Exhibit 99.1
CHIJET MOTOR COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of US$, except for number of shares and per share data)
| Note | June 30, 2025 | December 31, 2024 | ||||||||
| Unaudited | Audited | |||||||||
| ASSETS | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | 2(f) | $ | $ | |||||||
| Restricted cash | 2(g) | |||||||||
| Short-term investments | 1(b), 2(m) | |||||||||
| Accounts and notes receivable, net | 2(h), 5 | |||||||||
| Accounts and notes receivable from related parties, net | 2(h), 21 (b)(i) | |||||||||
| Inventory, net | 2(i), 6 | |||||||||
| Amounts due from related parties | 2(h), 21 (b)(i) | |||||||||
| Other current assets | 2(h), 7 | |||||||||
| Other current assets from related parties | 2(h), 21 (b)(i) | |||||||||
| Current assets held for sale | 22 | |||||||||
| Total current assets | ||||||||||
| Property, plant and equipment, net | 2(j), 8 | |||||||||
| Intangible assets, net | 2(k), 9 | |||||||||
| Land use rights, net | 2(l), 10 | |||||||||
| Long-term investments | 2(m) | |||||||||
| Goodwill | 2(n), 12 | |||||||||
| Other assets | 13 | |||||||||
| Total assets | $ | $ | ||||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||
| Current liabilities | ||||||||||
| Accounts and notes payable | 14 | $ | $ | |||||||
| Accounts and notes payable to related parties | 21 (b)(i) | |||||||||
| Loans attributable to related parties | 21 (b)(i), 21(c) | |||||||||
| Contract liabilities | 2(q), 15 | |||||||||
| Contract liabilities to related parties | 21 (b)(i) | |||||||||
| Long-term payables, current | 17 | |||||||||
| Accruals and other current liabilities | 16 | |||||||||
| Accruals and other current liabilities, related parties | 21 (b)(i) | |||||||||
| Current liabilities held for sale | 22 | |||||||||
| Total current liabilities | ||||||||||
| Non-current liabilities | ||||||||||
| Accrued post-employment and termination benefits | 2(v), 18 | |||||||||
| Other liabilities | ||||||||||
| Total liabilities | ||||||||||
| Commitments and contingencies | 23 | |||||||||
| Shareholders’ Deficit | ||||||||||
| Class A Ordinary shares (US$ par value, shares authorized, and shares issued, and shares outstanding as of June 30, 2025 and December 31, 2024, respectively) (i) | 1(c), 19 | |||||||||
| Class B Ordinary shares (US$ par value, shares authorized, and shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively) (i) | 1(c),19 | |||||||||
| Treasury Stock ( ordinary shares as of June 30, 2025 and December 31, 2024) (i) | 19(b) | ( | ) | ( | ) | |||||
| Additional paid-in capital | ||||||||||
| Statutory reserve | 19(c) | |||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive loss | ||||||||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||||
| Non-controlling interest | ||||||||||
| Total deficit | ( | ) | ( | ) | ||||||
| Total liabilities and shareholders’ deficit | $ | $ | ||||||||
| (i) |
The accompanying notes are an integral part of these consolidated financial statements.
| 1 |
CHIJET MOTOR COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)
(Amounts in thousands of US$, except for number of shares and per share data)
| For the six months ended | For the six months ended | |||||||||
| Note | June 30, 2025 | June 30, 2024 | ||||||||
| Revenues | 2(q) | $ | $ | |||||||
| Revenues from related parties | 2(q), 21(b)(ii) | |||||||||
| Total revenues | ||||||||||
| Cost of revenues | 2(r) | ( | ) | ( | ) | |||||
| Cost of revenues - idle capacity | 2(s) | ( | ) | ( | ) | |||||
| Gross loss | ( | ) | ( | ) | ||||||
| Operating expenses: | ||||||||||
| Research and development | 2(t) | |||||||||
| Selling, general and administrative | 2(u) | |||||||||
| Total operating expenses | ||||||||||
| Loss from operations | ( | ) | ( | ) | ||||||
| Other income (expenses): | ||||||||||
| Other income | ||||||||||
| Interest income | ||||||||||
| Interest expense | ( | ) | ( | ) | ||||||
| Government grant | 2(w) | |||||||||
| Gain (Loss) on equity investment | ( | ) | ||||||||
| Other expenses | ( | ) | ||||||||
| Total other income (expenses), net | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||||
| Provision for income tax | 20 | |||||||||
| Net loss | ( | ) | ( | ) | ||||||
| Net loss attributed to non-controlling interest | ( | ) | ( | ) | ||||||
| Net loss attributed to shareholders of Chijet Motor | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net loss per share attributable to shareholders of Chijet Motor(i)(ii) | $ | ) | $ | ) | ||||||
| Basic and diluted weighted average ordinary shares outstanding(i)(ii) | ||||||||||
| (i) | ||
| (ii) |
The accompanying notes are an integral part of these consolidated financial statements.
| 2 |
CHIJET MOTOR COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(Amounts in thousands of US$, except for number of shares and per share data)
| For the six months ended | For the six months ended | |||||||||
| Note | June 30, 2025 | June 30, 2024 | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive loss, net of tax | ||||||||||
| Changes in post-employment and termination benefits | 18 | ( | ) | |||||||
| Foreign currency adjustments | 2(d) | ( | ) | |||||||
| Comprehensive loss | ( | ) | ( | ) | ||||||
| Comprehensive loss attributed to non-controlling interest | ( | ) | ( | ) | ||||||
| Comprehensive loss attributable to shareholders of Chijet Motor | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
CHIJET MOTOR COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
(Amounts in thousands of US$, except for number of shares and per share data)
Class A Ordinary Share (i) | Class B Ordinary Share (i) | Common Stock in Treasury(i) | Additional Paid-in | Statutory | Accumulated | Accumulated Comprehensive | Non- Controlling | Total Shareholders’ | ||||||||||||||||||||||||||||||||||||||||||
| Note | Shares | Amount | Shares | Amount | Reserve | Amount | Capital (i) | Reserve | Deficit | Income (Loss) | Interest | (Deficit) | ||||||||||||||||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | 2(d) | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Changes in post-employment and termination benefits | 18 | - | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Effects of rounding fractional shares into whole shares upon Reverse Stock Split | 1(d) | * | - | - | * | |||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Issuance of Class A Ordinary Shares | 19 | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Reclassification of Class A and Class B Ordinary Shares | 1(c), 19 | ( | ) | ( | ) | - | ||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | 2(d) | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Changes in post-employment and termination benefits | 18 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||||||||||||||||||||
| * |
| (i) |
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
CHIJET MOTOR COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UAUDITED)
(Amounts in thousands of US$, except for number of shares and per share data)
| For the six months ended | For the six months ended | |||||||||
| Note | June 30, 2025 | June 30, 2024 | ||||||||
| Cash flows from operating activities: | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||||||||
| Depreciation and amortization expense | 8,9,10 | |||||||||
| Share-based compensation expenses | ||||||||||
| Allowance/ (reversal) for credit loss | 2(h) | ( | ) | |||||||
| Government grants | 2(w) | ( | ) | ( | ) | |||||
| Gain on disposal of property, plant and equipment | 2(j) | ( | ) | ( | ) | |||||
| Gain on disposal of land use right | 2(l) | ( | ) | |||||||
| (Gain) loss on equity investment | ( | ) | ||||||||
| Interest expenses | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts and notes receivable | ||||||||||
| Accounts and notes receivable from related parties | ( | ) | ( | ) | ||||||
| Inventory | ( | ) | ||||||||
| Amounts due from related party | ||||||||||
| Other current assets | ( | ) | ||||||||
| Current assets held for sale | ||||||||||
| Other current assets from related parties | ||||||||||
| Other assets | ||||||||||
| Accounts and notes payable | ( | ) | ||||||||
| Accounts and notes payable to related party | ( | ) | ( | ) | ||||||
| Accrual and other current liabilities | ( | ) | ( | ) | ||||||
| Accruals and other current liabilities to related parties | ||||||||||
| Current liabilities held for sale | ( | ) | ||||||||
| Contract liabilities | ||||||||||
| Contract liabilities to related parties | ( | ) | ||||||||
| Accrued post-employment and termination benefits | ( | ) | ||||||||
| Other liabilities | ( | ) | ||||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||||
| Cash flows from investing activities: | ||||||||||
| Purchase of fixed assets | ( | ) | ||||||||
| Purchase of short-term investment | ( | ) | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from short-term borrowings | ||||||||||
| Proceeds from short-term borrowings-related parties | ||||||||||
| Repayments of short-term borrowings-related parties | ( | ) | ( | ) | ||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||||
| Net change in cash, cash equivalents, and restricted cash | ( | ) | ( | ) | ||||||
| Effects of currency translation on cash, cash equivalents, and restricted cash | ( | ) | ||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | ||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | $ | ||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||
| Non-cash investing and financing activities: | ||||||||||
| Issuance of Class A ordinary shares for cashless exercise of warrants in February 2025 | 19 | |||||||||
| Issuance of Class A ordinary shares in March 2025 | 1(b), 19 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements
| 5 |
CHIJET MOTOR COMPANY, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
(a) Principal activities
Chijet Motor Company, Inc. (“Chijet Motor”) was incorporated on June 22, 2022 as a Cayman Islands exempted company. Chijet Motor, collectively with its subsidiaries (“the Company”, “Chijet”, “we”, “us” or “our”) is engaged in the development, manufacture, sales, and service of new energy vehicles (“NEV”), hybrid vehicles and traditional fuel vehicles in China. The main operating entities of the Company include Shandong Baoya New Energy Vehicle Co., Ltd. (“Shandong Baoya”) and its majority-owned holding subsidiary, FAW Jilin Automobile Co., Ltd. (“FAW Jilin”).
(b) Investment in Too Express
On
February 21, 2025, the Company entered into a stock purchase agreement with Too Express Group Inc. (“Too Express”) to acquire
an aggregate of
Pursuant to a Future Rights Agreement delivered at the closing, the transaction was terminated as the shareholder equity of the Company as of June 30, 2025 was a negative number. The Company Shares shall be forfeited and the TE Shares shall be returned to the original sellers of the TE Shares. As such, of the Company Shares were forfeited, retired and cancelled as of August 1, 2025, resulting in neither cash inflows nor cash outflows.
(c)Reclassification of ordinary shares and share exchange
On January 10, 2025, the shareholders of the Company approved at the 2025 Extraordinary General Meeting, the redesignation of authorized share capital from one class of ordinary shares to two classes of ordinary shares (the “Reclassification”). Upon the Reclassification, the authorized shares of the Company consist of class A ordinary shares (“Class A Ordinary Shares”), par value of US$ each and class B ordinary shares (“Class B Ordinary Shares”), par value of US$ each.
Each Class A Ordinary Share entitles the holder thereof to one vote on all matters subject to vote at general meetings of the Company, and each Class B Ordinary Share entitles the holder thereof to 20 votes on all matters subject to vote at general meetings of the Company. Each Class B Ordinary Share is convertible into one Class A Ordinary Share at any time at the option of the holder thereof. In no event shall Class A Ordinary Shares be convertible into Class B Ordinary Shares. Save and except for voting rights and conversion rights, the Class A Ordinary Shares and the Class B Ordinary Shares rank par passu with one another and have the same rights, preferences, privileges and restrictions.
In March 2025, the Company issued an aggregate of Class B Ordinary Shares to two of its existing shareholders, Chijet Holdings Limited and Euroamer Kaiwan Technology Company Limited, pursuant to a Share Exchange Agreement dated as of March 16, 2025 among the Company and two shareholders. In exchange for the Class B Ordinary Shares, the two shareholders returned an aggregate of Class A Ordinary Shares of the Company to the Company, which were subsequently canceled, retired and reverted to authorized but unissued Class A Ordinary Shares.
| 6 |
(d) Reverse Stock Split
On
June 28, 2024, the Company declared a
Unless
otherwise indicated, all share and share-related information presented in these financial statements, including all shares, treasury
stock, warrants, per share data and share prices set forth in consolidated financial statements and notes, have been retroactively equitably
adjusted to reflect the decreased number of shares and the increased price per share resulting from the Reverse Stock Split. For simplified
understanding, the share-related information in the previous period or comparable period is simply converted according to the
(e) Reverse Recapitalization
On June 1, 2023 (“Closing Date”), the Company consummated the business combination described further below. A Business Combination Agreement (“BCA”) dated as of October 25, 2022, was entered into by and among Jupiter Wellness Acquisition Corp. (“JWAC”), a special purpose acquisition company, Chijet Inc., incorporated under the Combination laws of the Cayman Islands on July 2, 2021, Chijet Motor, a wholly-owned subsidiary of Chijet Inc., and Chijet Motor (USA) Company, Inc. (“Merger Sub”), a Delaware corporation and a wholly-owned subsidiary of Chijet Motor, and each of the holders of Chijet Inc.’s outstanding ordinary shares (collectively, the “Sellers”).
Pursuant to the BCA, the business combination was affected through the merger of the Merger Sub with and into JWAC, with JWAC as the surviving entity and wholly-owned subsidiary of Chijet Motor. On the Closing Date, Chijet Motor acquired all of the issued and outstanding capital shares of Chijet Inc. held by the Sellers in exchange for ordinary shares of Chijet Motor, and any shares Chijet Inc. held in Chijet Motor were surrendered for no consideration, such that Chijet Inc. becomes a wholly-owned subsidiary of Chijet Motor and the Sellers became shareholders of Chijet Motor and its subsidiaries (“Share Exchange”).
On
the Closing Date, the Sellers holding ordinary shares of Chijet Inc. received of ordinary shares after giving effect
to the exchange ratio of
Following completion of the transactions contemplated by the BCA, there were an aggregate of ordinary shares issued and outstanding which include those shares issued to the Sellers, shares issued to JWAC’s public shareholders with one contingent value right (a “CVR”) of the Company for each share outstanding, shares issued to JWAC’s Class B Common Stock holders, shares issued to holders with JWAC’s right to receive (1/8) of ordinary shares, shares issued to
After giving the aforementioned effect, the number of ordinary shares issued and outstanding immediately following the consummation of the Business Combination was as follows:
| Shares | ||||
| Legacy Chijet Shares | ||||
| JWAC’s public shares, net of redemption | ||||
| JWAC public shares converted from (1/8) JWAC rights at closing | ||||
| JWAC sponsor shares | ||||
| Shares issued to private placed shareholders and rights, and share-based compensation | ||||
| Exercise of Greentree warrants | ||||
| Total shares of ordinary shares outstanding immediately after the Business Combination | ||||
| 7 |
The Business Combination was accounted for as a “reverse recapitalization” in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Under this method of accounting, although JWAC is the public entity as the legal acquirer, it was treated as the “accounting acquiree”. And Chijet Motor as the legal acquiree, was treated as the acquirer for financial reporting purposes. This determination was primarily based on the following factors: (i) Chijet Motor’s shareholders have a majority of the voting power of the Company after the consummation of the Business Combination; (ii) Chijet Motor and its subsidiaries represent the ongoing operations and a majority of the governing body of the Company, and (iii) Chijet Motor’s senior management is comprised of the senior management of the Company. Accordingly, for accounting purposes, the business combination was treated as the equivalent of Chijet Motor issuing stock for the net assets of JWAC, accompanied by a recapitalization. The net assets of JWAC were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination were those of Chijet Motor and its subsidiaries. Accordingly, the consolidated assets, liabilities and results of operations prior to the reverse recapitalization were those of Chijet Motor and its subsidiaries, and JWAC’s assets, liabilities and results of operations were consolidated with the Company beginning on June 1, 2023. Share data has been retroactively restated by the Exchange Ratio to give effect to the reverse recapitalization.
Upon
the consummation of the reverse recapitalization, the assets and liabilities of JWAC were recognized at fair value. The fair value of
cash and short-term liabilities acquired approximates their historical costs attributable to their short maturity. After the redemption
of common stocks of JWAC before the closing of the business combination, the net assets acquired by the Company were in the amount of
US$
| June 1, 2023 | ||||
| US$’000 | ||||
| Cash | $ | |||
| Including repayment of extension note to Chijet Inc. | ( | ) | ||
| Accrued expenses | ( | ) | ||
| Bank charges | ( | ) | ||
| Net assets acquired by Chijet Motor as of June 1, 2023 | $ | |||
For
the year ended December 31, 2023, the Company incurred approximately US$
(f) History of the Company and Reorganization
Prior to the incorporation of the Company and starting in April 2009, the business was carried out under Shandong Baoya and its subsidiaries. Shandong Baoya and its subsidiaries were controlled by a group of individual and institutional shareholders, with voting agreements to vote consensually concerning operating and development matters.
| 8 |
Prior to the business combination, Chijet Inc. completed a reorganization (“Reorganization”), which involved the following steps:
| ● | On July 6, 2021, Chijet Inc. was established under the laws of the Cayman Islands. | |
| ● | On July 12, 2021, Baoya Technology Holdings Limited was incorporated in the British Virgin Islands (“BVI”) as a wholly-owned subsidiary of Chijet Inc. | |
| ● | On July 28, 2021, Baoyaev Group Limited was incorporated in Hong Kong as a wholly-owned subsidiary of Baoya Technology Holdings Limited. | |
| ● | On October 21, 2021, Baoya New Energy (Shandong) Co., Ltd. (“WFOE”) was established in the People’s Republic of China (“PRC”) as a wholly-owned subsidiary of Baoyaev Group Limited. |
By
June 3, 2022, Chijet Inc. gradually acquired a
As of June 30, 2025, the subsidiaries of Chijet Motor were:
Date of incorporation | Place of incorporation | Percentage of ownership | Principal activities | |||||||
| Subsidiaries | ||||||||||
| Baoya New Energy (Shandong) Co., Ltd. | % | |||||||||
| Baoya New Energy Automobile Sale (Yantai) Co., Ltd. | % | |||||||||
| Baoya New Energy Automobile R&D (Xiangyang) Co., Ltd. | % | |||||||||
| Baoya New Energy Automobile R&D Institution (Yantai) Co., Ltd. | % | |||||||||
| Baoya Technology Holdings Limited | % | |||||||||
| Baoyaev Group Limited | % | |||||||||
| Chijet, Inc. | % | |||||||||
| Dezhou Yarui New Energy Automobile Co., Ltd. | % | |||||||||
| Dezhou Yitu New Energy Automobile Co., Ltd. | % | |||||||||
| Faw Jilin Automobile Co., Ltd. | % | |||||||||
| Faw Jilin Automobile Sale Co., Ltd. | % | |||||||||
| Jupiter Wellness Acquisition Corp. | % | |||||||||
| Shandong Baoya New Energy Vehicle Co., Ltd. | % | |||||||||
| Xiangyang Yazhi New Energy Automobile Co., Ltd. | % | |||||||||
| Xiangyang Yazhi New Energy Automobile Sale Co., Ltd. | % | |||||||||
| 9 |
(g) Liquidity and going concern
The
Company’s consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal course of business. The Company incurred net losses of US$
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred recurring operating losses raising substantial doubt about its ability to continue as a going concern. The Company’s continuation as a going concern is dependent upon the continued financial support from its principal shareholder, as well as its ability to obtain additional financing through capital markets or other sources.
As of June 30, 2025, a significant portion of the Company’s liabilities are amounts due to related parties. While these amounts are contractually due, based on past experience and ongoing discussions, these obligations are not likely to be called in the near term. Management is actively exploring strategic initiatives to improve liquidity, including potential equity financing, debt financing, the use of other innovative financial instruments and business restructuring.
Though the Company is evaluating strategies to continue as a going concern including a) developing and continuously promoting a systematic financing plan including third-party financings and capital issuances, and the restructuring of existing loans to meet the Company’s future liquidity needs. On September 5, 2025, the Company has introduced a new investor and raised US$8.0 million through public marketing offering; b) reaching a long-term strategic cooperation agreement with the new investor and proposing a business restructuring plan to introduce more investors to inject assets and business operations. The business restructuring plan is currently under discussion. While these plans are intended to mitigate the going concern uncertainty, there can be no assurance that such efforts will be successful. Accordingly, substantial doubt about the Company’s ability to continue as a going concern exists as of the date of issuance of these financial statements.
The consolidated financial statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP to reflect the financial position and results of operations of the Company.
Significant accounting policies followed by the Company in the preparation of its accompanying consolidated financial statements are summarized below.
| 10 |
Emerging Growth Company Status
The Company is an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, (“Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (“JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
(b) Principles of consolidation
The accompanying consolidated financial statements include the financial statements of Chijet Motor and its subsidiaries. A subsidiary is an entity in which Chijet Motor, directly or indirectly, controls more than one half of the voting power (a) to appoint or remove the majority of the members of the board of directors (“Board”), (b) to cast majority of votes at the meeting of the Board or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. All inter-company transactions and balances between Chijet Motor and its subsidiaries have been eliminated in consolidation.
(c) Use of estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s consolidated financial statements primarily include, but are not limited to, the determination of performance obligations, the determination of warranty cost, lower of cost and net realizable value of inventory, assessment for impairment of long-lived assets and intangible assets, recoverability of receivables.
Management bases the estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from these estimates.
(d) Functional currency and foreign currency translation
The Company’s reporting currency is the United States dollar (“US$”). The functional currency of the Company and its subsidiaries which is incorporated in places other than Chinese Mainland is the United States dollar. The functional currencies of the other subsidiaries are the RMB, the legal currency of Mainland China. The determination of the functional currency is based on the criteria set out by Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters.
| 11 |
Transactions denominated in foreign currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the applicable exchange rates at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are measured using the exchange rates at the dates of the initial transactions. Exchange gains or losses arising from foreign currency transactions are included in the consolidated statements of comprehensive loss.
The financial statements of the Company’s subsidiaries whose functional currency is not the US$ are translated from their respective functional currency into US$. Assets and liabilities denominated in foreign currencies are translated into US$ at the exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated into US$ at the appropriate historical rates. Income and expense items are translated into US$ using the periodic average exchange rates. The resulting foreign currency translation adjustments are recorded in other comprehensive income or loss in the consolidated statements of comprehensive loss, and the accumulated currency translation adjustments are presented as a component of accumulated other comprehensive income or loss in the consolidated statements of changes in shareholders’ deficit.
(e) Fair value of financial instruments
Fair value is the price we would receive to sell an asset or pay to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.
The Company applies a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. This guidance specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows:
Level I — Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.
Level II — Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level II valuation techniques.
Level III — Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The fair value guidance describes three main approaches to measure the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset.
When available, the Company uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Company will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates.
| 12 |
Financial assets and liabilities of the Company primarily consist of cash and cash equivalents, restricted cash, short-term investments, accounts and notes receivable, amounts due from related parties, accounts and notes payable, loans attributable to related parties, promissory note payable, accruals and other current liabilities, long-term payables. As of June 30, 2025 and December 31, 2024, the carrying values of these financial instruments approximated their respective fair values.
(f) Cash and cash equivalents
Cash and cash equivalents primarily consist of cash and demand deposits which are highly liquid. The Company considers highly liquid investments that are readily convertible to known amounts of cash and with original maturities from the date of purchase of three months or less to be cash equivalents. All cash and cash equivalents are unrestricted as to withdrawal and use.
(g) Restricted cash
Restricted
cash represents the cash frozen relating to a court order. The restricted cash attributable to the court order primarily resulted from
a contract dispute. As of June 30, 2025 and December 31, 2024, the restricted cash amounted to approximately US$
(h) Current expected credit losses
Since January 1, 2023, the Company has adopted Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), using the modified retrospective transition method.
The Company’s accounts and notes receivable, amounts due from related parties and other current assets are within the scope of ASC Topic 326. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and the Company’s customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns.
The Company estimates an allowance for credit losses for the anticipation of future economic condition and credit risk indicators of customers. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In the event the Company recovers amounts previously reserved for, the Company will reduce the specific allowance for credit losses. The cumulative effect from the adoption as of January 1, 2023 was immaterial to the consolidated financial statements.
The following table summarizes the activity in the allowance for expected credit loss for the six months ended June 30, 2025 and 2024, respectively.
| For the six months ended | ||||
| June 30, 2025 | ||||
| US$’000 | ||||
| (Unaudited) | ||||
| Balance as of January 1, 2025 | ||||
| Current period provision | ||||
| Balance as of June 30, 2025 | ||||
| 13 |
| For the six months ended | ||||
| June 30, 2024 | ||||
| US$’000 | ||||
| (Unaudited) | ||||
| Balance as of January 1, 2024 | ||||
| Reversal | ( | ) | ||
| Balance as of June 30, 2024 | ||||
(i) Inventory
Inventories are stated at the lower of cost or net realizable value. Cost is calculated on the weighted average basis and includes all costs to acquire and other costs to bring the inventories to their present location and condition. The Company records inventory write-downs for excess or obsolete inventories based upon assumptions on current and future demand forecasts. If the inventory on hand is in excess of future demand forecast, the excess amounts are written off. The Company also reviews inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. This requires the determination of the estimated selling price of the vehicles less the estimated cost to convert inventory on hand into a finished product. Once inventory is written-down, a new, lower-cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
(j) Property, plant and equipment, net
Property,
plant and equipment are stated at cost less accumulated depreciation and impairment loss, if any. Property, plant and equipment are depreciated
primarily using the straight-line method over the estimated useful life of the asset. Salvage value rates range from
Estimated useful lives | ||
| Buildings | ||
| Machinery and equipment | ||
| Vehicles | ||
| Computer and electronic equipment | ||
| Mold and tooling | ||
| Other logistic equipment |
The cost of maintenance and repairs is expensed as incurred, whereas the cost of renewals and betterment that extends the useful lives of property, plant and equipment is capitalized as additions to the related assets.
Construction in progress represents property, plant and equipment under construction and pending installation and is stated at cost less accumulated impairment losses, if any. Completed assets are transferred to their respective asset classes and depreciation begins when an asset is ready for its intended use. Interest expense on outstanding debt is capitalized during the period of significant capital asset construction. Capitalized interest expense on construction-in-progress is included within property, plant and equipment and is amortized over the life of the related assets.
The
gain or loss on the disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount
of the relevant assets and is recognized in the consolidated statement of comprehensive loss. The gain on the disposal of property was
approximate US$
| 14 |
(k) Intangible assets, net
Intangible assets mainly consist of computer software, patent, trademark and manufacturing license. Intangible assets with finite lives are carried at acquisition cost less accumulated amortization and impairment, if any. Finite lived intangible assets are tested for impairment if impairment indicators arise.
Amortization of intangible assets with finite lives are computed using the straight-line method over the estimated useful lives as below:
Estimated useful lives | ||
| Patent | ||
| Computer software |
The estimated useful lives of intangible assets with finite lives are reassessed if circumstances occur that indicate the original estimated useful lives have changed.
Intangible
assets that have indefinite useful life are automotive manufacturing license and trademark as of June 30, 2025 and December 31, 2024.
The Company evaluates indefinite-lived intangible assets each reporting period to determine whether events and circumstances continue
to support indefinite useful lives. The value of indefinite-lived intangible assets is not amortized but tested for impairment annually
or whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. As such,
(l) Land use rights, net
Land
use rights represent lease prepayments to local government authorities. Upon the adoption of ASC 842, Leases, on January 1, 2022,
land use rights, net were identified as operating lease right-of-use assets, which is separately disclosed as “Land use rights”
in the Company’s consolidated balance sheets. Land use rights are recorded at cost less accumulated amortization, amortization
has been provided on a straight-line basis
The
gain or loss on the disposal of land use right is the difference between the net sales proceeds and the carrying amount of the relevant
assets and is recognized in the consolidated statement of comprehensive loss. The gain or loss on the disposal of land use right is US$
(m) Investments
Short-term
investments consist of an investment in Too Express which has already been disposed on August 1, 2025, as disclosed in Note 1(b), amounting
to approximately US$
The Company records short-term investments that are not subject to equity method of accounting at fair value, with gains and losses recorded through net earnings. In accordance with ASC 321, the Company elects the measurement alternative and records certain equity investments without readily determinable fair value at cost, less impairments, plus or minus observable price changes.
Equity investments the Company elects to use measurement alternative are evaluated for impairment qualitatively at each reporting date based on various factors, including projected and historical financial performance, cash flow forecasts and financing needs, the regulatory and economic environment of the investee and overall health of the investee’s industry. As of June 30, 2025, there were no observable impairment indicators for the investments. Consequently, short-term investments shall still be measured at its cost.
| 15 |
Long-term
investments consist of an investment in Jilin FAW Baosteel Auto Steel Parts Co., Ltd. (“Baosteel”) amounting to approximately
US$
The Company uses the equity method of accounting for its investment in, and earning or loss of, the companies that it does not control but over which it has ability to exercise significant influence in accordance with ASC topic 323, Investment—Equity Method and Joint Ventures (“ASC 323”). Under the equity method, the Company initially records its investment at cost and is included in the long-term investments on the consolidated balance sheets. The Company subsequently adjusts the carrying amount of the investment to recognize the Company’s proportionate share of each equity investee’s net income or loss into earnings after the date of investment. If an equity investment no longer qualifies to be accounted for under the equity method, the investment’s initial basis for which subsequent changes in value are measured should be the previous carrying amount of the investment.
The Company periodically reviews its equity investments for impairment. Under the equity method of accounting, an impairment loss would be recorded whenever the fair value of an equity investment is determined to be below its carrying value. The Company considers whether the fair value of its equity method investment has declined below its carrying value whenever adverse events or changes in circumstances indicate that recorded value may not be recoverable. An impairment charge would be recorded when the decline in value is determined to be other-than-temporary. There was no impairment loss of long-term investments during the six months ended June 30, 2025 and 2024.
(n) Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognized for non-controlling interests and any fair value of the Company’s previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognized in profit or loss as a gain on bargain purchase.
The Company adopted Accounting Standards Update (“ASU”) 2017-04, Intangible – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. After adopting this guidance, the Company performs the quantitative impairment test by comparing the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, the amount by which the carrying amount exceeds the reporting unit’s fair value is recognized as impairment. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, allocation of assets, liabilities and goodwill to reporting units, and determination of the fair value of each reporting unit.
(o) Impairment of long-lived assets
Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will affect the future use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company first determines the unit of account for testing the long-lived assets, and then identifies the indicators of impairment. When indicators of impairment at present, the Company must then proceed to the recoverability test. The recoverability test evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. Fair value is determined using anticipated cash flows discounted at a rate commensurate with the risk involved.
| 16 |
(p) Warranties
The Company provides a manufacturer’s standard warranty on all vehicles sold. The Company accrues a warranty reserve for the vehicles sold by the Company, which includes the Company’s best estimate of the projected costs to repair or replace items under warranties and recalls when identified. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. Changes to the Company’s historical or projected warranty experience may cause material changes to the warranty reserve in the future. The portion of the warranty reserve expected to be incurred within the next 12 months is included within accruals and other liabilities, while the remaining balance is included within other non-current liabilities on the consolidated balance sheets. Warranty expense is recorded as a component of cost of sales in the consolidated statements of operations. The Company reevaluates the adequacy of the warranty accrual on a regular basis.
The Company considers the standard warranty is not providing incremental service to customers rather an assurance to the quality of the vehicle, and therefore is not a separate performance obligation and should be accounted for in accordance with ASC 460, Guarantees.
Accrued warranty is included in other liabilities and the movement of accrued warranty is as following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Accrued warranty - beginning of period | ||||||||
| Warranty costs incurred | ( | ) | ( | ) | ||||
| Translation adjustment | ( | ) | ||||||
| Accrued warranty - end of period | ||||||||
(q) Revenue recognition
Revenue is recognized when or as the control of the goods or services is transferred upon delivery to customers. Depending on the terms of the contract and the laws that apply to the contract, control of the goods and services may be transferred over time or at a point in time. Control of the goods and services is transferred over time if our performance:
| ● | provides all of the benefits received and consumed simultaneously by the customer; | |
| ● | creates and enhances an asset that the customer controls as the Company performs; or | |
| ● | does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. |
If control of the goods and services transfers over time, revenue is recognized over the period of the contract by reference to the progress towards complete satisfaction of the performance obligation. Otherwise, revenue is recognized at a point in time when the customer obtains control of goods and services.
Contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates overall contract price to each distinct performance obligation based on its relative standalone selling price in accordance with ASC 606, Revenue from Contracts with Customers. The Company generally determines standalone selling prices for each individual distinct performance obligation identified based on the prices charged to customers. If the standalone selling price is not directly observable, it is estimated using expected cost plus a margin or adjusted market assessment approach, depending on the availability of observable information, the data utilized, and considering the pricing policies and practices in making pricing decisions. Assumptions and estimations have been made in estimating the relative selling price of each distinct performance obligation, and changes in judgments on these assumptions and estimates may affect the revenue recognition. The discount provided in the contract is allocated by the Company to all performance obligations as conditions under ASC 606-10-32-37 are not met.
| 17 |
For new Master Service Agreements (“MSA”) or for purchase orders (“PO”) from new customers, a credit check is required, which establishes collectability of the considerations to which the Company expects to be entitled. Management also has controls in place for the review of credit limits with existing customers. Other considerations in determining collectability include the customer’s payment history, prior or existing customer disputes, if any, and market conditions.
When either party to a contract has performed the obligation, the Company presents the contract in the consolidated balance sheets as a contract asset or a contract liability, depending on the relationship between the entity’s performance and the customer’s payment.
A receivable is recorded when the Company has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due.
If a customer pays consideration or the Company has a right to an amount of consideration that is unconditional, before the Company transfers a good or service to the customer, the Company presents the contract liability when the payment is made or a receivable is recorded, whichever is earlier. A contract liability is the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration, or an amount of consideration is due, from the customer. The Company’s contract liabilities primarily result from the performance obligation identified in the vehicle sales contract, which is recorded as deferred revenue and revenue will be recognized when future goods or services are transferred. Besides, amounts received on behalf of third parties are recorded as other current liabilities.
Vehicle Sales
Vehicle sales revenue includes revenues related to deliveries of new vehicles under the definition of a performance obligation under ASC 606. The Company recognizes revenue on vehicle sales upon delivery to the customer, which is when the control of a vehicle transfers. For the obligations related to vehicle sales, the Company estimates the standalone selling price by considering costs used to develop and deliver the service, third-party pricing of similar options and other information that may be available.
The Company provides a manufacturer’s limited warranty on all new vehicles sold to customers, ensuring that the vehicles comply with agreed-upon specifications. As the manufacturer’s limited warranty is not separately sold to the customers, the Company does not consider the warranty as a separate performance obligation under the ASC 606-10-55-31.
Sales of vehicle parts and accessories
The Company recognizes revenue upon transfer of control to the customer which occurs at a point in time. When the Company performs shipping and handling activities after the transfer of control to the customer, they are considered as fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized.
Practical expedients and exemptions
The Company follows the guidance on immaterial promises when identifying performance obligations in the vehicle sales contracts and concludes that labor related to assurance-type warranties is not a performance obligation considering this service is value-added service to enhance customer experience rather than critical items for vehicle driving and forecasted that usage of this service will be very limited. The Company also performs an estimation on the stand-alone fair value of the promise applying a cost-plus margin approach and concludes that the standalone fair value of the service is insignificant, if it represents less than 5% of vehicle gross selling price and aggregate fair value of each individual promise.
| 18 |
Revenue consists of the following:
| For the six months ended | ||||||||||||||||
| June 30, 2025 | June 30, 2024 | |||||||||||||||
| US$’000 | US$’000 | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Related Parties | Third Parties | Related Parties | Third Parties | |||||||||||||
| Vehicle sales | $ | $ | $ | $ | ||||||||||||
| Sales of vehicle parts and accessories | $ | $ | $ | $ | ||||||||||||
| Others | $ | $ | $ | $ | ||||||||||||
| Total revenues | ||||||||||||||||
All of the property and equipment of the Company is physically located in the PRC. The geographical location of the Company’s customers spans the PRC, Latin America, Oceania and Europe. All of the Company’s revenue is derived from operations in the PRC for the six months periods ended June 30, 2025 and 2024.
(r) Cost of revenues
Cost of revenue includes direct parts, material, labor cost and manufacturing overhead (including depreciation of assets associated with the production) and reserves for estimated warranty cost. Cost of revenue also includes charges to write-down the carrying value of the inventories when it exceeds its estimated net realizable value and to provide for on-hand inventories that are either obsolete or in excess of forecasted demand.
(s) Cost of revenues – idle capacity
Idle
capacity consists of production-related costs in excess of charges allocated to the Company’s finished goods in production. The
costs include direct and indirect labor, production supplies, repairs and maintenance, rent, utilities, insurance and property taxes.
The costs allocated to the Company’s finished goods are determined on a daily basis which is lower than the actual costs incurred.
Costs in excess of production allocations are expensed in the period incurred rather than added to the cost of finished goods produced.
Idle capacity expenses amounted to US$
(t) Research and development expenses
All
costs associated with research and development (“R&D”) are expensed as incurred. R&D expenses consist primarily of
employee compensation for those employees engaged in R&D activities, design and development expenses with new technology, materials
and supplies and other R&D related expenses. For the six months ended June 30, 2025 and 2024, R&D expenses were US$
(u) Selling, general and administrative expenses
Selling
expenses consist primarily of employee compensation and transportation cost. For the six months ended June 30, 2025 and 2024, total sales
and marketing expenses were US$
General
and administrative expenses consist primarily of employee compensation for employees involved in general corporate functions and those
not specifically dedicated to R&D activities, share-based compensation, depreciation and amortization expenses, legal, and other
professional services fees, lease and other general corporate related expenses. For the six months ended June 30, 2025 and 2024, general
and administrative expenses were US$
| 19 |
(v) Employee benefits
Short-term employee benefits
All short-term employee benefits which consist of salaries and related benefits, vacation pay, incentives and other short-term benefits are recognized as expense on undiscounted basis when employees have rendered service to the Company. Other short-term benefits are including work-related injury benefits, maternity insurance, medical care, employee housing fund and other welfare benefits. Chinese labor regulations require that the PRC subsidiaries of the Company make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government.
Post-employment benefit plans
Post-employment benefit plans consist of funded and unfunded defined benefit pension plans, defined contribution pension plan, other post-employment benefits, post-employment health care benefit plan, defined contribution health care benefit plan and obligations under the Labor Law.
The cost of providing benefits under post-employment benefit plans calculation is performed by an independent actuary using the projected unit credit method.
The net obligations in respect of the defined pension benefit plans and post-retirement health care benefit plan are calculated at the present value of estimated future benefits that the employees have earned in return for their service in the current and prior periods less the fair value of plan assets. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of Government bonds that are denominated in the currencies in which the benefits will be paid and that have terms to maturity approximating the terms of the related retirement benefit obligation. Government bonds are used as there are no deep markets for high quality corporate bonds.
Plan assets are assets owned by defined benefit pension plan and post-retirement health care benefits plan as well as qualifying insurance policy. The assets are measured at fair value as of reporting dates. The fair value of qualifying insurance policy is deemed to be the present value of the related obligations (subject to any reduction required if the amounts receivable under the insurance policies are not recoverable in full).
Remeasurement, comprising of actuarial gains and losses, the effect of the asset ceiling (excluding amounts included in net interest on the net defined benefit liability (asset)) and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability (asset)) are recognized immediately in the consolidated statements of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized immediately in profit or loss on the earlier of:
(a) the date of plan amendment or curtailment; and
(b) the date that the Group recognized restructuring-related costs.
Net interest is calculated by applying the discount rate to the net defined benefit liabilities or assets.
Gains or losses on curtailment are recognized when there is a commitment to make a material reduction in the number of employees covered by a plan or when there is an amendment of defined benefit plan terms such as that a material element of future services to be provided by current employees will no longer qualify for benefits, or will qualify only for reduced benefits.
Gains or losses on settlement are recognized when there is a transaction that eliminates all further legal or constructive obligation for part, or all of the benefits provided under a defined benefit plan (other than the payment of benefit in accordance with the program and included in the actuarial assumptions).
The PRC government is responsible for the medical benefit and the pension liability to be paid to these employees and the Company’s obligations are limited to the amounts contributed and there is no legal obligation beyond the contributions made. Consequently, for defined contribution plans, the regular contributions constitute net periodic costs for the period in which they are due and, as such, are included in “personnel expenses” as they become payable.
The Company attributed benefits under the defined benefit plan’s benefit formula to periods of service from the date when employee service first leads to benefits under the plan until the date when further employee service will lead to no material amount of further benefits under the plan.
Early retirement benefit
Early retirement benefits are accrued at the time the Group makes a commitment to provide early retirement benefits as a result of an offer made in order to encourage voluntary resignation. A commitment to a termination arises when, and only when a detailed formal plan for the early retirement cannot be withdrawn.
(w) Government grants
The
Company’s PRC based subsidiaries received subsidies from certain local governments. The Company’s government subsidies
consist of subsidies which are provided by the local governments for a specific purpose, such as land fulfillment costs and
production and capacity subsidies related to the manufacturing plant construction. The Company recognizes government subsidies as
non-current liabilities until there is reasonable assurance that the Company will comply with conditions attaching to them and the
grants will be received. Hence, the Company recorded specific subsidies as other non-current liabilities when received and the
specific subsidies are recognized as other income at each stage when the Company is entitled to the amount or the required
performance is met. The Company currently recognizes government subsidies 1) using a systematic basis over the periods in which the
Company recognizes the related expenses or losses that the grants are intended to compensate and 2) when the grant is received if it
compensates for expenses or losses already incurred. For the six months ended June 30, 2025 and 2024, the Company recognized
subsidies of approximately US$
See below for the nature of each government subsidy received and the related accounting treatment:
| For the six months ended June 30, 2025 (Unaudited) | ||||||||
| No. | US$’000 | Type of Subsidies | Accounting Treatment | |||||
| 1 | ||||||||
| 2 | ||||||||
| TOTAL | ||||||||
| For the six months ended June 30, 2024 (Unaudited) | ||||||||
| No. | US$’000 | Type of Subsidies | Accounting Treatment | |||||
| 1 | ||||||||
| 2 | ||||||||
| TOTAL | ||||||||
| 20 |
(x) Income taxes
Current income taxes are recorded in accordance with the regulations of the relevant tax jurisdiction. The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Tax. Under this method, deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between carrying amounts of existing assets and liabilities in the consolidated financial statements and their respective tax basis, and operating loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of operations in the period of change. Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely than not that amount of the deferred tax assets will not be realized.
Uncertain tax positions
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. Interest and penalties related to uncertain tax positions, if any, are recorded under accrued expenses and other current liabilities on its consolidated balance sheets and under other expenses in its consolidated statements of operations. As of June 30, 2025 and December 31, 2024, the Company did not have any significant unrecognized uncertain tax positions. The Company did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of its consolidated statements of income for the six months ended June 30, 2025 and 2024.
(y) Warrants
The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares. The Company classifies as liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares.
The Company accounts for its currently outstanding warrants in conjunction with the Company’s ordinary shares in equity. These warrants are indexed to the Company’s shares and meet the requirements of equity classification as prescribed under ASC 815-40. Warrants classified as equity are initially measured at fair value, and subsequent changes in fair value are not recognized so long as the warrants continue to be classified as equity.
The details for the outstanding warrants are disclosed in Note 19(a).
(z) Value-added tax
The
Company is subject to statutory value-added tax (“VAT”) of
(aa) Statutory reserves
The Company’s subsidiaries established in the PRC are required to make appropriations to certain non-distributable reserve funds.
In accordance with the laws applicable to PRC’s Foreign Investment Enterprises, the Company’s subsidiaries registered as wholly-owned foreign enterprises have to make appropriations from their after-tax profits (as determined under the Accounting Standards for Business Enterprises as promulgated by the Ministry of Finance of the People’s Republic of China (“PRC GAAP”) to reserve funds including the general reserve fund, and staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of the Company. Appropriation to the staff bonus and welfare fund is at the Company’s discretion.
| 21 |
The use of the general reserve fund, statutory surplus fund and discretionary surplus fund is restricted to the offsetting of losses or increasing capital of the respective company. The staff bonus and welfare fund is a liability in nature and is restricted to fund payments of special bonuses to staff and for the collective welfare of employees. No reserves are allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor can they be distributed except under liquidation.
(bb) Comprehensive income (loss)
The Company applies ASC 220, Comprehensive Income, with respect to reporting and presentation of comprehensive loss and its components in a full set of financial statements. Comprehensive loss is defined to include all changes in equity of the Company during a period arising from transactions and other events and circumstances except those resulting from investments by shareholders and distributions to shareholders. For the periods presented, the Company’s comprehensive loss includes net loss and other comprehensive loss, which primarily consists of the foreign currency translation adjustments and actuarial loss arising from changes in financial assumptions on the Company’s defined contribution plan that has been excluded from the determination of net loss.
(cc) Leases
Operating lease
The Company adopted ASC 842, Leases as of January 1, 2022 using modified retrospective transition approach. Upon adoption, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward the historical determination of contracts as leases, lease classification and not reassess initial direct costs for historical lease arrangements. In addition, the Company also elected the practical expedient of using hindsight to apply consistently to all of the Company’s leases in determining the lease term and in assessing impairment of the Company’s right-of-use assets.
The Company includes a right-of-use asset and lease liability related to substantially all of the Company’s lease arrangements in the consolidated balance sheets. All of the Company’s leases are operating leases. As the existing operating leases are short-term leases, right-of-use assets and the corresponding lease liabilities were nil in the consolidated balance sheets as of June 30, 2025 and December 31, 2024.
The Company has elected not to present short-term leases on the consolidated balance sheets as these leases have a lease term of 12 months or less at commencement date of the lease and do not include options to purchase or renew that the Company is reasonably certain to exercise. The Company recognizes lease expenses for such short-term lease generally on a straight-line basis over the lease term. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company’s leases do not provide an implicit rate of return, the Company uses the Company’s incremental borrowing rate based on the information available at adoption date or lease commencement date in determining the present value of lease payments.
The acquired land use right (Notes 2(l),10) represents lease prepayments to the local government authorities which is separately presented in the consolidated balance sheets. The Company determines whether the land use right agreement contains an operating lease. Land use rights are carried at cost less accumulated amortization and impairment losses.
Basic loss per share is computed by dividing net loss attributable to holders of ordinary shares by the weighted-average ordinary shares outstanding for the period. Potentially dilutive shares, which are based on the weighted-average ordinary shares underlying outstanding stock-based awards, warrants, or options using the treasury stock method or the if-converted method, if applicable, are included when calculating diluted net loss per share attributable to holders of ordinary shares when their effect is dilutive.
| 22 |
Since the Company has incurred losses for each of the six months ended June 30, 2025 and 2024, the potential shares issuable related to outstanding warrants have been excluded from the calculation of diluted loss per share as the effect of such shares is anti-dilutive. Therefore, basic and diluted loss per share amounts are the same for each period presented.
Earnout/Contingent Value Rights
Pursuant
to the BCA, ordinary shares (valued as US$
| (i) | The first tranche (along with earnings thereon) were to |
| (ii) | The second tranche (along with earnings thereon) will likewise either |
| (iii) | Any remaining Earnout Shares (along with earnings thereon) not vested or surrendered in the first or second tranches are eligible either to |
Any Earnout Shares and earnings thereon that are surrendered to Chijet will be promptly reissued and delivered by Chijet to the CVR rights agent on behalf of the holders of the CVRs, to be reissued pro rata among the holders of the CVRs.
The accounting for the Earnout Shares was first evaluated under ASC 718 to determine if the arrangement represents a share-based payment. Considering that the Earnout Shares were issued to the Chijet Inc. Sellers, and there are no service conditions nor any requirement of the participants to provide goods or services, the Company determined that the Earnout Shares are not within the scope of ASC 718. In reaching this conclusion, the Company focused on the fact that the Earnout Shares are not provided to any holder of options or unvested stock but rather the arrangement is provided only to vested equity holders.
| 23 |
Next, the Company determined that the Earnout Shares represent a freestanding equity-linked financial instrument to be evaluated under ASC 480. Based upon the analysis, the Company concluded that the Earnout Shares should not be classified as a liability under ASC 480.
The Company next considered the conditions in ASC 815-10-15-74 and ASC 815-40 and concluded that the Earnout Shares are not within the scope of ASC 815. Therefore, the Earnout Share arrangement is appropriately classified in equity. As the business combination was accounted for as a reverse recapitalization, the fair value of the Earnout Share arrangement as of the Closing Date was accounted for as an equity transaction. Therefore, contingent value rights did not give any effect in calculation of the earnings per share as of June 30, 2025.
(ee) Assets and liabilities classified as held for sale
Assets and liabilities to be disposed of by sale (“disposal groups”) are classified as “held for sale” if their carrying amounts are principally expected to be recovered through a sale transaction rather than through continuing use. The classification occurs when the disposal group is available for immediate sale and the sale is probable. These criteria are generally met when management has committed to a plan to sell the assets within one year. Disposal groups are measured at the lower of carrying amount or fair value less costs to sell, and long-lived assets included within the disposal group are not depreciated or amortized. The fair value of a disposal group, less any costs to sell, is assessed during each reporting period it remains classified as held for sale, and any remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value of the disposal group. When the net realizable value of a disposal group increases during a period, a gain can be recognized to the extent that it does not increase the value of the disposal group beyond its original carrying value when the disposal group was reclassified as held for sale. Disposal groups are disposed or meet the criteria to be classified as held for sale should be reported in discontinued operations if the disposal represents a strategic shift that has a major effect on an entity’s operations and financial results.
3. RECENT ACCOUNTING PRONOUNCEMENT
Recently adopted accounting pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for the Company’s annual reporting periods beginning after December 15, 2024. Adoption is either with a prospective method or a fully retrospective method of transition. Early adoption is permitted.
The Company adopted ASU No. 2023-09 on January 1, 2025, which did not have a material impact on the consolidated financial statements.
| 24 |
Recently issued accounting pronouncements not yet adopted
In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). ASU 2023-06 adds interim and annual disclosure requirements to GAAP at the request of the Securities and Exchange Commission. The guidance in ASU 2023-06 is required to be applied prospectively and the GAAP requirements will be effective when the removal of the related SEC disclosure requirements is effective. If the SEC does not act to remove its related requirements by June 30, 2027, any related FASB amendments will be removed from the Accounting Standards Codification and will not be effective. The Company does not anticipate that the adoption of ASU 2023-06 will have a material impact on the consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03-Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses (or ASU 2024-03). This ASU improves the disclosures about a public business entity’s expenses and addresses requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling, general and administrative expenses, and research and development). This ASU is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The amendments in this ASU are applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Company does not expect that adoption of ASU 2024-03 will have a material impact on the Company’s consolidated financial statements.
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 amends ASC 326, Financial Instruments—Credit Losses, and introduces a practical expedient available for all entities and an accounting policy election available for all entities, other than public business entities, that elect the practical expedient. These changes apply to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue Recognition. Under the practical expedient, entities may assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts. This simplifies the estimation process for short-term financial assets. ASU 2025-05 is effective for the Company’s annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Company is currently assessing the impact this standard will have on the Company’s Consolidated Financial Statements.
| 25 |
4. CONCENTRATION OF RISK
(a) Credit risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, restricted cash, accounts and notes receivable, and accounts and notes payable. The maximum exposure of such financial instruments to credit risk is their carrying amounts as of the balance sheet dates. As of June 30, 2025 and December 31, 2024, substantially all of the Company’s cash and cash equivalents and restricted cash was placed with banking institutions in the PRC. Management chose these institutions because of their reputations and track records for stability, and their known large cash reserves, and management periodically reviews these institutions’ reputations, track records, and reported reserves. Management expects that any additional institutions that the Company uses for its cash and bank deposits would be chosen with similar criteria for soundness. Bank failure is uncommon in PRC and based on publicly available information, management believes that those Chinese banks that hold the Company’s cash and cash equivalents and restricted cash are financially sound.
For the credit risk related to accounts and notes receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit losses.
(b) Customer risk
As
of June 30, 2025, two customers, determined as related parties under ASC 850, accounted for
As
of December 31, 2024, one customer, determined as a related party under ASC 850, accounted for
During
the six months ended June 30, 2025, two third-party customers accounted for 10% of the Company’s total revenue at
During
the six months ended June 30, 2024, two customers accounted for more than 10% of total revenue at
(c) Foreign currency exchange rate risk
The revenues and expenses of the Company’s entities in the PRC are generally denominated in RMB and their assets and liabilities are denominated in RMB. The Company’s overseas financing activities are denominated in U.S. dollars. The RMB is not freely convertible into foreign currencies. Remittances of foreign currencies into the PRC or remittances of RMB out of the PRC as well as exchange between RMB and foreign currencies require approval by foreign exchange administrative authorities and certain supporting documentation. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of RMB into other currencies.
5. ACCOUNTS AND NOTES RECEIVABLE, NET
Accounts and notes receivable and allowance for doubtful accounts consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Accounts receivable | ||||||||
| Notes receivable | ||||||||
| Accounts and notes receivable, net | ||||||||
Notes
receivable represents bank acceptance drafts that are non-interest bearing and due within
| 26 |
The
Company has developed a CECL model based on historical experience, the age of the accounts receivable balances, credit quality of its
customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may
affect its ability to collect from customers. There was
6. INVENTORY, NET
Inventory consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Finished goods | ||||||||
| Raw materials | ||||||||
| Work-in-process | ||||||||
| Inventory, subtotal | ||||||||
| Less: inventory impairment provision | ( | ) | ( | ) | ||||
| Inventory, net | ||||||||
Finished goods primarily consist of vehicles ready for transit at production factories, vehicles in transit to fulfill customer orders, new vehicles available for immediate sale at its delivery and service centers, vehicle parts and charging piles.
Raw materials primarily consist of materials for volume production.
Work-in-process primarily consist of vehicles in production which will be transferred into finished goods inventory when completed.
For the six months ended June 30, 2025 and 2024, write-downs of inventories to net realizable value were both , respectively.
7. OTHER CURRENT ASSETS
Other current assets consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Prepayments for materials | ||||||||
| Prepayments for R&D | ||||||||
| Prepayments for utilities | ||||||||
| Other prepayments | ||||||||
| Deductible value-added tax input | ||||||||
| Other receivables(i) | ||||||||
| Subtotal | ||||||||
| Less: allowance for bad debts | ( | ) | ( | ) | ||||
| Net balance | ||||||||
| 27 |
On March 21, 2022, the Ministry of Finance and State Administration of Tax released Announcement (2022) No.14 to issue China’s VAT rebates to eligible industries. Companies in these industries can now apply for monthly refunds of incremental VAT credits and a one-time refund of remaining VAT credits from April 1, 2022 onward. Given that Chijet falls within the scope of the eligible industry, the deductible value-added tax input is classified as other current assets.
| (i) |
8. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| At cost: | ||||||||
| Buildings | ||||||||
| Mold and tooling | ||||||||
| Computer and electronic equipment | ||||||||
| Machinery and equipment | ||||||||
| Vehicles | ||||||||
| Other logistic equipment | ||||||||
| Construction in progress(i) | ||||||||
| Property, plant and equipment, subtotal | ||||||||
| Less: accumulated depreciation(ii) | ( | ) | ( | ) | ||||
| Less: accumulated impairment(iii) | ( | ) | ( | ) | ||||
| Property, plant and equipment, net(iv) | ||||||||
| (i) |
| (ii) |
| (iii) |
| (iv) |
The
nine vehicles pledged by Shandong Baoya in April 2024 to secure borrowings, seven of these vehicles were disposed in 2025. The
carrying amounts of vehicles were US$
The
carrying amounts of buildings, machines and equipment pledged by Dezhou Yarui to secure borrowings were US$
| 28 |
9. INTANGIBLE ASSETS, NET
Intangible assets consisted of the following:
| June 30, 2025 | ||||||||||||
| Gross Carrying | Accumulated | Net Carrying | ||||||||||
| Amount | Amortization | Amount | ||||||||||
| US$’000 | US$’000 | US$’000 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Finite-lived intangible assets: | ||||||||||||
| Computer software | ( | ) | ||||||||||
| Patent | ( | ) | ||||||||||
| Total finite-lived intangible assets | ( | ) | ||||||||||
| Indefinite-lived intangible assets: | ||||||||||||
| Trademark and manufacturing license | ||||||||||||
| Total indefinite-lived intangible assets | ||||||||||||
| Total intangible assets | ( | ) | ||||||||||
| December 31, 2024 | ||||||||||||
| Gross Carrying | Accumulated | Net Carrying | ||||||||||
| Amount | Amortization | Amount | ||||||||||
| US$’000 | US$’000 | US$’000 | ||||||||||
| (Audited) | (Audited) | (Audited) | ||||||||||
| Finite-lived intangible assets: | ||||||||||||
| Computer software | ( | ) | ||||||||||
| Patent | ( | ) | ||||||||||
| Total finite-lived intangible assets | ( | ) | ||||||||||
| Indefinite-lived intangible assets: | ||||||||||||
| Trademark and manufacturing license | ||||||||||||
| Total indefinite-lived intangible assets | ||||||||||||
| Total intangible assets | ( | ) | ||||||||||
Amortization
expenses of intangible assets were US$
10. LAND USE RIGHTS, NET
Land use rights consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Land use right | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Land use right, net | ||||||||
As
discussed in Note 17, the Company was unable to meet the conditions to apply for the government subsidies to repay the loans. As a result,
Xiangyang Yazhi pledged land use rights with the carrying amount of US$
Dezhou Yarui pledged land use rights with the carrying amount of US$
FAW
Jilin pledged its land use rights in July 2024 to secure the borrowings. The carrying amounts of land use rights pledged by FAW Jilin
for loan were totally US$
| 29 |
Land
use right of Shandong Baoya was frozen by court due to the legal loan dispute in December 2024. The carrying amount of the land use right
that was frozen was US$
Amortization
expenses of land use rights were US$
11. OPERATING LEASES (EXCLUDING LAND USE RIGHTS)
Operating leases of the Company mainly consist of short-term leases of plants, warehouses and machinery. Short-term lease cost is recognized as rental expenses in the consolidated statements of loss.
The components of lease cost for operating leases were as follows:
| For the six months ended | For the six months ended | |||||||
| June 30, 2025 | June 30, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Short-term lease cost | ||||||||
| Total lease cost | ||||||||
12. GOODWILL
Goodwill
represents the excess of the purchase price over the fair value of the net assets acquired from FAW Jilin on December 27, 2019 (“Acquisition
Date”). Pursuant to the related agreement and plan of merger, the purchase price was US$
The Company accounted for the acquisition using the purchase method of accounting for business combinations under ASC 805, Business Combinations. The total purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed on their estimated fair value as of the Acquisition Date.
| 30 |
| US$’000 | RMB’000 | |||||||
| Assets acquired: | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts and notes receivable | ||||||||
| Other receivable | ||||||||
| Inventory | ||||||||
| Property, plant and equipment, net | ||||||||
| Equity investment | ||||||||
| Intangible assets | ||||||||
| Land use right | ||||||||
| Prepayments and other assets, current and non-current | ||||||||
| Total assets acquired | ||||||||
| Liabilities and equity assumed | ||||||||
| Short-term borrowing | ( | ) | ( | ) | ||||
| Accounts and notes payable | ( | ) | ( | ) | ||||
| Contract liabilities | ( | ) | ( | ) | ||||
| Accounts and other liabilities | ( | ) | ( | ) | ||||
| Long-term payables | ( | ) | ( | ) | ||||
| Accrued post-employment and termination benefits | ( | ) | ( | ) | ||||
| Other payable, current and non-current | ( | ) | ( | ) | ||||
| Noncontrolling interest | ( | ) | ( | ) | ||||
| Total liabilities and equity assumed | ( | ) | ( | ) | ||||
| Net assets acquired | ||||||||
| Goodwill | ||||||||
| Total purchase price | ||||||||
Changes in the carrying amount of goodwill consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Beginning balance | ||||||||
| Translation adjustment | ( | ) | ||||||
| Goodwill | ||||||||
Goodwill
of US$
13. OTHER ASSETS
Other assets consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Long-term prepayment | ||||||||
| Total | ||||||||
Long-term
prepayment of US$
| 31 |
14. ACCOUNTS AND NOTES PAYABLE
Accounts and notes payable consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Accounts payable | ||||||||
| Total | ||||||||
15. CONTRACT LIABILITIES
Contract liabilities primarily consisted of advance payments from customers prior to the transfer of goods or services by the Company. The payment amounts and timing vary depending on the vehicle model, the energy product and the location of delivery. Contract liabilities are included in current liabilities until refunded or until they are applied towards the revenue.
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Contract liabilities - beginning of period | ||||||||
| A change in time frame for a performance obligation satisfied | ( | ) | ( | ) | ||||
| Advance received | ||||||||
| Translation adjustment | ( | ) | ||||||
| Contract liabilities - subtotal | ||||||||
| Less: contract liabilities to related parties | ( | ) | ( | ) | ||||
| Contract liabilities - end of period | ||||||||
16. ACCRUALS AND OTHER CURRENT LIABILITIES
Accruals and other current liabilities consisted of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Payroll payable | ||||||||
| Accrued post-employment and termination benefits - current portion (Note 18) | ||||||||
| Business and other taxes payable | ||||||||
| Accrued expenses | ||||||||
| Other payable secured by acceptance draft | ||||||||
| Other payable | ||||||||
| Total | ||||||||
| 32 |
17. LONG-TERM PAYABLES, CURRENT
In May 2016, the Company entered into two loans with a government entity (Xiangyang High Tech Industrial Development Zone Management Committee). The purpose of the borrowing was solely for the development of the Electric Vehicle industry in Xiangyang, PRC, and the funds cannot be used for any other purpose. The loans bear no interest and the maturity date will depend on the development status.
Because
of the nature of these loans, the Company was subject to the fulfillment of covenants relating to the Company’s consolidated statement
of financial position performance and results. However, due to the Covid-19 pandemic and the specific regulations issued, the Company
was unable to meet the conditions in the loan agreements and, therefore, was unable to apply for the government subsidies to repay the
US$
In June 2023, the Company pledged
certain assets to the two government entities to secure the principal and related interest claims of the above-mentioned loans. The carrying amount of machinery and equipment, molds and tooling was US$
The
carrying value of the borrowings approximates their fair value as of June 30, 2025 and December 31, 2024. As of June 30, 2025 and December
31, 2024, the outstanding principal of the loans were US$
As of June 30, 2025, the Company was unable to meet the conditions in the loan agreement, therefore there are no subsidies receivable by the Company from the government. On July 2, 2025, Xiangyang High Tech Industrial Development Zone Management Committee has initiated arbitration proceedings and submitted the following claims: 1)require the Company to repay the loans and pay the penalty; 2)require the auction of the mortgaged land use right, buildings, and equipment, and seeking priority compensation from the proceeds of the auction within the scope of the aforementioned claims.
On
September 1, 2025, the court frozen Xiangyang Yazhi’s bank deposits and ordered the auction of the mortgaged assets. The
Company plans to repay the US$
18. ACCRUED POST-EMPLOYMENT AND TERMINATION BENEFITS
The Company pays post-employment obligations to its retired employees. In addition, the Company is committed to make periodic benefits payments to certain former employees, who were terminated or early retired. These benefits are only applicable to the qualifying employees.
As of December 31, 2024, the Company had three defined benefit, non-contributory retirement or termination plans that cover qualifying employees. These defined benefit plans provide benefits to covered individuals satisfying certain age and/or service requirements. The three benefit plans are as follows:
(i) Plan 1: Post-employment benefits for civil retirees, retirees and internal retirees in 2019 restructure;
(ii) Plan 2: Termination benefits for internal retirees in 2019 restructure;
(iii) Plan 3: Post-employment benefits for retirees and active employees granted after 2019;
In March 2025, to cut costs and boost productivity, the Company launched the 2025 Employee Placement Project (the “2025 Project”) targeting all retirees and active employee under Plan 3. The 2025 Project was approved by the meeting of all employee representatives on March 25, 2025. Under this project, all the post-employment benefits under Plan 3 were terminated. Instead, the Company has offered multiple termination benefits:
(iv) Plan 4: Post-employment benefits for retirees and internal retirees in 2025 Project;
(v) Plan 5: Termination benefits for internal retirees in 2025 Project;
| 33 |
For
the remaining active employees in Plan 3, their employment shall be terminated with a lump-sum termination compensation of US$
The Company terminated Plan 3 on June 30, 2025. This change has been accounted for curtailment as of June 30, 2025 and has been recognized immediately. The unrecognized accumulated other comprehensive income is recognized immediately in profit or loss.
Plan 4 and Plan 5 were established on June 30, 2025. This change has been accounted for termination benefits as of June 30, 2025, and has been recognized immediately.
According to the policy of gradually raising retirement age and “Measures of the State Council on Gradually Raising the Statutory Retirement Age” (referred to as the “Measures”), the statutory retirement age has been changed since January 1, 2025. The change of the Company’s benefits has occurred pursuant to the Measures since December 31, 2024. The above change has no influence on Plan 1 and 2. The effect on Plan 3 has been accounted for as past service cost on December 31, 2024 and amortized during the average expected future working lifetime of corresponding members under ASC 715.
The principal assumptions used for the purposes of the actuarial valuations are as follows:
| June 30, 2025 | December 31, 2024 | June 30, 2024 | ||||||||||
| (Unaudited) | (Audited) | (Unaudited) | ||||||||||
| Discount rate | % | % | ||||||||||
| Mortality rate | ||||||||||||
| Annual withdrawal rate | % | % | % | |||||||||
| Annual increase rate of supplemental medical benefits | % | % | % | |||||||||
| Annual increase rate of social insurance, housing fund and EAP | % | % | % | |||||||||
| * |
Movements in the present value of the retirement and supplemental benefit obligations during the six months ended June 30, 2025 and 2024 are as follows:
| For the six months ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Beginning of period | ||||||||
| Service costs | ||||||||
| Interest costs | ||||||||
| Benefits paid | ( | ) | ( | ) | ||||
| Actuarial loss arising from changes in financial assumptions | ( | ) | ||||||
| Termination Benefits | ||||||||
| Gain due to curtailment | ( | ) | ||||||
| Translation adjustment | ( | ) | ||||||
| End of period | ||||||||
| 34 |
The amount of retirement and supplemental benefit obligations recognized in the consolidated balance sheets are determined as follows:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| End of period/year | ||||||||
| Less: net amount due within one year (Note 16) | ( | ) | ( | ) | ||||
| Net amount due after one year | ||||||||
The following amounts were recorded in the consolidated statements of operations as components of the benefit cost for this period:
| For the six months ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Service costs | ||||||||
| Interest costs | ||||||||
| Amortization of actuarial losses | ||||||||
| Amortization of past service cost | ( | ) | ||||||
| Termination Benefits(i) | ||||||||
| Gain due to curtailment(i) | ( | ) | ||||||
| Immediate recognition of actuarial (gains) losses | ( | ) | ||||||
| Benefit cost for this period | ||||||||
| (i) |
The following amounts were recorded in the other comprehensive income of the consolidated statements of comprehensive loss:
| For the six months ended | ||||||||
| June 30, 2025 | June 30, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Actuarial (gain) loss arising from changes in financial assumptions | ( | ) | ||||||
| Amortization recognized in net period benefit cost | ( | ) | ( | ) | ||||
| Total | ( | ) | ||||||
During
the six months ended June 30, 2025 and 2024, the Company made cash payments of US$
| 35 |
In January and February 2025, the
Company had issued and Class A Ordinary Shares, par value US$ per share, in connection with the Private Placement
and the cashless exercise of the accompanying warrants in. The gross proceeds to the Company from the Private
Placement, amounting to approximately US$
On March 15, 2025, the Company had issued Class A Ordinary Shares to purchase the equity interest in Too Express that is discussed in Note 1(b).
In March 2025, the Company had cancelled Class A Ordinary Shares and issued Class B Ordinary Shares that are discussed in Notes 1(c).
As
of June 30, 2025 and December 31, 2024, Chijet Motor had issued and Class
A ordinary shares, of which outstanding Class A ordinary shares of and ,
respectively. Chijet Motor had and issued and outstanding Class B ordinary shares as of June 30, 2025 and December 31, 2024. Share data as of June 30, 2025 and
December 31, 2024 have been retroactively restated to give effect to the
(a) Warrants
GT Warrants
The following table summarizes the changes in the number of warrants outstanding during the six months ended June 30, 2025:
Weighted average | Total | |||||||||||
| Number | unit price | price | ||||||||||
| US$’000 | ||||||||||||
| Balance of warrants - December 31, 2024 | $ | $ | ||||||||||
| Balance of warrants - June 30, 2025 | $ | $ | ||||||||||
| Balance of warrants exercisable - June 30, 2025 | $ | $ | ||||||||||
On
February 15, 2022, pursuant to a financial advisory agreement, Shandong Baoya issued a common stock purchase warrant to Greentree to
purchase
| 36 |
The Company used the following assumptions to estimate the fair value of warrants granted under the financial advisory agreement:
| At February 15, 2022 | ||||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Expected term (in years) | ||||
| Expected dividend yield | % | |||
I-Bankers Warrants
The following table summarizes the changes in the number of warrants outstanding during the six months ended June 30, 2025:
Weighted average | Total | |||||||||||
| Number | unit price | price | ||||||||||
| US$’000 | ||||||||||||
| Balance of warrants - December 31, 2024 | $ | $ | ||||||||||
| Balance of warrants – June 30, 2025 | $ | $ | ||||||||||
On
December 9, 2021, JWAC issued to I-Bankers warrants to purchase
The Company used the following assumptions to estimate the fair value of warrants:
| At December 9, 2021 | ||||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Expected term (in years) | ||||
| Expected dividend yield | % | |||
(b) Treasury stock
Chijet
Inc. entered into unsecured promissory notes (“Promissory Notes”) in the principal amount of US$
| 37 |
(c) Statutory Reserves and Restricted Net Asset
The Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. The payment of dividends by entities organized in the PRC is subject to limitations, procedures, and formalities. Regulations in the PRC currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in PRC.
The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with PRC GAAP. Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The statutory reserve may be applied against prior year losses, if any, and may be used for general business expansion, production, or increase in registered capital but are not distributable as cash dividends.
For
the six months ended June 30, 2025 and 2024, the Company’s PRC subsidiaries did
In
accordance with the safety production regulations, the Company’s subsidiaries in China have to make appropriations as a special
reserve which will only be used for the enhancement of safety production environment and improvement of facilities. As of June 30, 2025
and December 31, 2024, the accumulated balance of special reserves, which is included in the accumulated deficit, was approximately US$
Because
the Company’s entities in the PRC can only pay dividends out of distributable profits reported in accordance with PRC accounting
standards, the Company’s entities in the PRC are restricted from transferring a portion of their net assets to the Company. The
restricted amounts include the paid-in capital, statutory reserves, special reserve and additional paid-in capital of the Company’s
entities in the PRC. The aggregate amount of paid-in capital and additional paid-in capital, which is the amount of net assets of the
Company’s entities in the PRC not available for distribution, were US$
20. INCOME TAXES
Enterprise income tax
Cayman Islands
Under the current laws of the Cayman Islands, Chijet Motor is not subject to tax on income or capital gain. Additionally, upon payments of dividends to shareholders, no Cayman Islands withholding tax will be imposed.
British Virgin Islands
The Company’s subsidiary, Baoya Technology Holdings Limited is incorporated in the BVI and under the current laws of the BVI, Baoya Technology Holdings Limited is not subject to tax on income or capital gain. In addition, payments of dividend by the subsidiary to its shareholders are not subject to withholding tax in the BVI.
| 38 |
Hong Kong
Under
the current Hong Kong Inland Revenue Ordinance, the Company’s Hong Kong subsidiary, Baoyaev Group Limited, is subject to
The PRC
The
Company’s subsidiaries that are incorporated in the PRC are subject to Corporate Income Tax (“CIT”) on the taxable
income as reported in their respective statutory financial statements adjusted in accordance with the new PRC Enterprise Income Tax Laws
(“PRC Income Tax Laws”) effective from January 1, 2008. Pursuant to the PRC Income Tax Laws, most of the Company’s
PRC subsidiaries are subject to a CIT statutory rate of
For the six months ended on June 30, 2025 and 2024, income tax expenses were both .
Reconciliations
of the income tax expenses (benefits) computed by applying the PRC statutory income tax rate of
| June 30, 2025 | June 30, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Loss before income tax expenses | ( | ) | ( | ) | ||||
| Income tax benefits computed at the PRC statutory income tax rate of | ( | ) | ( | ) | ||||
| Use of NOL | ( | ) | ||||||
| Effect of additional deduction for qualified R&D expenses | ( | ) | ( | ) | ||||
| Effect of changes in asset value | ||||||||
| Non-deductible expenses | ||||||||
| Changes in valuation allowance and others | ||||||||
| Income tax expenses | ||||||||
The
Company considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will be more-likely-than-not
realized. This assessment considers, among other matters, the nature, frequency and severity of recent loss and forecasts of future profitability.
These assumptions require significant judgment, and the forecasts of future taxable income are consistent with the plans and estimates
the Company is using to manage the underlying businesses. The statutory income tax rate of
| 39 |
The Company’s deferred tax assets (liabilities) consisted of the following components:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Deferred tax assets | ||||||||
| Net operating loss carryforwards | ||||||||
| Accrued warranty | ||||||||
| Accrued expenses | ||||||||
| Investment loss | ||||||||
| Inventory impairment | ||||||||
| Fixed assets impairment provision | ||||||||
| Bad debts | ||||||||
| Accrued payroll | ||||||||
| Subtotal | ||||||||
| Fair value change of fixed assets | ( | ) | ( | ) | ||||
| Fair value change of intangible assets | ( | ) | ( | ) | ||||
| Total deferred tax liabilities | ( | ) | ( | ) | ||||
| Net deferred tax assets | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net of valuation allowance | ||||||||
A valuation allowance is provided against deferred tax assets when the Company determines that it is more-likely-than-not that the deferred tax assets will not be utilized in the future.
The
Company has tax losses arising in Mainland China of US$
21. RELATED PARTIES
The principal related parties of which the Company as of June 30, 2025 are as follows:
(a) Relationship:
| Name of Entity or Individual | Relationship with the Company | |
| Jilin FAW Baosteel Auto Steel Parts Co., Ltd. | Significantly influenced by the Company | |
| Jilin Jiqi-Longshan Automobile Chassis Co., Ltd. | Significantly influenced by the Company | |
| Zhang Jiannong | Shareholder | |
| Wang Qingjun | Shareholder | |
| Euroamer Kaiwan Technology Company Limited | Shareholder | |
| Chijet Holdings Limited | Shareholder | |
| Mu Hongwei | Principal Owner/Director | |
| John Chiang | Shareholder | |
| Simon Pang | Shareholder | |
| Li Wen | Shareholder | |
| Liu Ying | Shareholder | |
| Wang Wenbo | Independent Director | |
| Wang Na | Independent Director | |
| Wang Wanli | Independent Director | |
| Zhang Jing | Independent Director | |
| China FAW Co., Ltd. | Non-controlling interest shareholder | |
| Dezhou Economic and Tech Development Zone Jingtai Investment Co., Ltd. | Non-controlling interest shareholder | |
| Qiming Information Technology Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| FAW Bestune Car Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| FAW-Volkswagen Automobile Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| FAW Mould Manufacturing Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| FAW Logistics (Changchun Lushun) Storage and Transportation Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| FAW Logistics Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| Changchun FAW International Logistics Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| China FAW Technology Center | Affiliate of non-controlling interest shareholder | |
| China FAW Group Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| China FAW Group Import & Export Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| FAW Finance Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| Changchun Wisdom Bus Branch of FAW Jiefang Automobile Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| FAW Equity Investment (Tianjin) Co., Ltd. | Affiliate of non-controlling interest shareholder | |
| Yantai Public Transportation Co., Ltd. | Significantly influence the Company | |
| Shandong Zhanpuce Management Consulting | Significantly influenced by non-controlling interest shareholder | |
| Shandong Jiankangdadi Enterprise Management Consulting Co., Ltd. | Significantly influenced by non-controlling interest shareholder | |
| Jinan Haiyun Investment Consulting Co., Ltd. | Significantly influenced by non-controlling interest shareholder | |
| Machinery Industry Ninth Design and Research Institute Co., Ltd. | Significantly influenced by non-controlling interest shareholder | |
| FAW Bus (Dalian) Co., Ltd. | Significantly influenced by non-controlling interest shareholder |
| 40 |
(b) The following tables indicate the transactions that have been entered into with related parties:
| i) | Balance Sheets |
| As of June 30, 2025 (Unaudited) | ||||||||||||||||||||||||||||
| US$’000 | ||||||||||||||||||||||||||||
| Accounts and notes receivable from related parties | Other current assets from related parties | Amounts due from related parties | Accounts and notes payable to related parties | Contract liabilities to related parties | Accruals and other current liabilities to related parties | Loans attributable to related parties | ||||||||||||||||||||||
| Significantly influenced by the Company | ||||||||||||||||||||||||||||
| Jilin FAW Baosteel Auto Steel Parts Co., Ltd. | ||||||||||||||||||||||||||||
| Jilin Jiqi-Longshan Automobile Chassis Co., Ltd | ||||||||||||||||||||||||||||
| Independent Directors | ||||||||||||||||||||||||||||
| Wang Wenbo | ||||||||||||||||||||||||||||
| Wang Na | ||||||||||||||||||||||||||||
| Wang Wanli | ||||||||||||||||||||||||||||
| Zhang Jing | ||||||||||||||||||||||||||||
| Non-controlling interest shareholder | ||||||||||||||||||||||||||||
| China FAW Co., Ltd. | ||||||||||||||||||||||||||||
| Dezhou Economic and Tech Development Zone Jingtai Investment Co., Ltd. | ||||||||||||||||||||||||||||
| Affiliate of non-controlling interest shareholder | ||||||||||||||||||||||||||||
| Qiming Information Technology Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Bestune Car Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Mould Manufacturing Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Logistics (Changchun Lushun) Storage and Transportation Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Logistics Co., Ltd. | ||||||||||||||||||||||||||||
| Changchun FAW International Logistics Co., Ltd. | ||||||||||||||||||||||||||||
| China FAW Group Co., Ltd. | ||||||||||||||||||||||||||||
| China FAW Group Import & Export Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Finance Co., Ltd. | ||||||||||||||||||||||||||||
| Significantly influenced the Company | ||||||||||||||||||||||||||||
| Yantai Public Transportation Co., Ltd. | ||||||||||||||||||||||||||||
| Significantly influenced by non-controlling interest shareholder | ||||||||||||||||||||||||||||
| Shandong Jiankangdadi Enterprise Management Consulting Co., Ltd | ||||||||||||||||||||||||||||
| Jinan Haiyun Investment Consulting Co., Ltd | ||||||||||||||||||||||||||||
| Machinery Industry Ninth Design and Research Institute Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Bus (Dalian) Co., Ltd. | ||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||
| 41 |
| As of December 31, 2024 (Audited) | ||||||||||||||||||||||||||||
| US$’000 | ||||||||||||||||||||||||||||
| Accounts and notes receivable from related parties | Other current assets from related parties | Amounts related parties | Accounts and notes payable to related parties | Contract liabilities to related parties | Accruals and other current liabilities | Loans attributable parties | ||||||||||||||||||||||
| Shareholders | ||||||||||||||||||||||||||||
| Euroamer Kaiwan Technology Company Limited | ||||||||||||||||||||||||||||
| Chijet Holdings Limited | ||||||||||||||||||||||||||||
| Ying Liu | ||||||||||||||||||||||||||||
| Significantly influenced by the Company | ||||||||||||||||||||||||||||
| Jilin FAW Baosteel Auto Steel Parts Co., Ltd. | ||||||||||||||||||||||||||||
| Jilin Jiqi-Longshan Automobile Chassis Co., Ltd. | ||||||||||||||||||||||||||||
| Independent Directors | ||||||||||||||||||||||||||||
| Wang Wenbo | ||||||||||||||||||||||||||||
| Huimin Li | ||||||||||||||||||||||||||||
| Non-controlling interest shareholder | ||||||||||||||||||||||||||||
| China FAW Co., Ltd. | ||||||||||||||||||||||||||||
| Dezhou Economic and Tech Development Zone Jingtai Investment Co., Ltd. | ||||||||||||||||||||||||||||
| Affiliate of non-controlling interest shareholder | ||||||||||||||||||||||||||||
| Qiming Information Technology Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Bestune Car Co., Ltd. | ||||||||||||||||||||||||||||
| FAW-Volkswagen Automobile Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Mould Manufacturing Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Logistics (Changchun Lushun) Storage and Transportation Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Logistics Co., Ltd. | ||||||||||||||||||||||||||||
| Changchun FAW International Logistics Co., Ltd. | ||||||||||||||||||||||||||||
| China FAW Group Co., Ltd. | ||||||||||||||||||||||||||||
| China FAW Group Import & Export Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Equity Investment (Tianjin) Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Finance Co., Ltd. | ||||||||||||||||||||||||||||
| Significantly influence the Company | ||||||||||||||||||||||||||||
| Yantai Public Transportation Co., Ltd. | ||||||||||||||||||||||||||||
| Significantly influenced by non-controlling interest shareholder | ||||||||||||||||||||||||||||
| Shandong Jiankangdadi Enterprise Management Consulting Co., Ltd. | ||||||||||||||||||||||||||||
| Jinan Haiyun Investment Consulting Co., Ltd. | ||||||||||||||||||||||||||||
| Machinery Industry Ninth Design and Research Institute Co., Ltd. | ||||||||||||||||||||||||||||
| FAW Bus (Dalian) Co., Ltd. | ||||||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||
| 42 |
| ii) | Operations |
| For the six months ended June 30, 2025 (Unaudited) | For the six months ended June 30, 2024 (Unaudited) | |||||||||||||||||||||||
| US$’000 | US$’000 | |||||||||||||||||||||||
| Sales of goods | Purchase of goods | Interest Expense | Sales of goods | Purchase of goods | Interest Expense | |||||||||||||||||||
| Significantly influenced by the Company | ||||||||||||||||||||||||
| Jilin FAW Baosteel Auto Steel Parts Co., Ltd. | ||||||||||||||||||||||||
| Jilin Jiqi-Longshan Automobile Chassis Co., Ltd | ||||||||||||||||||||||||
| Non-controlling interest shareholder | ||||||||||||||||||||||||
| China FAW Co., Ltd. | ||||||||||||||||||||||||
| Dezhou Economic and Tech Development Zone Jingtai Investment Co., Ltd. | ||||||||||||||||||||||||
| Affiliate of non-controlling interest shareholder | ||||||||||||||||||||||||
| Yantai Guofeng Investment Holding Group Co., Ltd. | ||||||||||||||||||||||||
| Nanjing Shengnuo Biotechnology Industry Company Ltd | ||||||||||||||||||||||||
| Qiming Information Technology Co., Ltd. | ||||||||||||||||||||||||
| FAW Bestune Car Co., Ltd. | ||||||||||||||||||||||||
| FAW-Volkswagen Automobile Co., Ltd. | ||||||||||||||||||||||||
| FAW Finance Co., Ltd. | ||||||||||||||||||||||||
| Significantly influence the Company | ||||||||||||||||||||||||
| Yantai Public Transportation Co., Ltd. | ||||||||||||||||||||||||
| Significantly influenced by non-controlling interest shareholder | ||||||||||||||||||||||||
| Shandong Jiankangdadi Enterprise Management Consulting Co., Ltd | ||||||||||||||||||||||||
| Jinan Haiyun Investment Consulting Co., Ltd | ||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||
| 43 |
(c) The following table consists of the financing that the Company has entered into with related parties:
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Significantly influence the Company | ||||||||
| Yantai Public Transportation Co., Ltd. (i) | ||||||||
| Affiliate of non-controlling interest shareholder | ||||||||
| FAW Finance Co., Ltd. (ii) | ||||||||
| FAW Equity Investment (Tianjin) Co., Ltd. (iii) | ||||||||
| Non-controlling interest shareholder | ||||||||
| Dezhou Economic and Tech Development Zone Jingtai Investment Co., Ltd. (iv) | ||||||||
| Significantly influenced by non-controlling interest shareholder | ||||||||
| Shandong Jiankangdadi Enterprise Management Consulting Co., Ltd. (v) | ||||||||
| Jinan Haiyun Investment Consulting Co., Ltd. (vi) | ||||||||
| Total | ||||||||
| (i) |
| (ii) |
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Collateralized by the FAW Jilin factory and land use right with the carrying value of US$ | ||||||||
| Collateralized by the machinery and equipment, molds and tooling, other logistic equipment of FAW Jilin with carrying value of US$ | ||||||||
| Credit loan, no collateralized items. | ||||||||
| Total | ||||||||
| 44 |
| Maturity date | The
loans mature gradually from |
| Interest Rate and default rate | The
loans bear an annual interest rate of |
| Interest expense | The
interest expenses were US$ |
| (iii) | On
December 19, 2024, FAW Jilin entered a mortgage loan of US$ |
| (iv) | In
2016, Dezhou Yarui entered into a related party mortgage loan with Dezhou Economic and Tech Development Zone Jingtai Investment Co.,
Ltd. (“Dezhou Jingtai”). The loan was originally due on October 31, 2026. In March 2022, pursuant to the loan agreement,
Dezhou Jingtai filed a request in court that the Company repay the loan in advance. In April 2022, the Company reached a settlement
agreement with Dezhou Jingtai. Pursuant to the settlement agreement, the outstanding balance of US$ |
| June 30, 2025 | December 31, 2024 | |||||||
| US$’000 | US$’000 | |||||||
| (Unaudited) | (Audited) | |||||||
| Collateralized by buildings, machinery and equipment, land use right of Dezhou Yarui. The carrying amounts of machinery and equipment pledged to secure the borrowings as of June 30, 2025 and December 31, 2024 were US$ | ||||||||
| Maturity date | The
outstanding balance was due on |
| Interest Rate | The
loans bear an annual interest rate of |
| Interest expense (One loan thus no weighted average rate) | The
interest expenses were US$ |
| Others | For the six months ended June 30, 2025, the Company has paid . |
(v)
In August and October 2023, Shandong Baoya entered into two loans totaling US$
| 45 |
Additionally,
on January 16, 2024, January 19, 2024, and March 25, 2024, Shandong Baoya entered three loans with Jiankangdadi. The loans bear interest
of
On
November 25, 2024, Jiankangdadi filed an application with the Lixia People’s Court of Jinan City to freeze Shandong Baoya’s
(vi)
In August and September 2023, Shandong Baoya entered two loans amounting to US$
On
December 3, 2024, Jinan Haiyun filed an application with the Lixia People’s Court of Jinan City to freeze Shandong Baoya’s
(d) Compensation to independent directors
The following table consists of the number of shares and the total amount of compensation to independent directors:
| June 30, 2025 (Unaudited) | June 30, 2024 (Unaudited) | |||||||||||||||
| Issued shares | Cash | Issued shares | Cash | |||||||||||||
| US$’000 | US$’000 | |||||||||||||||
| John Chiang | $ | $ | ||||||||||||||
| Simon Pang | $ | $ | ||||||||||||||
| Li Wen | $ | $ | ||||||||||||||
| Liu Ying | $ | $ | ||||||||||||||
| Liu Huimin | $ | $ | ||||||||||||||
| Wang Wenbo | $ | $ | ||||||||||||||
| Wang Na | $ | |||||||||||||||
| Wang Wanli | $ | |||||||||||||||
| Zhang Jing | $ | |||||||||||||||
| Total | $ | $ | ||||||||||||||
The
Company appointed four independent directors in 2023 and offered each of the director compensation amounting to US$ for one year.
US$ of the compensation was payable in cash and US$ was payable by the issuance of the Company’s ordinary shares. On
March 31, 2023, the offer letter (“2023 Contract”) took effect. The compensation is payable in arrears on a semi-annual basis,
with the payment of US$ in cash and ordinary shares of the Company valued at US$. On June 1, 2023, the Company issued to
each independent director ordinary shares of Chijet under the offer letter, with each share valued at US$. The contract ended
as of March 31, 2024 and the total US$
Three
independent directors resigned following the expiration of 2023 Contract, and the remaining director renewed her contract on April 8,
2024. The Company subsequently appointed two additional independent directors on April 8, 2024, and May 14, 2024, respectively. The new
contract (“2024 Contract”) maintains the 2023 Contract terms. As of June 30, 2025, the Company has not yet issued shares
but paid US$
On January 13, 2025, Ying Liu and Huimin Li resigned as independent directors of the Company. The Company subsequently appointed three independent directors, Wanli Wang, Na Wang, Jing Zhang, on January 27, 2025. The 2025 Contract maintains the 2023 Contract terms. As of June 30, 2025, the Company has not yet issued shares nor paid nil compensation costs under the 2025 Contract. On September 10, 2025, Na Wang and Jing Zhang resigned and the Company appointed Jonathan Zhang and Huijie Gao as independent directors.
| 46 |
22. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
The
Company classified the disposal group, its subsidiary, Bijie Yabei New Energy Automobile Co., Ltd. (“Bijie Yabei”), as current
assets held for sale of US$
On January 8, 2025, the disposal date, the Company deconsolidated Bijie Yabei, resulting in the Company no longer having any ownership interest in it. Consequently, Bijie Yabei’s operating results for periods after January 8, 2025 are not included in the Consolidated Financial Statements.
23. COMMITMENTS AND CONTINGENCIES
Commitments
| (a) | Capital commitments |
As
of June 30, 2025, the Company had several capital commitments with a total contract amount of US$
| (b) | Parts purchase commitment |
During the six months ended June 30, 2025, the Company did not enter into new trial production and development agreements.
As
of June 30, 2025, the Company had various agreements with various suppliers for production and development. The balance of the contractual
commitments was approximately US$
Contingencies
Legal proceedings
As of June 30, 2025, the Company is subject to legal proceedings and regulatory actions in the ordinary course of business, such as disputes with suppliers, employees, etc. The proceedings are in the early stages. Accordingly, there is considerable uncertainty regarding the timing or ultimate resolution of such matters. Especially, for the contracts with suppliers of molds, as the condition of payment in the contracts has not been reached. Therefore, the Company does not anticipate that the final outcome arising out of any of such matters will have a material adverse effect on the consolidated balance sheets, comprehensive loss, or cash flows on an individual basis or in the aggregate.
On October 11, 2024, the Company was served with four separate complaints in litigations filed by four plaintiffs alleging violations of a Non-Redemption Agreement and a Contingent Value Rights Agreement that were entered into in connection with the Company’s SPAC transaction that was discussed in Note 2(dd). The four complaints demand compensation for damages and the request the transfer of ordinary shares of the Company as stipulated in their contracts. The legal proceedings are still at the preliminary stages. Accordingly, as of June 30, 2025, the Company was unable to predict the outcome of these cases or reasonably estimate a range of the possible loss, given the current status of the proceedings.
| 47 |
On January 22, 2025, the Company has received a lawsuit complaint. The Yantai Economic and Technological Development Zone Investment Attraction Bureau (the “Bureau”) alleges that Shandong Baoya did not meet the conditions for government subsidies as stipulated in the Investment Contracts signed in 2019 and 2021. Therefore, the Bureau is requesting the return of the previously issued government subsidy funds. The action remained in its preliminary stages. The Company is currently unable to determine the outcomes of these actions or any estimate of the amount or range of any potential loss, if any, associated with resolution of such lawsuits, if they proceed.
24. SEGMENT INFORMATION
The Company is principally engaged in designing, developing, manufacturing, and marketing automobiles, including fuel vehicles, hybrid vehicles and electric vehicles. The Company manages the business activities on a consolidated basis and operates in one reportable segment. The determination of a single reportable segment is consistent with the consolidated financial information regularly provided to the Group’s chief operating decision maker (CODM), which is its Chief Executive Officer.
The accounting policies of the segment are the same as those described in the summary of significant accounting policies in Note 2. The CODM assesses performance for the segment and decides how to allocate resources based on consolidated net income (loss) that also is reported on the Company’s consolidated statements of loss.
The Company identifies the significant expenses within consolidated net income (loss) including cost of revenues, selling, general and administrative expenses, which are each separately presented on the Company’s consolidated statements of loss. Other segment items within consolidated net income (loss) include research and development expenses, impairment charges, other income and expenses.
The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. The Company’s long-lived assets consist primarily of property, plant and equipment, net. As the Company’s long-lived assets are substantially located in the PRC, no geographical segments are presented.
25. SUBSEQUENT EVENT
Management performed an evaluation of the Company’s activity through the date the financial statements were issued September 29, 2025, noting the following subsequent event:
Public Marketing Offering
On
September 2, 2025, the Company entered into a placement agency agreement with Maxim Group LLC (the “Placement Agent”) and
certain securities purchase agreements with certain investors and sale of (i) Class A ordinary shares, par value US$
per share; and (ii) ordinary warrants to purchase up to
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