| PREPAID EXPENSES AND OTHER CURRENT ASSETS |
7. PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consisted
of the following:
| | |
As of December 31, | |
| | |
2024 | | |
2023 | |
| Amounts due from export agent (i) | |
$ | 26,810 | | |
$ | 28,385 | |
| Prepaid expenses (ii) | |
| 7,386 | | |
| 12,094 | |
| Deductible input VAT (iii) | |
| 3,015 | | |
| 2,861 | |
| Deposits (iv) | |
| 1,572 | | |
| 1,385 | |
| Advance to staff | |
| 696 | | |
| 770 | |
| Loan to third parties (v) | |
| - | | |
| 7,000 | |
| Advance to a third-party individual (vi) | |
| - | | |
| 1,159 | |
| Others | |
| 7 | | |
| 230 | |
| Less: allowance for expected credit losses | |
| (10,787 | ) | |
| (20,182 | ) |
| Prepaid expenses and other current assets, net | |
$ | 28,699 | | |
$ | 33,702 | |
The movement of allowance for credit losses for
the years ended December 31, 2024, 2023 and 2022 were as follows:
| | |
For the years ended December 31, | |
| | |
2024 | | |
2023 | | |
2022 | |
| Balance at the beginning of the period | |
$ | 20,182 | | |
$ | - | | |
$ | 466 | |
| Addition during the period | |
| 3,016 | | |
| 20,187 | | |
| - | |
| Reversal during the period | |
| - | | |
| - | | |
| (321 | ) |
| Write off during the period | |
| (12,259 | ) | |
| - | | |
| (145 | ) |
| Effect of exchange rate differences | |
| (152 | ) | |
| (5 | ) | |
| | |
| Balance at the end of the period | |
$ | 10,787 | | |
$ | 20,182 | | |
$ | - | |
| (i) | In April 2023, NWTN Zhejiang entered into vehicle sales agreements with entities including Jizhida’an (Jinhua)
Technology Co., Ltd (hereinafter referred to as “Jizhida’an”). Pursuant to these agreements, the vehicles to be sold
would be transferred to export agents (such as China National Vehicles IMP. & EXP. Co., Ltd, hereinafter referred to as “Vehicles
IMP. & EXP.”) and then purchased by FZCO through separate vehicle sales agreements. These sales agreements were procedural in
nature, in order to facilitate the process of vehicles exportation from Mainland China to the Group’s factory in the UAE. In this
regard, the Group did not recognize revenue or cost. In addition, the transaction price would be separately settled under each agreement,
therefore, the Group recognized the receivables from Jizhida’an in prepaid expenses and other current assets and payables to Vehicles
IMP. & EXP in accounts payable. As of December 31, 2024, the Group recorded expected credit losses for the receivables of US$2.4 million
based on the management’ estimation of the collectability of the amounts due from vehicle import and export. |
| (ii) | Prepaid expenses primarily consisted of directors’
and officers’ insurance expenses to be amortized within a year and prepaid commission expenses for financing and marketing services,
advance payment for the potential investment or acquisition as of December 31, 2024 and 2023. As of December 31, 2023, the Group recorded
expected credit losses for the prepaid expenses of US$11.2 million based on the management’ estimation of the recoverability, considering
the suspension of certain business operations and the uncertainty regarding the ability to reclaim the prepaid expenses. As of December
31, 2024, US$4.1 million of such prepaid expenses were written off based on the management’ estimation of the collectability of
the prepaid expenses. Meanwhile, the Group recorded expected credit losses for prepaid expenses
of US$7.2 million based on the management’ estimation of the recoverability. |
| (iii) | Deductible input VAT will be expected to be utilized in the
future, and there is no expiry of the deductible input VAT as per the country’s jurisdiction. |
| (iv) | Deposits mainly consisted of property rental deposits, car
rental deposits and export agent deposits. As of December 31, 2024, the Group recorded expected credit losses
of US$0.6 million based on the management’ estimation of the collectability of the deposits. |
| (v) | In November and December 2022, the Group provided an interest-free
loan of US$6.0 million to a third party, and an interest-free loan of US$1.0 million to a shareholder who held a 4.3% equity interests
in NWTN could not significantly influence the Group thus was considered as a third party as of December 31, 2023, respectively, for their
ordinary operations. These loans would be due in October through December 2023 but extended for up to another 12 months. As of December
31, 2023, the Group recorded expected credit losses for the receivables of US$7.0 million based on the management’ estimation of
the collectability of the receivables from the third party. As of December 31, 2024, The Group has fully written off the balance as the
Group believes the balance is unlikely to be collectible. |
| (vi) | In November 2022, the Group engaged a shareholder, who held
a 0.4% equity interest of NWTN could not significantly influence the Group thus was considered as a third party as of December 31, 2023
and is experienced in investing and financing for investment and financing consulting, for the period from January 2023 to January 2024.
In November 2022, the Group paid an amount of US$2 million to this individual as prepayment, which would be expensed as the services
are provided to the Group. During the year ended December 31, 2023, the Group recognized consulting expenses of US$0.8 million. As of
December 31, 2023, the Group recorded expected credit losses of US$1.2 million based on the management’ estimation of the recoverability
of the receivables from the third-party individual. As of December 31, 2024, The Group has fully written off the balance as the Group
believes the balance is unlikely to be collectible. |
|