Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification Number)
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Title of each class:
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Trading Symbol(s)
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Name of each exchange on which registered:
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The
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Large accelerated filer
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☐
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Accelerated filer
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☐
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☒
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Smaller reporting company
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Emerging growth company
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1
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1 | |
20 |
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32 | |
32 |
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33 |
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33 |
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34 |
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34 |
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34 |
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34 |
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35 |
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35 |
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36 |
● |
general economic and business conditions, including changes in interest rates;
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● |
prices of other EVs, costs associated with manufacturing EVs and other economic conditions;
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● |
the effect of an outbreak of disease or similar public health threat, such as the COVID-19 pandemic, on the Company’s business (natural phenomena, including the lingering effects of the COVID-19 pandemic);
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● |
the impact of political unrest, natural disasters or other crises, terrorist acts, acts of war and/or military operations, and our ability to maintain or broaden our business relationships and develop new
relationships with strategic alliances, suppliers, customers, distributors or otherwise;
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● |
breaches in data security, failure of information security systems, cyber-attacks or other security or privacy-related incidents affecting us or our suppliers;
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● |
the ability of our information technology systems or information security systems to operate effectively;
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● |
actions by government authorities, including changes in government regulation;
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● |
uncertainties associated with legal proceedings;
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● |
changes in the size of the EV market;
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● |
future decisions by management in response to changing conditions;
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● |
the Company’s ability to execute prospective business plans;
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● |
misjudgments in the course of preparing forward-looking statements;
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● |
the Company’s ability to raise sufficient funds to carry out its proposed business plan;
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● |
inability to keep up with advances in EV and battery technology;
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● |
inability to design, develop, market and sell new EVs and services that address additional market opportunities to generate revenue and positive cash flows;
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● |
dependency on certain key personnel and any inability to retain and attract qualified personnel;
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● |
inexperience in mass-producing EVs;
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● |
inability to succeed in establishing, maintaining and strengthening the Cenntro brand;
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● |
disruption of supply or shortage of raw materials;
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● |
the unavailability, reduction or elimination of government and economic incentives;
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● |
failure to manage future growth effectively; and
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● |
the other risks and uncertainties detailed from time to time in our filings with the Security and Exchange Commission (“SEC”), including but not limited to those described under “Risk Factors” in Part I, Item
1A of the Company’s Annual Report on Form 10-K as amended for the year ended December 31, 2023, filed with the SEC on April 1, 2023 (the “Form 10-K”).
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Page
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Item 1. Interim Financial Statements
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1 |
1 | |
2 |
|
3 |
|
4 |
|
5 |
For the Three Months Ended March 31,
|
||||||||||||
Note
|
2024
|
2023
|
||||||||||
Net revenues
|
2(d)
|
|
$
|
|
$
|
|
||||||
Cost of goods sold
|
(
|
)
|
(
|
)
|
||||||||
Gross profit
|
|
|
||||||||||
OPERATING EXPENSES:
|
||||||||||||
Selling and marketing expenses
|
(
|
)
|
(
|
)
|
||||||||
General and administrative expenses
|
(
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)
|
(
|
)
|
||||||||
Research and development expenses
|
(
|
)
|
(
|
)
|
||||||||
Total operating expenses
|
(
|
)
|
(
|
)
|
||||||||
Loss from operations
|
(
|
)
|
(
|
)
|
||||||||
OTHER EXPENSE:
|
||||||||||||
Interest income (expense), net
|
|
(
|
)
|
|||||||||
(Loss) income from long-term investment
|
(
|
)
|
|
|||||||||
Impairment of long-term investment
|
|
(
|
)
|
|||||||||
Loss on redemption of convertible promissory notes
|
|
(
|
)
|
|||||||||
Loss on exercise of warrants
|
|
(
|
)
|
|||||||||
Change in fair value of convertible promissory notes and derivative liability
|
(
|
)
|
(
|
)
|
||||||||
Change in fair value of equity securities
|
|
|
||||||||||
Foreign currency exchange loss, net | ( |
) | ||||||||||
Gain from cross-currency swaps |
||||||||||||
Other income, net
|
|
|
||||||||||
Loss before income taxes
|
(
|
)
|
(
|
)
|
||||||||
Income tax benefit
|
11
|
|
|
|||||||||
Net loss
|
(
|
)
|
(
|
)
|
||||||||
Less: net loss attributable to non-controlling interests
|
(
|
)
|
(
|
)
|
||||||||
Net loss attributable to the Company’s shareholders
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||
OTHER COMPREHENSIVE LOSS
|
||||||||||||
Foreign currency translation adjustment
|
(
|
)
|
|
|||||||||
Total comprehensive loss
|
(
|
)
|
(
|
)
|
||||||||
Less: total comprehensive loss attributable to non-controlling interests
|
(
|
)
|
(
|
)
|
||||||||
Total comprehensive loss to the Company’s shareholders
|
$
|
(
|
)
|
$
|
(
|
)
|
||||||
Weighted average number of shares outstanding, basic and diluted * |
||||||||||||
Loss per share, basic and diluted |
( |
) | ( |
) |
Note
|
March 31,
2024
|
December 31,
2023
|
||||||||||
(Unaudited)
|
||||||||||||
ASSETS
|
||||||||||||
Current assets:
|
||||||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||||||
Restricted cash
|
|
|
||||||||||
Short-term investment |
3 | |
||||||||||
Accounts receivable, net
|
4
|
|
|
|||||||||
Inventories, net
|
5
|
|
|
|||||||||
Prepayment and other current assets
|
6
|
|
|
|||||||||
|
16
|
|
|
|||||||||
Total current assets
|
|
|
||||||||||
Non-current assets:
|
||||||||||||
Long-term investments
|
7
|
|
|
|||||||||
Investment in equity securities
|
8
|
|
|
|||||||||
Property, plant and equipment, net
|
9
|
|
|
|||||||||
Goodwill |
||||||||||||
Intangible assets, net
|
10 |
|
|
|||||||||
Right-of-use assets, net
|
12
|
|
|
|||||||||
Other non-current assets
|
|
|
||||||||||
Total non-current assets
|
|
|
||||||||||
Total Assets
|
$
|
|
$
|
|
||||||||
LIABILITIES AND EQUITY
|
||||||||||||
LIABILITIES
|
||||||||||||
Current liabilities:
|
||||||||||||
Accounts payable
|
$
|
|
$
|
|
||||||||
Accrued expenses and other current liabilities
|
|
|
||||||||||
Contract liabilities
|
|
|
||||||||||
Operating lease liabilities, current
|
12
|
|
|
|||||||||
Convertible promissory notes
|
13
|
|
|
|||||||||
Contingent liabilities, current |
||||||||||||
Deferred government grant, current
|
|
|
||||||||||
|
16
|
|
|
|||||||||
Total current liabilities
|
|
|
||||||||||
Non-current liabilities:
|
||||||||||||
Contingent liabilities, non-current |
||||||||||||
Deferred tax liabilities |
||||||||||||
Deferred government grant, non-current
|
|
|
||||||||||
Derivative liability - investor warrant
|
13
|
|
|
|||||||||
Derivative liability - placement agent warrant
|
13
|
|
|
|||||||||
Operating lease liabilities, non-current
|
12
|
|
|
|||||||||
Total non-current liabilities
|
|
|
||||||||||
Total Liabilities
|
$
|
|
$
|
|
||||||||
Commitments and contingencies
|
15
|
|
|
|||||||||
EQUITY
|
||||||||||||
Ordinary shares (
|
|
|
||||||||||
Additional paid in capital
|
|
|
||||||||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||||||
Total equity attributable to shareholders
|
|
|
||||||||||
Non-controlling interests
|
(
|
)
|
(
|
)
|
||||||||
Total Equity
|
$
|
|
$
|
|
||||||||
Total Liabilities and Equity
|
$
|
|
$
|
|
Ordinary shares
|
Additional
paid in capital
|
Accumulated
deficit
|
Accumulated
other
comprehensive
loss
|
Total
shareholders’
equity
|
Non-
controlling
interest
|
Total equity
|
||||||||||||||||||||||||||
Shares *
|
Amount
|
|||||||||||||||||||||||||||||||
Balance as of December 31, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Acquisition of
|
-
|
|
(
|
)
|
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||
Exercise of warrants
|
||||||||||||||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
|
|
|
|
|
(
|
)
|
|
|||||||||||||||||||||||
Balance as of March 31, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
Ordinary shares
|
Additional
paid in capital
|
Accumulated
deficit
|
Accumulated
other
comprehensive
loss
|
Total
shareholders’
equity
|
Non-
controlling
interest
|
Total equity
|
||||||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Balance as of December 31, 2023
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||||||||||
Share-based compensation
|
-
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Fractional shares issued due to reverse stock split
|
||||||||||||||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Balance as of March 31, 2024
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
For the Three Months Ended March 31,
|
||||||||
2024
|
2023
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net cash used in operating activities
|
$
|
(
|
)
|
$
|
(
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of equity investment
|
|
(
|
)
|
|||||
Purchase of property, plant and equipment
|
(
|
)
|
(
|
)
|
||||
Purchase of land use right
|
|
(
|
)
|
|||||
Acquisition of CAE’s equity interests
|
|
(
|
)
|
|||||
Cash dividend from long-term investment |
||||||||
Proceeds from disposal of property, plant and equipment
|
|
|
||||||
Loans provided to third parties
|
|
(
|
)
|
|||||
Proceeds from interest and redemption of equity securities |
||||||||
Net cash provided by (used in) investing activities
|
|
(
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Redemption of convertible promissory notes
|
|
(
|
)
|
|||||
Net cash used in financing activities
|
|
(
|
)
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(
|
)
|
|
|||||
Net decrease in cash, cash equivalents and restricted cash
|
(
|
)
|
(
|
)
|
||||
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
||||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
|
$
|
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Interest paid
|
$
|
|
$
|
|
||||
Income tax paid
|
$ | $ | ||||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
||||||||
Cashless exercise of warrants
|
$
|
|
$
|
|
Name
|
Date of
Incorporation
|
Place of
Incorporation
|
Percentage of direct or
indirect economic
interest
|
Cenntro Electric Group Limited (“CEGL”) |
|||
Cenntro Automotive Corporation (“CAC”)
|
|
|
|
Cenntro Electric Group, Inc. (“CEG”)
|
|
|
|
Cennatic Power, Inc. (“Cennatic Power”)
|
|
|
|
Teemak Power Corporation
|
|
|
|
Avantier Motors Corporation
|
|
|
|
Cenntro Electric CICS, SRL
|
|
|
|
Cennatic Energy S. de R.L. de C.V.
|
|
|
|
Cenntro Automotive S.A.S.
|
|
|
|
Cenntro Electric Colombia S.A.S.
|
|
|
|
Cenntro Automotive Group Limited (“CAG HK”)
|
|
|
|
Hangzhou Ronda Tech Co., Limited (“Hangzhou Ronda”)
|
|
|
|
Hangzhou Cenntro Autotech Co., Limited (“Cenntro Hangzhou”)
|
|
|
|
Zhejiang Cenntro Machinery Co., Limited
|
|
|
|
Jiangsu Tooniu Tech Co., Limited
|
|
|
|
Hangzhou Hengzhong Tech Co., Limited
|
|
|
|
Teemak Power (Hong Kong) Limited (HK)
|
|
|
|
Avantier Motors (Hong Kong) Limited
|
|
|
|
Cenntro Automotive Europe GmbH (“CAE”)
|
|
|
|
Cenntro Electric B.V.
|
|
|
|
Cenntro Elektromobilite Araçlar A.Ş
|
|
|
|
Cenntro Elecautomotiv, S.L.
|
|
|
|
Cenntro Electric Group (Europe) GmbH (“CEGE”)
|
|
|
|
Simachinery Equipment Limited (“Simachinery HK”)
|
|
|
|
Zhejiang Sinomachinery Co., Limited (“Sinomachinery Zhejiang”)
|
|
|
|
Shengzhou Cenntro Machinery Co., Limited (“Cenntro Machinery”)
|
|
|
|
Cenntro EV Center Italy S.R.L.
|
|
|
|
Antric Gmbh
|
|
||
Pikka Electric Corporation
|
|
||
Centro Technology Corporation
|
|
(a) |
Basis of presentation
|
(b) |
Use of estimates
|
(c) |
Fair value measurement
|
(d) |
Revenue recognition
|
For the Three Months Ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Vehicles sales
|
$
|
|
$
|
|
||||
Spare-parts sales
|
|
|
||||||
Other service income
|
|
|
||||||
Net revenues
|
$
|
|
$
|
|
For the Three Months Ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
Primary geographical markets
|
|
|||||||
Europe
|
$
|
|
$
|
|
||||
Asia
|
|
|
||||||
America
|
|
|
||||||
Total
|
$
|
|
$
|
|
March 31,
2024
|
December 31,
2023
|
|||||||
Accounts receivable, net
|
$
|
|
$
|
|
||||
Contract liabilities
|
$
|
|
$
|
|
(e) |
Recently issued accounting standards pronouncement
|
|
March 31,
2024
(Unaudited)
|
December 31,
2023
|
||||||
Available-for-sale investment (1)
|
$
|
|
$
|
|
||||
Cross-currency swap (2)
|
|
|
||||||
Total
|
$
|
|
$
|
|
(1)
|
|
(2)
|
|
March 31,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
Accounts receivable
|
$
|
|
$
|
|
||||
Less: provision for doubtful accounts
|
(
|
)
|
(
|
)
|
||||
Accounts receivable, net
|
$
|
|
$
|
|
For the Three Months Ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Balance at the beginning of the period
|
$
|
|
$
|
|
||||
Write-off
|
(
|
)
|
(
|
)
|
||||
Foreign exchange
|
(
|
)
|
|
|||||
Balance at the end of the year
|
$
|
|
$
|
|
March 31,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
Raw material
|
$
|
|
$
|
|
||||
Work-in-progress
|
|
|
||||||
Goods in transit
|
|
|
||||||
Finished goods
|
|
|
||||||
Inventories, gross
|
|
|
||||||
Less: Inventory valuation allowance |
( |
) | ( |
) | ||||
Inventories, net |
$ | $ |
For the Three Months Ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(Unaudited) | (Unaudited) | |||||||
Balance at the beginning of the period
|
$
|
|
$
|
|
||||
Write-off
|
(
|
)
|
(
|
)
|
||||
Foreign exchange |
(
|
)
|
|
|||||
Balance at the end of the year
|
$
|
|
$
|
|
March 31,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
Advance to suppliers
|
$
|
|
$
|
|
||||
Deductible input value added tax
|
|
|
||||||
Receivable from third parties
|
|
|
||||||
Others
|
|
|
||||||
Prepayment and other current assets
|
$
|
|
$
|
|
(a)
|
Equity method investments, net
|
March 31, 2024
(Unaudited)
|
December 31,
2023
|
|||||||
Hangzhou Entropy Yu Equity Investment Partnership (Limited Partnership) (“Entropy Yu”) (1)
|
$
|
|
$
|
|
||||
Hangzhou Hezhe Energy Technology Co., Ltd. (“Hangzhou Hezhe”) (2)
|
|
|
||||||
Able 2rent GmbH (DEU) (3)
|
|
|
||||||
Total
|
$
|
|
$
|
|
(1) |
|
(2) |
|
(3) |
|
(b)
|
Equity investment without readily determinable fair value
|
March 31,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
HW Electro Co., Ltd. (1)
|
$
|
|
$
|
|
||||
Robostreet Inc. (2)
|
||||||||
Total
|
$
|
|
$
|
|
(1) |
|
(2) |
(c)
|
Debt Security Investments
|
March 31,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
MineOne Fix Income Investment I L.P
|
$
|
|
$
|
|
||||
Micro Money Fund SPC
|
|
|
||||||
Total
|
$
|
|
$
|
|
March 31,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
At cost:
|
||||||||
Plant and building
|
$
|
|
$
|
|
||||
Land |
||||||||
Machinery and equipment
|
|
|
||||||
Leasehold improvement
|
|
|
||||||
Office equipment
|
|
|
||||||
Motor vehicles
|
|
|
||||||
Construction in progress |
||||||||
Total
|
|
|
||||||
Less: accumulated depreciation
|
(
|
)
|
(
|
)
|
||||
Impairment
|
( |
) | ( |
) | ||||
Property, plant and equipment, net
|
$
|
|
$
|
|
March 31,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
At cost:
|
||||||||
Land use right
|
$
|
|
$
|
|
||||
Trademark |
||||||||
Technology |
||||||||
Software
|
|
|
||||||
Total
|
|
|
||||||
Less: accumulated amortization
|
(
|
)
|
(
|
)
|
||||
Intangible assets, net
|
$
|
|
$
|
|
For the Three Months Ended March 31,
|
||||||||
2024
|
2023
|
|||||||
(Unaudited) |
(Unaudited) |
|||||||
PRC |
$ | |||||||
US
|
|
|
||||||
Europe |
|
|
||||||
Australia
|
|
|
||||||
Others
|
|
|
||||||
Total
|
$
|
|
|
For the Three Months Ended
March 31,
|
||||||||
2024
|
2023
|
|||||||
(Unaudited) | (Unaudited) | |||||||
Operating leases cost excluding short-term rental expense
|
$
|
|
$
|
|
||||
Short-term lease cost
|
|
|
||||||
Total
|
$
|
|
$
|
|
March 31,
2024
|
March 31,
2023
|
|||||||
(Unaudited) | ||||||||
Cash paid for amounts included in the measurement of lease liabilities
|
$
|
|
$
|
|
||||
Weighted average remaining lease term
|
|
|
||||||
Weighted average discount rate
|
|
%
|
|
%
|
Operating
Leases
|
||||
For the remaining of 2024
|
$
|
|
||
Years ended December 31,
|
||||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
2028
|
|
|||
2029 and thereafter
|
|
|||
Total lease payments
|
|
|||
Less: imputed interest
|
(
|
)
|
||
Total
|
|
|||
Less: |
|
|||
$
|
|
Liability component
|
||||
As of December 31, 2023
|
$
|
|
||
Convertible promissory notes issued during the period
|
|
|||
Redemption of convertible promissory notes
|
|
|||
Fair value change recognized
|
|
|||
As of March 31, 2024 (Unaudited)
|
|
Fair Value Assumptions - Convertible Promissory Note
|
March 31,
2024
|
December 31,
2023
|
||||||
(Unaudited) | ||||||||
Face value principal payable
|
|
|
||||||
Original conversion price
|
|
|
||||||
Interest Rate
|
|
%
|
|
%
|
||||
Expected term (years)
|
|
|
||||||
Volatility
|