 2023,					Six months ended June 30, 2022,					Nine Months ended September 30, 2023,					Nine Months ended September 30, 2022,
Supplier	Amount		% of Total			Amount		% of Total			Amount		% of Total			Amount		% of Total
A	$	4,645,216		33	%	$	-		-		$	5,593,765		26	%	$	1,919,050		13	%
B		2,644,958		19	%		-		-			3,078,975		14	%		8,038		*
C		1,734,260		12	%		308,918		*			31,223		*			5,265,348		37	%
D		27,436		*			4,030,226		45	%
Total	$	9,051,870		64	%	$	4,030,226		45	%	$	8,703,963		40	%	$	7,192,436		50	%

	For the Periods Ended
	Unaudited 30 June 2023									31 December 2022
Balance Sheet:	U.S. GAAP			IFRS Difference			IFRS			U.S. GAAP			IFRS Difference			IFRS
Current assets
Cash and cash equivalents		60,390,172			-			60,390,172			153,966,777			-			153,966,777
Restricted cash		92,461			-			92,461			130,024			-			130,024
Accounts receivable, net		2,646,333			-			2,646,333			565,398			-			565,398
Inventories		41,798,511			-			41,798,511			31,843,371			-			31,843,371
Prepayment and other current assets		18,339,914			-			18,339,914			16,138,330			-			16,138,330
Deferred cost-current		10,273			-			10,273			-			-			-
Amount due from a related party		212,320			-			212,320			366,936			-			366,936
Total current assets		123,489,984			-			123,489,984			203,010,836			-			203,010,836

Non-current assets
Long-term investment, net		4,959,769			-			4,959,769			5,325,741			-			5,325,741
Investment in equity securities		30,472,663			-			30,472,663			29,759,195			-			29,759,195
Property, plant and equipment, net		18,508,847			-			18,508,847			14,962,591			-			14,962,591
Intangible assets, net		6,439,333			-			6,439,333			4,563,792			-			4,563,792
Right-of-use assets		19,734,961			-			19,734,961			8,187,149			-			8,187,149
Deferred cost - non-current		207,974			-			207,974			-			-			-
Other non-current assets, net		2,232,206			-			2,232,206			2,039,012			-			2,039,012
Total non-current assets		82,555,753			-			82,555,753			64,837,480			-			64,837,480
Total assets		206,045,737			-			206,045,737			267,848,316			-			267,848,316

Current liabilities
Accounts payable		3,364,228			-			3,364,228			3,383,021			-			3,383,021
Accrued expense and other current liabilities		3,543,840			-			3,543,840			5,048,641			-			5,048,641
Contractual liabilities		3,314,661			-			3,314,661			2,388,480			-			2,388,480
Operating lease liabilities, current		4,303,890			-			4,303,890			1,313,334			-			1,313,334
Convertible promissory notes		11,904,153			-			11,904,153			57,372,827			-			57,372,827
Deferred government grant, current		53,046			-			53,046			26,533			-			26,533
Amount due to related parties		41,302			-			41,302			716,372			-			716,372
Total current liabilities		26,525,120			-			26,525,120			70,249,208			-			70,249,208

Non-current liabilities
Deferred government grant, non-current		968,079			-			968,079			497,484			-			497,484
Derivative liability - investor warrant		12,205,830			-			12,205,830			14,334,104			-			14,334,104
Derivative liability - placement agent warrant		3,456,137			-			3,456,137			3,456,404			-			3,456,404
Operating lease liabilities, non-current		16,001,387			-			16,001,387			7,421,582			-			7,421,582
Total non-current liabilities		32,631,433			-			32,631,433			25,709,574			-			25,709,574
Total liabilities		59,156,553			-			59,156,553			95,958,782			-			95,958,782

Equity
Ordinary shares (No par value; 304,449,091 and 300,841,995 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively)		-			-			-			-			-			-
Additional paid-in capital		399,517,411			182,274,066	(1)		581,791,477			397,497,817			182,125,475	(1)		579,623,292
Accumulated other comprehensive loss		(7,770,097	)		7,770,097			-			(5,306,972	)		5,306,972			-
Reserves		-			19,385,768	(2)		19,385,768			-			21,997,484	(2)		21,997,484
Accumulated deficit		(244,856,609	)		(209,429,931	)		(454,286,540	)		(219,824,176	)		(209,429,931	)		(429,254,107	)
Total Stockholders' Equity		146,890,705			-			146,890,705			172,366,669			-			172,366,669

Non-controlling interests		(1,521	)		-			(1,521	)		(477,135	)		-			(477,135	)

Total Equity		146,889,184			-			146,889,184			171,889,534			-			171,889,534
Total Liabilities and Equity		206,045,737			-			206,045,737			267,848,316			-			267,848,316

	For the Three Months Ended
	Unaudited 30 June 2023								Unaudited 30 June 2022
	U.S. GAAP			IFRS Difference		IFRS			U.S. GAAP			IFRS Difference		IFRS
Net revenues		4,237,520			-		4,237,520			3,204,689			-		3,204,689
Cost of goods sold		(3,090,275	)		-		(3,090,275	)		(3,036,237	)		-		(3,036,237	)
Gross profit		1,147,245			-		1,147,245			168,452			-		168,452

Selling and marketing expenses		(2,742,749	)		-		(2,742,749	)		(1,531,460	)		-		(1,531,460	)
General and administrative expenses		(9,285,213	)		-		(9,285,213	)		(12,014,453	)		-		(12,014,453	)
Research and development expenses		(2,143,070	)		-		(2,143,070	)		(1,389,153	)		-		(1,389,153	)
Total operating expenses		(14,171,032	)		-		(14,171,032	)		(14,935,066	)		-		(14,935,066	)

Loss from operations		(13,023,787	)		-		(13,023,787	)		(14,766,614	)		-		(14,766,614	)

Interest income (expense), net		1,262			-		1,262			222,672			-		222,672
(Loss) income from long-term investment		(148,645	)		-		(148,645	)		4,941			-		4,941
Impairment of long-term investment		(8,538	)				(8,538	)		-			-		-
Gain (loss) on redemption of convertible promissory notes		1,900			-		1,900			-			-		-
Loss on exercise of warrants		(14,745	)		-		(14,745	)		-			-		-
Change in fair value of convertible promissory notes and derivative liability		199,698			-		199,698			-			-		-
Change in fair value of equity securities		60,452					60,452			-			-		-
Other (expense) income, net		(1,119,295	)		-		(1,119,295	)		784,220			-		784,220
Loss before income taxes		(14,051,698	)		-		(14,051,698	)		(13,754,781	)		-		(13,754,781	)
Income tax expense		(25,468	)		-		(25,468	)		48,861			-		48,861
Net loss		(14,077,166	)		-		(14,077,166	)		(13,705,920	)		-		(13,705,920	)
Less: net loss attributable to non-controlling interests		(2,682	)		-		(2,682	)		(633,922	)		-		(633,922	)
Net loss attributable to the Company’s shareholders		(14,074,484	)		-		(14,074,484	)		(13,071,998	)		-		(13,071,998	)
													-
Other comprehensive loss													-
Foreign currency translation adjustment		(2,824,971	)		-		(2,824,971	)		(4,078,240	)		-		(4,078,240	)
Total comprehensive loss		(16,902,137	)		-		(16,902,137	)		(17,784,160	)		-		(17,784,160	)
Less: total comprehensive loss attributable to non-controlling interests		(2,683	)		-		(2,683	)		(483,216	)		-		(483,216	)
Total comprehensive loss attributable to the Company’s shareholders		(16,899,454	)		-		(16,899,454	)		(17,300,944	)		-		(17,300,944	)

	For the Six Months Ended
	Unaudited 30 June 2023								Unaudited 30 June 2022
	U.S. GAAP			IFRS Difference		IFRS			U.S. GAAP			IFRS Difference		IFRS
Net revenues		7,708,064			-		7,708,064			5,035,322			-		5,035,322
Cost of goods sold		(6,366,075	)		-		(6,366,075	)		(4,503,840	)		-		(4,503,840	)
Gross (Loss) Profit		1,341,989			-		1,341,989			531,482			-		531,482

Selling and marketing expenses		(4,611,734	)		-		(4,611,734	)		(2,626,568	)		-		(2,626,568	)
General and administrative expenses		(16,643,477	)		-		(16,643,477	)		(20,226,284	)		-		(20,226,284	)
Research and development expenses		(3,712,989	)		-		(3,712,989	)		(1,814,512	)		-		(1,814,512	)
Total operating expenses		(24,968,200	)		-		(24,968,200	)		(24,667,364	)		-		(24,667,364	)

Loss from operations		(23,626,211	)		-		(23,626,211	)		(24,135,882	)		-		(24,135,882	)

Interest (expense) income, net		(53,153	)		-		(53,153	)		286,873			-		286,873
(Loss) income from long-term investment		(129,603	)		-		(129,603	)		10,878			-		10,878
Impairment of long-term investment		(1,154,666	)				(1,154,666	)		-			-		-
Loss on redemption of convertible promissory notes		(101	)		-		(101	)		-			-		-
Loss on exercise of warrants		(227,615	)				(227,615	)		-			-		-
Change in fair value of convertible promissory notes and derivative liability		73,425			-		73,425			-			-		-
Change in fair value of equity securities		713,468					713,468			-			-		-
Other (expense) income, net		(761,219	)		-		(761,219	)		734,981			-		734,981
Loss before income taxes		(25,165,675	)		-		(25,165,675	)		(23,103,150	)		-		(23,103,150	)
Income tax expense		(25,468	)		-		(25,468	)		48,861			-		48,861
Net loss		(25,191,143	)		-		(25,191,143	)		(23,054,289	)		-		(23,054,289	)
Less: net loss attributable to non-controlling interests		(158,710	)		-		(158,710	)		(670,641	)		-		(670,641	)
Net loss attributable to the Company’s shareholders		(25,032,433	)		-		(25,032,433	)		(22,383,648	)		-		(22,383,648	)
													-
Other comprehensive loss													-
Foreign currency translation adjustment		(2,487,693	)		-		(2,487,693	)		(3,825,086	)		-		(3,825,086	)
Total comprehensive loss		(27,678,836	)		-		(27,678,836	)		(26,879,375	)		-		(26,879,375	)
Less: total comprehensive loss attributable to non-controlling interests		(183,278	)		-		(183,278	)		(540,805	)		-		(540,805	)
Total comprehensive loss attributable to the Company’s shareholders		(27,495,558	)		-		(27,495,558	)		(26,338,570	)		-		(26,338,570	)