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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Accelerated filer
|
☐
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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 |
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19 |
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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 |
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36 |
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36 |
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36 |
|
37 |
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37 |
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38 |
● |
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);
|
● |
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, 2024 (the “Form 10-K”).
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Page
|
|
Item 1. Interim Financial Statements
|
1
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
For the Three Months Ended June 30,
|
For the Six Months Ended June 30,
|
|||||||||||||||||||
Note
|
2024
|
2023
|
2024
|
2023
|
||||||||||||||||
Net revenues
|
2(d
|
)
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Cost of goods sold
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Gross profit
|
|
|
|
|
||||||||||||||||
|
||||||||||||||||||||
OPERATING EXPENSES:
|
||||||||||||||||||||
Selling and marketing expenses
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
General and administrative expenses
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Research and development expenses
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Total operating expenses
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
|
||||||||||||||||||||
Loss from operations
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
|
||||||||||||||||||||
OTHER (EXPENSE) INCOME:
|
||||||||||||||||||||
Interest (expense) income, net
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||||||
Loss from long-term investment |
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Impairment of long-term investment
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||
Gain (loss) on redemption of convertible promissory notes |
|
|
|
(
|
)
|
|||||||||||||||
Loss on exercise of warrants
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||
Loss from acquisition of Hezhe |
( |
) | ( |
) | ||||||||||||||||
Change in fair value of convertible promissory notes and derivative liability
|
|
|
|
|
||||||||||||||||
Change in fair value of equity securities
|
|
|
|
|
||||||||||||||||
Foreign currency exchange loss, net |
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Loss (gain) from cross-currency swaps |
( |
) | ||||||||||||||||||
Other (expense) income, net |
( |
) | ||||||||||||||||||
Loss before income taxes
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||
Income tax benefit (expense)
|
12
|
|
(
|
)
|
|
(
|
)
|
|||||||||||||
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
|
June 30,
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
|
|
|
|||||||||
|
17
|
|
|
|||||||||
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
|
13
|
|
|
|||||||||
Other non-current assets
|
|
|
||||||||||
Total non-current assets
|
|
|
||||||||||
Total Assets
|
$
|
|
$
|
|
||||||||
LIABILITIES AND EQUITY
|
||||||||||||
LIABILITIES
|
||||||||||||
Current liabilities:
|
||||||||||||
Accounts payable
|
|
|
||||||||||
Current portion of long-term bank loans |
11 |
|||||||||||
Accrued expenses and other current liabilities
|
|
|
||||||||||
Contract liabilities
|
|
|
||||||||||
Operating lease liabilities, current
|
13
|
|
|
|||||||||
Convertible promissory notes
|
14
|
|
|
|||||||||
Contingent liabilities, current |
||||||||||||
Deferred government grant, current
|
|
|
||||||||||
|
17
|
|
|
|||||||||
Total current liabilities
|
|
|
||||||||||
Non-current liabilities:
|
||||||||||||
Long-term bank loans |
11 |
|||||||||||
Contingent liabilities, non-current |
||||||||||||
Deferred tax liabilities |
||||||||||||
Deferred government grant, non-current
|
|
|
||||||||||
Derivative liability - investor warrant
|
14
|
|
|
|||||||||
Derivative liability - placement agent warrant
|
14
|
|
|
|||||||||
Operating lease liabilities, non-current
|
13
|
|
|
|||||||||
Total non-current liabilities
|
|
|
||||||||||
Total Liabilities
|
$
|
|
$
|
|
||||||||
Commitments and contingencies
|
16
|
|||||||||||
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 June 30, 2023 (unaudited)
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
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
|
-
|
|
|
(
|
)
|
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||||||||||||||
Acquisition of
|
- | |||||||||||||||||||||||||||||||
Fractional shares issued due to reverse stock split
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
|
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|||||||||||||||||||||
Balance as of June 30, 2024 (unaudited)
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
For the Six Months Ended June 30,
|
||||||||
2024
|
2023
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net cash used in operating activities
|
$
|
(
|
)
|
$
|
(
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of equity investment
|
|
(
|
)
|
|||||
Purchase of plant and equipment
|
(
|
)
|
(
|
)
|
||||
Purchase of land use right and land
|
|
(
|
)
|
|||||
Acquisition of CAE’s equity interests
|
|
(
|
)
|
|||||
Net of cash acquired of |
( |
) | ||||||
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 used in investing activities
|
(
|
)
|
(
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from bank loans |
||||||||
Repayment of bank loans |
( |
) | ||||||
Redemption of convertible promissory notes
|
|
(
|
)
|
|||||
Net cash provided by (used in) financing activities
|
|
(
|
)
|
|||||
Effect of exchange rate changes on 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 Pty Limited (“CEGL”) | |||
Cenntro Automotive Corporation (“CAC”)
|
|
|
|
Cenntro Electric Group, Inc. (“CEG”)
|
|
|
|
Cennatic Power, Inc. (“Cennatic Power”)
|
|
|
|
Cenntro Electric Group (Europe) GmbH | |||
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
|
|
||
Hangzhou Hezhe Energy Technology Co., Ltd. (“Hangzhou Hezhe”) |
(a) |
Basis of presentation
|
(b) |
Use of estimates
|
(c) |
Fair value measurement
|
(d) |
Revenue recognition
|
For the Six Months Ended
June 30,
|
||||||||
2024
|
2023
|
|||||||
(Unaudited)
|
(Unaudited) | |||||||
Vehicles sales
|
$
|
|
$
|
|
||||
Spare-parts sales
|
|
|
||||||
Other service income
|
|
|
||||||
Net revenues
|
$
|
|
$
|
|
For the Six Months Ended
June 30,
|
||||||||
2024
|
2023
|
|||||||
(Unaudited) | (Unaudited) | |||||||
Primary geographical markets
|
|
|||||||
America
|
$
|
|
$
|
|
||||
Europe
|
|
|
||||||
Asia
|
|
|
||||||
Total
|
$
|
|
$
|
|
June 30,
2024
|
December 31,
2023
|
|||||||
Accounts receivable, net
|
$
|
|
$
|
|
||||
Contract liabilities
|
$
|
|
$
|
|
(e) |
Recently issued accounting standards pronouncement
|
|
June 30,
2024
(Unaudited)
|
December 31,
2023
|
||||||
Available-for-sale investment (1)
|
$
|
|
$
|
|
||||
Cross-currency swap (2)
|
|
|
||||||
Total
|
$
|
|
$
|
|
(1)
|
|
(2)
|
|
June 30,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
Accounts receivable
|
$
|
|
$
|
|
||||
Less: allowance for
credit losses
|
(
|
)
|
(
|
)
|
||||
Accounts receivable, net
|
$
|
|
$
|
|
For the Six Months Ended
June 30,
|
||||||||
2024
|
2023
|
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Balance at the beginning of the period
|
$
|
|
$
|
|
||||
Write-off
|
(
|
)
|
(
|
)
|
||||
Foreign exchange
|
(
|
)
|
|
|||||
Balance at the end of the period
|
$
|
|
$
|
|
June 30,
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 Six Months Ended
June 30,
|
||||||||
2024
|
2023
|
|||||||
(Unaudited) | (Unaudited) | |||||||
Balance at the beginning of the period
|
$
|
|
$
|
|
||||
Addition during the period |
||||||||
Write-off
|
(
|
)
|
(
|
)
|
||||
Foreign exchange |
(
|
)
|
(
|
)
|
||||
Balance at the end of the period
|
$
|
|
$
|
|
June 30,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
Advance to suppliers
|
$
|
|
$
|
|
||||
Deductible input value added tax
|
|
|
||||||
Receivable from third parties
|
|
|
||||||
Others
|
|
|
||||||
Prepayment and other current assets
|
$
|
|
$
|
|
June 30,
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) |
|
June 30,
2024
(Unaudited)
|
December 31,
2023
|
|||||||
HW Electro Co., Ltd. (1)
|
$
|
|
$
|
|
||||
Robostreet Inc. (2)
|
||||||||
Total
|
$
|
|
$
|
|
(1) |
|