Business context and reporting period
This is Chijet Motor Company, Inc.’s annual report on Form 20-F for the fiscal year ended December 31, 2023, prepared under U.S. GAAP. It is not a quarterly filing. The request names Digital Currency X Technology Inc.; that does not match the registrant identified in the filing.
Chijet is a Cayman Islands holding company whose vehicle operations are primarily conducted through subsidiaries in China, including Shandong Baoya and FAW Jilin. It develops, manufactures and sells new-energy and traditional-fuel vehicles. The June 2023 SPAC business combination brought the company to Nasdaq under ticker CJET.
Financial results and liquidity
Amounts below are in U.S. dollars; financial statement figures are in thousands unless noted.
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | $9.483 million | $14.961 million | Down 37% |
| Gross loss | $32.763 million | $38.325 million | Loss narrowed 15% |
| Operating loss | $88.725 million | $118.263 million | Loss narrowed 25% |
| Net loss | $98.501 million | $111.518 million | Loss narrowed 12% |
| Net loss attributable to Chijet shareholders | $68.111 million | $77.256 million | Loss narrowed |
| Basic and diluted loss per share | $0.43 | $0.51 | Loss per share narrowed |
| Net cash used in operating activities | $40.017 million | Net cash provided: $22.383 million | Turned to outflow |
Gross loss was approximately 346% of revenue, reflecting substantial production costs and idle-capacity expense. Idle-capacity costs were $26.951 million, down from $34.001 million in 2022. Government grant income fell to $3.748 million from $19.467 million; interest expense was $14.819 million versus $14.724 million. The filing reports no income-tax provision.
At December 31, 2023, cash and cash equivalents were $10.731 million and restricted cash was $1.378 million. Current assets were $90.828 million against current liabilities of $525.054 million, a working-capital deficit of $434.226 million. Total liabilities were $615.325 million, total assets $536.451 million, and total shareholders’ equity was a deficit of $78.874 million. Related-party loans totaled $273.412 million, in addition to $97.832 million of current long-term payables and other obligations.
The auditor issued an unqualified opinion on the financial statements but highlighted substantial doubt about the company’s ability to continue as a going concern. Management says it is pursuing financing, loan restructuring, sales growth and cost controls; it also acknowledges available cash may not be sufficient for operations and investment needs. No assurance is given that additional financing will be available.
Material changes and operating developments
- Revenue declined as vehicle sales fell 34% and parts, accessories and other sales fell 46%. Management cited strategic transition, lower domestic sales of fuel vehicles following National VI emissions standards, promotional pricing and reduced dealer demand for parts.
- The company sold 1,424 vehicles in 2023. Sales remained concentrated in a few models and customers; R7 generated about 79% of vehicle-sales revenue. Mainland China accounted for 96.9% of sales.
- Research and development expense declined 39% to $8.398 million, which management attributed to completed projects and adjusting R&D plans to financing availability. Selling, general and administrative expense declined 28%, partly because 2022 included about $22.9 million of warrant and IPO-related professional costs.
- Cash and restricted cash fell to $12.109 million combined from $50.023 million. Capital expenditures were $0.972 million in 2023, versus $11.586 million in 2022.
- The company reported two material weaknesses identified in prior-year reporting and said remediation measures were completed; management concluded internal control over financial reporting was effective at year-end 2023. The auditor did not attest to that assessment.
Outlook, risks and unusual items
Management described the passenger-vehicle pipeline as nearing commercialization, not as established mass-market production. It anticipated FB77 launch around November 2024, completion of the Yantai EV assembly workshop in October 2024, and a target of 17,000 FB77 sales in China in 2025. These are forward-looking expectations, not guaranteed guidance. Management also expects future export sales to represent 40%–50% of total sales and estimates per-vehicle costs could decline 7%–10% over three years.
- Defaults and collateral: The company disclosed breaches and missed payments on loans, including FAW Jilin borrowings secured by land, buildings, machinery and equipment. It also reported Xiangyang project loans that became repayable after conditions were not met; related property was pledged, and the lender may seek repayment, compensation or land repurchase. Management says it is negotiating extensions.
- Debt and liquidity exposure: As of April 26, 2024, the filing says approximately $196.965 million of principal and interest was in default. Separately, FAW Finance-related principal and interest outstanding was reported at $185.746 million as of April 30, 2024. The filing contains inconsistent amounts and dates for certain loan balances; verify against the notes and lender confirmations.
- Legal matters: FAW Jilin has multiple contractual disputes. The largest listed claim is approximately $36.6 million and is under enforcement. The filing says certain cases were settled and accrued, but outcomes of other proceedings remain uncertain.
- China-related risks: Operations, cash and substantially all assets are in China. PRC rules on cross-border cash transfers, currency conversion, data, overseas listings and foreign investment may change; dividend remittances are restricted and no dividends have been paid. The company says its PRC subsidiaries currently hold material required permits, while noting future approvals or renewals may be required.
- Listing and dilution: Nasdaq issued a minimum-bid-price deficiency notice on January 23, 2024, with an initial compliance deadline of July 22, 2024. The filing also describes substantial potential resale supply and dilution risks, including earnout and registration rights. The company reported 160,707,171 shares outstanding on the cover, while the balance sheet gives a different outstanding-share figure; reconcile the counts.
- Other risks: The EV business model has limited commercial track record; production scale, supplier access, customer demand, vehicle safety and service capability remain uncertain. The company is exposed to commodity and battery costs, competition, subsidy changes, cybersecurity and data regulation, and possible foreign-audit inspection or delisting risks.
Most important facts for investors to verify
- Reconcile loan balances, payment defaults, accrued interest, collateral and lender rights, particularly the conflicting Xiangyang-loan disclosures and the reported default total.
- Confirm near-term liquidity, funding commitments and whether lenders will extend or enforce secured loans; assess the going-concern warning against actual available cash.
- Verify the share count, earnout status, resale registration availability and potential dilution, and check current Nasdaq listing compliance.
- Track delivery evidence and financing for the Yantai facility, FB77 launch and 2025 unit target; distinguish achieved production and orders from management plans.
- Review the legal-case schedule and accrued loss estimates, and confirm the status of the largest enforcement matters.
- Assess whether sales concentration, gross losses and heavy idle-capacity costs improve as production scales, and whether cash use is consistent with the company’s stated plan.