Financial Data and Key Metrics Changes - For Q3 2023, net revenues were $0.3 million, a decrease of 30% compared to $0.4 million in Q3 2022, primarily due to lower EV lease and maintenance revenues as certain customer leases rolled off [12] - Gross profit for Q3 2023 was breakeven, compared to a gross profit of $120,000 in the same quarter of the previous year [6] - SG&A expenses decreased to $2.5 million from $3.8 million in the prior year, attributed to cost-cutting initiatives [22] - The net loss for Q3 2023 narrowed to $2.7 million, compared to a net loss of $3.9 million in the same period last year [22] Business Line Data and Key Metrics Changes - The company is developing a light-duty commercial vehicle line under the EdisonFuture brand, which includes pickup trucks, delivery vans, and SUVs [3] - Revenue from the sale of electric forklifts experienced a modest decline, contributing to the overall revenue decrease [12] Market Data and Key Metrics Changes - Proterra accounts for over 40% of all electric transit buses delivered in North America, with over 40 million real-world service miles [20] Company Strategy and Development Direction - The acquisition of Proterra Transit is seen as a significant milestone, providing ownership of advanced technology and a large order backlog, which will enhance competitiveness in the zero-emission commercial vehicle industry [4][11] - The company aims to maximize returns on shareholders' capital while deploying industry-leading technology, positioning itself well in the high-growth zero-emission commercial vehicle sector [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the integration of Proterra Transit and the potential for market synergies in scale, product offerings, and customer relationships [11] - The management team is excited about upcoming product launches and the opportunities presented by the Proterra acquisition, as well as the development of Gen 4 and Gen 5 products [21][23] Other Important Information - The company has a stable and loyal customer base, having logged over 4 million zero-emission miles on the road since its founding in 2003 [3] - The Anaheim facility will continue to serve as the hub for the Gen 4 product line, while the Greenville location will ramp up production of the ZX5 transit bus [5] Q&A Session Summary - The Q&A session included discussions on the Proterra acquisition and its implications for future growth, as well as inquiries about the company's product development timelines and market strategies [24]

Revenue Performance - For the three months ended September 30, 2023, revenues were $0.3 million, a decrease of 30% compared to $0.4 million in the same period of 2022[87]. - For the nine months ended September 30, 2023, revenues increased by 25% to $3.2 million, up from $2.6 million in the same period of 2022, primarily due to increased EV deliveries[88]. Cost and Expenses - Cost of revenues for the nine months ended September 30, 2023, was $3.1 million, a 55% increase from $2.0 million in the same period of 2022, driven by higher material costs and manufacturing overheads[92]. - Operating expenses for the three months ended September 30, 2023, were $2.5 million, a decrease from $3.8 million in the same period of 2022, largely due to layoffs and cost-cutting measures[96]. - Operating expenses for the nine months ended September 30, 2023, were $9.5 million, a slight increase from $9.2 million in the same period of 2022, primarily due to increased research and development expenses[97]. Profitability and Loss - The company reported a net loss of $2.7 million for the three months ended September 30, 2023, compared to a net loss of $3.9 million in the same period of 2022[86]. - The net loss for the three months ended September 30, 2023, was $2.7 million, compared to a net loss of $3.9 million for the same period in 2022; the net loss for the nine months ended September 30, 2023, was $8.7 million, up from $8.2 million in 2022[100]. Cash Flow and Financial Position - As of September 30, 2023, the company had cash and cash equivalents of $0.4 million and an accumulated deficit of $37.2 million, raising substantial doubt about its ability to continue as a going concern[105]. - Net cash used in operating activities was $2.5 million for the nine months ended September 30, 2023, a significant improvement from $14.2 million in the same period of 2022[106][107]. - The company generated $2.8 million from financing activities for the nine months ended September 30, 2023, compared to $13.6 million in the same period of 2022[110]. - Capital expenditures were $0.2 million for the nine months ended September 30, 2023, down from $0.7 million in the same period of 2022[111]. Market and Regulatory Environment - Government incentives are driving the adoption of electric vehicles, with programs offering up to $100,000 per Class 4 electric vehicle in New York and $60,000 in California[88]. - The Inflation Reduction Act is expected to significantly impact the demand for electric vehicles, with federal tax credits for commercial zero-emission vehicles up to $40,000[112]. - The increase in inflation and interest rates is anticipated to adversely impact demand for electric vehicles, as customers may delay purchases or face financing difficulties[114]. Strategic Initiatives - The company aims to reduce Bill of Materials (BOM) and overhead costs through supply chain optimization and strategic alliances[84]. - The company is focused on expanding its electric vehicle offerings, particularly in the medium-duty truck segment, in response to regulatory requirements for zero-emission transportation[84]. - The company anticipates increased capital and operating expenditures as it invests in technology and scales production to meet growing demand[84]. - Supply chain challenges continue to affect the company, with chassis and raw material shortages leading to longer lead times and increased capital spending requirements[112]. - The company plans to implement cost-cutting measures, including workforce reduction and strategic partnerships to control development costs[105].

Financial Data and Key Metrics Changes - For Q2 2023, net revenues were $1.2 million, a decrease of 23% compared to $1.5 million in Q2 2022, despite an 80% increase in electric vehicle sales, which was offset by a decline in electric forklift sales [7][21] - Cost of revenues remained at $1.2 million, resulting in a gross loss of $61,000 compared to a gross profit of $325,000 in the prior year, driven by a decline in gross margin from forklift sales [8][21] - SG&A expenses increased to $3.1 million from $2.3 million year-over-year, primarily due to higher payroll expenses, leading to a net loss of $3.2 million compared to a net loss of $2 million in the previous year [21] Business Line Data and Key Metrics Changes - The Retrofit Solutions business is gaining traction, with increasing inquiries from fleet owners looking to modernize and reduce carbon footprints [6][14] - Over half of vehicle deliveries in the recent quarter were leases to a large repeat customer, which, if classified as sales, would have increased total net revenues by approximately $1 million [20] Market Data and Key Metrics Changes - The company serves over 50 commercial fleet customers, having deployed over 125 shuttle buses and trucks with a combined distance traveled of more than 4 million miles [9][16] - The medium-duty EV market is heavily dependent on the supply of Ford chassis, with anticipated supply shortages prompting plans for a Gen 5 ground-up design [25] Company Strategy and Development Direction - The company aims to be a leader in sustainable and zero-emission medium-duty transportation, with a focus on Gen 4 and Gen 5 vehicle development [3][19] - The asset-light business model is a key differentiator, allowing for lower costs and faster production times, with plans to ramp Gen 4 production to 20-25 units per month in the first half of next year [19][22] - Future vehicle lines include EdisonFuture, a light-duty offering with solar-powered components expected to launch in 2025 [26][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges in battery supply and chassis availability but has secured a long-term supply agreement with CATL for Gen 4 vehicles [12][25] - The Gen 4 development is expected to be profitable with high gross margins, and its principles will be applied to the Gen 5 design for enhanced security and flexibility [13][36] Other Important Information - The company has reduced the number of parts in its Gen 4 vehicles from 450 to 70, improving design efficiency and supply chain management [24] - The Anaheim manufacturing facility will be reconfigured as a showcase and training center for third-party manufacturing partners [31] Q&A Session Summary - The management expressed appreciation for the interest in the company and encouraged questions via email, indicating a commitment to shareholder value and business development [28]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) This section covers the interim financial statements, management's discussion and analysis, market risk, and internal controls [Item 1. Interim Financial Statements](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements) The interim financial statements reveal a weakened financial position, increased net loss, improved operating cash flow, and significant going concern doubts [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show a decline in total assets and stockholders' equity, alongside a shift to a working capital deficit Condensed Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $5,709 | $7,721 | | **Total Assets** | **$17,997** | **$20,443** | | **Total Current Liabilities** | $6,175 | $4,789 | | **Total Liabilities** | $10,297 | $8,161 | | **Total Stockholders' Equity** | $7,700 | $12,282 | | **Total Liabilities and Stockholders' Equity** | **$17,997** | **$20,443** | - The company's financial position weakened, with total assets decreasing by **12.0%** and total stockholders' equity declining by **37.3%** from December 31, 2022, to June 30, 2023. A notable shift from a working capital surplus to a deficit of **$466 thousand** occurred during this period[9](index=9&type=chunk)[36](index=36&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Despite revenue growth, the statements of operations indicate a significant drop in gross profit and a widened net loss Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $1,158 | $1,499 | $2,939 | $2,170 | | **Gross Profit (Loss)** | $(61) | $325 | $112 | $445 | | **Operating Loss** | $(3,161) | $(1,965) | $(6,834) | $(4,868) | | **Net Loss** | **$(3,177)** | **$(1,925)** | **$(5,955)** | **$(4,247)** | | **Net Loss Per Share (Basic & Diluted)** | $(0.15) | $(0.11) | $(0.28) | $(0.24) | - For the six months ended June 30, 2023, revenues increased by **35.4%** year-over-year, but the net loss widened by **40.2%** due to a significant drop in gross profit and higher operating expenses[10](index=10&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements show improved operating cash usage but a reduced overall cash increase due to lower financing activities Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,678) | $(8,374) | | Net cash (used in) provided by investing activities | $(766) | $265 | | Net cash generated from financing activities | $2,687 | $13,440 | | **Increase in cash, cash equivalents and restricted cash** | **$243** | **$5,331** | | **Cash, cash equivalents and restricted cash at end of period** | **$632** | **$8,014** | - Cash from financing activities in the first half of 2023 was primarily from convertible notes (**$1.46 million**) and a standby equity purchase agreement (**$1.23 million**), compared to **$13.4 million** from the IPO in the prior year period[15](index=15&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's business, significant going concern issues, recent capital raises, and other critical financial disclosures - The company's primary business involves designing, assembling, and integrating electric drive systems for medium-duty commercial fleet vehicles, and selling material handling products like electric forklifts[17](index=17&type=chunk)[18](index=18&type=chunk) - The company has a working capital deficit of **$466 thousand** and has incurred a net loss of **$6.0 million** for the six months ended June 30, 2023, raising substantial doubt about its ability to continue as a going concern. Management plans include cost-cutting, strategic partnerships, and raising additional capital[36](index=36&type=chunk)[37](index=37&type=chunk) - In June 2023, the company entered into a Securities Purchase Agreement to issue up to **$5.1 million** in unsecured senior convertible promissory notes to raise capital[52](index=52&type=chunk) - For the six months ended June 30, 2023, no single customer represented **10%** or more of total net revenues, a change from 2022 where three customers accounted for **29%**, **18%**, and **10%** respectively[59](index=59&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue growth driven by EV deliveries, declining gross margins, increased operating expenses, critical liquidity issues, and external market influences [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Revenue increased due to EV sales, but gross margin significantly declined, and operating expenses rose, leading to a wider net loss Revenue by Category (in thousands) | Category | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Sales of EVs | $1,868 | $788 | | Lease of EVs | $215 | $275 | | Sales of Forklifts | $270 | $741 | | Others | $586 | $366 | | **Total** | **$2,939** | **$2,170** | - The increase in total revenue for the first six months of 2023 was primarily driven by a **137%** increase in EV sales, which was partially offset by a **63.6%** decrease in forklift sales[75](index=75&type=chunk)[76](index=76&type=chunk) - Gross margin for the six months ended June 30, 2023, decreased to **4%** from **21%** in the same period of 2022, attributed to higher service-related costs and increased fixed costs[80](index=80&type=chunk) - Operating expenses for the six months ended June 30, 2023, increased by **30.7%** to **$6.9 million**, mainly due to higher research and development expenses[82](index=82&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces critical liquidity challenges, a working capital deficit, and going concern doubts, necessitating strategic cost reductions and external financing - The company's financial state is precarious, with a working capital deficit of **$466 thousand** and an accumulated deficit of **$34.5 million** as of June 30, 2023[90](index=90&type=chunk) - Management has outlined a multi-pronged strategy to improve liquidity, including reducing the workforce, outsourcing R&D, negotiating better payment terms, and pursuing additional financing through stock or debt offerings[90](index=90&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,678) | $(8,374) | | Net cash (used in) provided by investing activities | $(766) | $265 | | Net cash generated from financing activities | $2,687 | $13,440 | [Trend information](index=29&type=section&id=Trend%20information) Key trends, including the Inflation Reduction Act, ongoing supply chain disruptions, and rising inflation, significantly impact the company's operations and customer demand - The Inflation Reduction Act (IRA) offers substantial tax credits for commercial ZEVs, but uncertainty regarding IRS guidance has led to a delay in customer orders[100](index=100&type=chunk) - Ongoing supply-chain challenges, particularly for chassis and raw materials, are causing longer lead times and increasing working capital needs[100](index=100&type=chunk) - Inflation is driving up the costs of raw materials, labor, and shipping, while higher interest rates may negatively impact customer demand and financing capabilities[100](index=100&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - Disclosure is not required as the registrant is a smaller reporting company[103](index=103&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to identified material weaknesses, with remediation plans underway - Management concluded that disclosure controls and procedures were ineffective as of June 30, 2023[104](index=104&type=chunk) - Material weaknesses identified include an ineffective control environment, inadequate risk assessment, ineffective monitoring, and insufficient controls and resources for financial reporting[107](index=107&type=chunk) - The company plans to remediate these weaknesses by hiring more qualified staff, establishing a formal control framework, and improving review processes[106](index=106&type=chunk) [Part II. Other Information](index=32&type=section&id=Part%20II.%20Other%20Information) This section includes information on legal proceedings, risk factors, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the normal course of business but does not believe any pending proceeding would have a material impact on its financial condition - The company states that it is not involved in any legal proceedings that are expected to have a material adverse effect on its financial condition[109](index=109&type=chunk) - A specific contingency mentioned is a dispute with a former landlord, but the outcome and potential loss are currently uncertain[57](index=57&type=chunk)[110](index=110&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - No material changes have been made to the risk factors disclosed in the 2022 Form 10-K filed on March 31, 2023[111](index=111&type=chunk) [Other Items (2, 3, 4, 5, 6)](index=32&type=section&id=Other%20Items%20%282%2C%203%2C%204%2C%205%2C%206%29) Under Part II, the company reports no unregistered sales of equity securities, no defaults upon senior securities, no mine safety disclosures, and no other information to disclose for the period - The company reported 'None' for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults upon senior securities), and Item 5 (Other information)[112](index=112&type=chunk)[113](index=113&type=chunk)[115](index=115&type=chunk) - Item 4 (Mine safety disclosures) was marked as 'Not applicable'[114](index=114&type=chunk) - Item 6 lists the exhibits filed with the 10-Q, including the Securities Purchase Agreement, Form of Note, and various officer certifications[117](index=117&type=chunk)

Financial Data and Key Metrics Changes - For Q1 2023, net revenues were $1.8 million, a 1.7 times increase from $0.7 million in Q1 2022, driven by improved EV deliveries due to resolved supply issues [4] - Gross profit for Q1 2023 was $0.2 million, up 44% from $0.1 million in the same quarter last year, attributed to better gross margins from electric vehicles [5] - The net loss for Q1 2023 was $2.8 million, compared to a net loss of $2.3 million in the prior year period [6] Business Line Data and Key Metrics Changes - The company is transitioning from Gen 3 vehicles to Gen 4, with production expected to ramp up to 20 to 25 units per month by year-end [19] - The Gen 4 vehicles will utilize a streamlined design, reducing the number of parts from 450 in Gen 3 to 70 in Gen 4, enhancing production efficiency [11] Market Data and Key Metrics Changes - The medium duty EV market is heavily reliant on Ford chassis, and the company is planning for Gen 5 to achieve chassis independence by 2024 [12] - The company has secured a long-term supply agreement with CATL for battery procurement, addressing one of the major hurdles in the EV market [28] Company Strategy and Development Direction - The company is focused on an asset-light business model, which allows for lower costs and faster production times, differentiating it from competitors [8] - Future product lines include the EdisonFuture brand, expected to launch in 2025, featuring light-duty vehicles with solar power components [14][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the execution of the asset-light model and the upcoming launches of Gen 4 and Gen 5 vehicles, which are expected to enhance customer satisfaction and operational efficiency [20][36] - The company aims to maximize shareholder returns while deploying leading technology in the zero-emission vehicle sector [31] Other Important Information - The company has a stable customer base, having logged over 4 million zero-emission miles and serving over 50 commercial fleet customers [7][18] - The management team is experienced in the EV sector, which positions the company well for growth in the commercial and consumer vehicle markets [15] Q&A Session Summary Question: What are the expectations for Gen 4 and Gen 5 vehicles? - Management highlighted that Gen 4 will serve as a bridge to Gen 5, with benefits from the asset-light model transferring directly to the new vehicle line [36] Question: How is the company addressing battery supply challenges? - The company has secured a supply agreement with CATL and is exploring additional partnerships to ensure battery availability for future models [28] Question: What is the timeline for the EdisonFuture vehicle launch? - The EdisonFuture lineup is expected to be brought to market in 2025, focusing on reliability and cost competitiveness [14][30]

Part I. Financial Information [Item 1. Interim Financial Statements](index=5&type=section&id=Item%201.%20Interim%20Financial%20Statements) Phoenix Motor Inc. reported a **net loss of $2.8 million** on **revenues of $1.8 million** for Q1 2023, with recurring losses and negative operating cash flow raising going concern doubts Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $6,572 | $7,721 | | **Total Assets** | **$18,984** | **$20,443** | | **Total Current Liabilities** | $5,042 | $4,789 | | **Total Liabilities** | **$8,217** | **$8,161** | | **Total Stockholders' Equity** | **$10,767** | **$12,282** | Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net Revenues | $1,781 | $671 | | Gross Profit | $173 | $120 | | Operating Loss | $(3,673) | $(2,903) | | **Net Loss** | **$(2,778)** | **$(2,322)** | | **Net Loss Per Share (Basic & Diluted)** | **$(0.13)** | **$(0.13)** | Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,086) | $(2,692) | | Net cash used in investing activities | $(71) | $0 | | Net cash generated from financing activities | $1,151 | $75 | | **Decrease in cash, cash equivalents and restricted cash** | **$(6)** | **$(2,617)** | - The company has **recurring losses**, **negative operating cash flow**, and needs to raise additional funds, raising **substantial doubt about its ability to continue as a going concern**[37](index=37&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **165.4% revenue growth** to eased supply chains, but **gross margin declined**, operating expenses rose, and liquidity is a major concern - Net revenues for Q1 2023 increased by **165.4% to $1.8 million** from **$0.7 million** in Q1 2022, primarily driven by the delivery of five EV units compared to two in the prior-year period as supply chain constraints eased[70](index=70&type=chunk) - Gross margin decreased to **9.7%** in Q1 2023 from **17.9%** in Q1 2022, attributed to lower margins on forklift sales, increased fixed costs, partially offset by higher margins on EV sales and leasing[74](index=74&type=chunk) - Operating expenses increased to **$3.8 million** from **$3.0 million** year-over-year, mainly due to higher payroll and research and development expenses[75](index=75&type=chunk) - The company's liquidity is a major concern, with cash and equivalents at only **$0.4 million**, and management has expressed **substantial doubt about the company's ability to continue as a going concern**, relying on equity financing (SEPA), cost controls, and negotiating better payment terms to sustain operations[82](index=82&type=chunk) - Key business trends and challenges include the impact of the Inflation Reduction Act (IRA) causing some customer order delays, ongoing supply-chain challenges leading to delivery delays and component shortages, and cost increases due to inflation and rising interest rates[92](index=92&type=chunk)[93](index=93&type=chunk)[97](index=97&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - The company stated that this item is not applicable to smaller reporting companies[96](index=96&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of March 31, 2023, due to four material weaknesses identified in the 2022 audit - Management concluded that the company's disclosure controls and procedures were **ineffective** as of the end of the fiscal quarter ended March 31, 2023[99](index=99&type=chunk) - Four material weaknesses were identified in the 2022 audit: (1) **ineffective control environment**, (2) **ineffective risk assessment process**, (3) **ineffective monitoring activities**, and (4) **lack of sufficient controls and skilled resources for financial reporting under U.S. GAAP**[103](index=103&type=chunk) - The company intends to implement remedial measures, including hiring more qualified staff, establishing a formal control framework, improving processes, and increasing senior management review[101](index=101&type=chunk) Part II. Other Information [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings but does not believe any pending cases would materially impact its financial condition - The company does not believe that any pending legal proceeding would be material to its financial condition[105](index=105&type=chunk) - A dispute with a previous landlord from 2021 is ongoing, but the outcome and potential loss are uncertain at this stage[53](index=53&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported from the 2022 Annual Report on Form 10-K - No material changes to the risk factors from the 2022 Form 10-K were reported[107](index=107&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported for the period[108](index=108&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes required certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32) and XBRL interactive data files[112](index=112&type=chunk)

PART I [Business](index=7&type=section&id=Item%201.%20Business) The company is a commercial EV solutions provider using an asset-light model to design and manufacture electric drive systems and vehicles - Phoenix Motor Inc. operates two primary brands: "Phoenix Motorcars" for commercial medium-duty vehicles and chargers, and "EdisonFuture" for future light-duty EVs[18](index=18&type=chunk) - The company has delivered **116 EVs** to over 42 customers as of December 31, 2022, accumulating over four million zero-emission miles[20](index=20&type=chunk) - As of December 31, 2022, the company has a backlog of approximately **61 orders** (56 vehicles, 5 kits) representing **$12.22 million** in potential revenue[24](index=24&type=chunk) - Key strategies include pursuing an asset-light model, achieving scale through standardization, securing key component supply (e.g., CATL batteries), and reducing costs for future generations[29](index=29&type=chunk) - The company faces significant competition from other commercial EV manufacturers and major automotive players entering the market[28](index=28&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, financial, and regulatory risks, including a history of losses and a going concern warning - The company has a history of losses, with a **net loss of $12.7 million in 2022** and an accumulated deficit of **$28.6 million**, leading to a going concern warning[51](index=51&type=chunk)[53](index=53&type=chunk) - Phoenix has experienced **negative cash flow from operations ($14.9 million in 2022)** and anticipates this will continue, requiring additional financing[52](index=52&type=chunk)[56](index=56&type=chunk) - The business is **highly dependent on the Ford E-450 chassis** for its current products, posing a significant viability risk if supply is disrupted[71](index=71&type=chunk) - Management has identified **several material weaknesses in internal controls** over financial reporting, including issues with the control environment and risk assessment[105](index=105&type=chunk)[212](index=212&type=chunk) - The company relies on a **Standby Equity Purchase Agreement (SEPA)** for funding, but access is not guaranteed and sales could be dilutive to shareholders[117](index=117&type=chunk)[118](index=118&type=chunk)[121](index=121&type=chunk) - The business is subject to extensive government regulations and relies on government incentives, which may be reduced or eliminated[123](index=123&type=chunk)[124](index=124&type=chunk) [Unresolved Staff Comments](index=40&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[144](index=144&type=chunk) [Properties](index=40&type=section&id=Item%202.%20Properties) The company leases its principal executive, manufacturing, and R&D facilities in California - Principal executive offices and manufacturing are in a **39,043 sq. ft. leased facility** in Anaheim, CA, with the lease expiring March 2027[145](index=145&type=chunk) - A **35,072 sq. ft. research and development center** is leased in Folsom, CA, with the lease expiring September 2027[145](index=145&type=chunk) [Legal Proceedings](index=40&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no material pending or ongoing legal proceedings - There are no pending or ongoing legal proceedings that are material to the Company's operations or financial condition[146](index=146&type=chunk) [Mine Safety Disclosures](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[147](index=147&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=41&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on NASDAQ under "PEV" and it does not currently pay dividends - The company's common stock trades on the NASDAQ Capital Market under the symbol **"PEV"** since June 8, 2022[149](index=149&type=chunk) - As of March 30, 2023, there were **3 holders of record** of the common stock[150](index=150&type=chunk) - The company has **never declared or paid dividends** and has no present plan to do so[151](index=151&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal year 2022 saw increased revenue and improved gross profit, but the company still recorded a net loss amid ongoing liquidity concerns Consolidated Statements of Operations Highlights (in thousands) | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | **Net revenues** | **$4,330** | **$2,977** | | Cost of revenues | $3,510 | $3,540 | | **Gross profit (loss)** | **$820** | **$(563)** | | Operating expenses | $13,970 | $13,750 | | **Operating loss** | **$(13,150)** | **$(14,313)** | | **Net loss** | **$(12,705)** | **$(14,614)** | | Net loss per share (Basic and Diluted) | $(0.65) | $(0.84) | Revenue Breakdown by Category (in thousands) | Category | Year ended Dec 31, 2022 | Year ended Dec 31, 2021 | | :--- | :--- | :--- | | Sales of EVs | $1,789 | $1,750 | | Lease of EVs | $551 | $586 | | Sales of forklifts | $1,251 | — | | Others | $739 | $641 | | **Total** | **$4,330** | **$2,977** | - Gross margin improved significantly from **-18.9% in 2021 to 18.9% in 2022**, driven by better margins on EVs and the introduction of electric forklifts[170](index=170&type=chunk) - The company incurred a **net loss of $12.7 million** and used **$14.9 million in cash from operating activities** in 2022, raising substantial doubt about its going concern status[194](index=194&type=chunk)[335](index=335&type=chunk) Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,866) | $(12,939) | | Net cash used in investing activities | $(1,011) | $(638) | | Net cash generated from financing activities | $13,583 | $561 | | **Net decrease in cash** | **$(2,294)** | **$(13,016)** | [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - Not applicable[204](index=204&type=chunk) [Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The company's Consolidated Financial Statements and supplementary data are included later in the report - The required financial statements appear after the signature page of the report, from F-1 to F-45[205](index=205&type=chunk) [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=57&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[206](index=206&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective due to material weaknesses in internal control - Management concluded that **disclosure controls and procedures were not effective** as of December 31, 2022[207](index=207&type=chunk) - **Four material weaknesses** in internal control over financial reporting were identified, related to the control environment, risk assessment, monitoring, and lack of skilled resources[212](index=212&type=chunk) - Remediation plans include hiring more qualified staff, setting up a formal control framework, and increasing senior management review[214](index=214&type=chunk) [Other Information](index=60&type=section&id=Item%209B.%20Other%20Information) This item is not applicable to the company - Not applicable[216](index=216&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=60&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[217](index=217&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=61&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the board of directors, executive officers, and corporate governance structures, including committee compositions - The board of directors consists of six members, including Chairman Xiaofeng Denton Peng and CEO Liang Lance Zhou[221](index=221&type=chunk) - The Board has determined that **four of the six directors are independent**[236](index=236&type=chunk) - The company has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each comprised solely of independent directors[242](index=242&type=chunk) - A code of business conduct and ethics has been adopted and applies to all directors, officers, and employees[249](index=249&type=chunk) [Executive Compensation](index=69&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation consists mainly of salary and equity awards, with detailed figures provided for named executive officers and directors Summary Compensation Table - Fiscal Year 2022 (in $) | Name and Principal Position | Salary ($) | Stock and Options Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Xiaofeng Peng (Chairman) | — | 235,500 | 235,500 | | Liang Lance Zhou (CEO) | 166,667 | 274,750 | 441,417 | | Wenbing Chris Wang (CFO) | 200,000 | 235,500 | 435,500 | | Tarek Helou (COO) | 200,000 | 7,850 | 207,850 | - The company has a **2021 Omnibus Equity Incentive Plan** allowing for the grant of various equity awards, with shares available representing 10% of the fully diluted total[264](index=264&type=chunk)[266](index=266&type=chunk) - Non-executive directors received compensation in 2022, including cash fees ranging from **$10,000 to $12,000** and option awards[263](index=263&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=75&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Parent company EdisonFuture, Inc. is the principal shareholder, beneficially owning 82.6% of the company's common stock Security Ownership of Principal Shareholders and Management | Name | Shares Beneficially Owned | Percentage Beneficially Owned | | :--- | :--- | :--- | | **Principal Shareholders** | | | | EdisonFuture, Inc. | 17,500,000 | 82.6% | | **Directors and Executive Officers** | | | | Xiaofeng Peng, Chairman | 1,200,000 | 5.7% | | All Directors and Executive Officers as a Group | 1,776,250 | 8.4% | - As of the report date, **21,181,924 shares of common stock** were issued and outstanding[277](index=277&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=77&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company details transactions with its parent company, SPI Energy, and confirms the independence of four directors - In 2022, the parent company SPI Energy Co., Ltd. provided a **$1.7 million interest-free loan**, which was subsequently repaid in full from IPO proceeds[279](index=279&type=chunk) - The Group sold **$0.2 million in forklifts** to SolarJuice Co., Ltd., a subsidiary of SPI, in 2022[280](index=280&type=chunk) - The Audit Committee has a policy for reviewing, considering, and overseeing all related party transactions[284](index=284&type=chunk) - The Board has determined that directors John F. Perkowski, Steven E. Stiver, Sam Van, and Zhenxing Fu are independent[286](index=286&type=chunk) [Principal Accountant Fees and Services](index=79&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The company paid its principal auditor, Marcum Asia CPAs LLP, $285,000 in audit fees for fiscal year 2022 Accountant Fees (in $) | Fee Category | 2022 | 2021 | | :--- | :--- | :--- | | Audit fees | $285,000 | $225,000 | | Audit-related fees | — | — | | Tax fees | — | — | | All other fees | — | — | | **Total** | **$285,000** | **$225,000** | - The Audit Committee pre-approved **100% of the audit and audit-related services** performed by the independent registered public accounting firms in fiscal years 2022 and 2021[290](index=290&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=82&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all filed documents, including financial statements, governance documents, material contracts, and required certifications - The Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm are filed as part of the report[298](index=298&type=chunk) - A detailed list of exhibits is provided, including governance documents, material contracts like the Standby Equity Purchase Agreement, and executive employment agreements[300](index=300&type=chunk)[301](index=301&type=chunk)[303](index=303&type=chunk) [Form 10-K Summary](index=86&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that no Form 10-K summary is provided - None[304](index=304&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=89&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor issued an opinion with an explanatory paragraph highlighting substantial doubt about the company's going concern status - The auditor's report contains a **"Going Concern" paragraph**, citing the company's significant losses and negative cash flow from operating activities[315](index=315&type=chunk) [Consolidated Financial Statements](index=90&type=section&id=Consolidated%20Financial%20Statements) The statements show total assets of $20.4 million, a net loss of $12.7 million, and significant cash used in operations for 2022 Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total current assets | $7,721 | $6,637 | | **Total assets** | **$20,443** | **$15,436** | | Total current liabilities | $4,789 | $4,452 | | **Total liabilities** | **$8,161** | **$5,208** | | **Total stockholders' equity** | **$12,282** | **$10,228** | Consolidated Statement of Operations (in thousands) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net revenues | $4,330 | $2,977 | | Gross profit (loss) | $820 | $(563) | | Operating loss | $(13,150) | $(14,313) | | **Net loss** | **$(12,705)** | **$(14,614)** | [Notes to the Consolidated Financial Statements](index=95&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail accounting policies and key financial matters, including the going concern issue, revenue recognition, and concentration risks - **Going Concern (Note 2):** The Group has incurred a **net loss of $12.7 million** and used **$14.9 million in cash from operations** in 2022, raising substantial doubt about its ability to continue[335](index=335&type=chunk) - **Revenue Recognition (Note 3 & 15):** Revenue is disaggregated into sales of EVs, lease of EVs, sales of forklifts, and others, with government grants included in the transaction price[356](index=356&type=chunk)[359](index=359&type=chunk)[363](index=363&type=chunk) - **Equity and Financing (Note 11):** The company completed its IPO in June 2022, raising **net proceeds of $13.4 million**, and entered a **$10 million Standby Equity Purchase Agreement (SEPA)**[404](index=404&type=chunk)[405](index=405&type=chunk) - **Stock-Based Compensation (Note 12):** The company recognized **$1.046 million in stock-based compensation expense** in 2022, primarily related to its 2021 Equity Incentive Plan[411](index=411&type=chunk) - **Concentration Risk (Note 16):** For 2022, **three customers represented 19.1%, 18.9%, and 12.9% of total revenue**, respectively, while two vendors represented 24.3% and 19.1% of total purchases[428](index=428&type=chunk)[429](index=429&type=chunk)

Phoenix Motor Inc. (NASDAQ:PEV) Q4 2022 Earnings Conference Call March 29, 2023 5:00 PM ET Company Participants Mark Hastings - Senior Vice President, Corporate Development and Strategy and Head, Investor Relations Lance Zhou - Chief Executive Officer Chris Wang - Chief Financial Officer Operator Welcome to the Fourth Quarter 2022 Phoenix Motors Inc. Earnings Conference Call. My name is Emma and I will be operator for today’s call. As a remainder, this call is being recorded and all participants are in a li ...

Phoenix Motor Inc. (NASDAQ:PEV) Q3 2022 Earnings Conference Call November 14, 2022 5:00 PM ET Company Participants Mark Hastings - Senior Vice President and Head, Investor Relations Lance Zhou - Chief Executive Officer Chris Wang - Chief Financial Officer Operator Welcome to the Third Quarter 2022 Phoenix Motor’s Earnings Conference Call. My name is Emma and I will be operator for today’s call. As a remainder, this call is being recorded and all participants are in a listen-only mode. All questions can be d ...

Phoenix Motor Inc. (NASDAQ:PEV) Q2 2022 Earnings Conference Call August 15, 2022 5:00 PM ET Company Participants Mark Hastings - Senior Vice President & Head of Investor Relations Lance Zhou - Chief Executive Officer Chris Wang - Chief Financial Officer Operator Welcome to the Second Quarter 2022 Phoenix Motor Inc. Earnings Conference Call. All participants are in a listen only mode. All questions can be directed after the call to Phoenix IR at icrinc.com. I will now turn the call over to Senior Vice Presid ...