Cenntro Inc.CENN

Cenntro Inc. Stock Compensation Disclosure

10-KFiled Apr 15, 20263 min read
NOTE 17- SHARE-BASED COMPENSATION

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

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

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

For the years ended December 31, 2025 and 2024, the total share-based compensation expenses were comprised of the following:

   
For the Years Ended December 31,
  
   
2025
    
2024
  
             
General and administrative expenses
  
$
2,487,988
    
$
2,921,063
  
Selling and marketing expenses
    
62,207
      
98,836
  
Research and development expenses
    
276,855
      
350,735
  
Total
  
$
2,827,050
    
$
3,370,634
  

A summary of share options activity for the years ended December 31, 2025 and 2024 were as follows:

   
Number
of
Share
Options*
    
Weighted
Average
Exercise
Price*
$
    
Weighted
Average
Remaining
Contractual
Years
    
Aggregate
Intrinsic
Value
$
  
Outstanding at December 31, 2023
    
33,752
      
855.6
      
4.81
      
-
  
Granted
    
-
      
-
                  
Exercised
    
-
      
-
                  
Forfeited
    
(1,822
)
    
1,017.0
                  
Expired
    
(3,046
)
    
1,016.4
                  
Outstanding at December 31, 2024
    
28,884
      
828.0
      
3.65
      
-
  
Granted
    
-
      
-
                  
Exercised
    
-
      
-
                  
Forfeited
    
(326
)
    
1,317.0
                  
Expired
    
(3,381
)
    
769.8
                  
Outstanding at December 31, 2025
    
25,177
      
829.8
      
3.12
      
-
  
Expected to vest at December 31, 2025
     765
      
1,021.1
      
5.69
      
-
  
Exercisable as of December 31, 2025
    
24,412
       803.1
       3.04
      
-
  

*On April 13, 2026, the Company effected a 1-for-60 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every sixty (60) shares of the Company’s common stock were automatically combined into one (1) share of common stock, with any fractional shares rounded up to the nearest whole share.
 
All share and per share amounts presented in the accompanying consolidated financial statements have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented, unless otherwise indicated.

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

   
For the Years Ended December 31,
  
   
2025
    
2024
  
Expected volatility
  
83.41%~86.57
%
83.41%~86.57
%
Expected dividends yield
    
0
%
    
0
%
Risk-free interest rate per annum
  
2.97%~3.01
%
  
2.97%~3.01
%
The fair value of underlying common stock (per share)
  
$
16.80
    
$
16.80
  

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

As of December 31, 2025, there was approximately $679,790 of total unrecognized compensation cost from continuing operations related to unvested share options. The unrecognized compensation costs are expected to be recognized over a weighted average period of approximately 0.25 years.

Historical Timeline

Fiscal YearFiled
2025Apr 15, 2026Showing above
2024Apr 1, 2025
2023Apr 1, 2024
2022Jun 30, 2023

About Stock Compensation Disclosures

Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.

Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.

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