Envirotech Vehicles(EVTV) - 2023 Q1 - Quarterly Report

Financial Performance - For Q1 2023, Envirotech Vehicles reported sales of $523,199, a significant increase from$89,900 in Q1 2022, representing a growth of approximately 482%[14] - The gross profit for Q1 2023 was $118,363, compared to$13,473 in Q1 2022, indicating a substantial improvement in profitability[14] - The net loss for Q1 2023 was $2,267,908, a decrease from a net loss of$2,936,862 in Q1 2022, reflecting a reduction in losses by about 23%[14] - Operating expenses for Q1 2023 were $2,411,229, down from$2,953,648 in Q1 2022, showing a decrease of about 18.3%[14] Assets and Liabilities - Total current assets decreased to $15,996,269 as of March 31, 2023, down from$18,339,239 as of December 31, 2022, a decline of approximately 12.3%[12] - Cash and cash equivalents at the end of Q1 2023 were $1,668,909, down from$2,765,068 at the end of Q4 2022, a decrease of about 39.6%[12] - Total liabilities decreased to $1,317,001 as of March 31, 2023, compared to$1,488,709 as of December 31, 2022, a reduction of approximately 11.5%[12] - The company’s accumulated deficit increased to $54,196,428 as of March 31, 2023, from$51,928,520 at the end of 2022, indicating a rise in losses[15] Inventory and Receivables - As of March 31, 2023, the company had trade accounts receivable of $2,160,732 and a recorded allowance for bad debt of$271,218, resulting in a net trade accounts receivable balance of $1,889,514[32] - The company reported finished goods inventory of$5,745,850 as of March 31, 2023, with a recorded inventory valuation allowance of $12,429[33] - The company had inventory deposits of$5,169,872 as of March 31, 2023, an increase from $4,829,933 as of December 31, 2022[34] Research and Development - Research and development costs incurred during the three months ended March 31, 2023, were$70,888, compared to no research and development costs for the same period in 2022[43] Manufacturing and Operations - Envirotech Vehicles is focused on expanding its zero-emission commercial fleet vehicles to meet increasing demand in the market[18] - The company has established a state-of-the-art manufacturing facility in Osceola, Arkansas, which spans approximately 580,000 square feet[19] Financial Agreements and Obligations - The Company entered into a $63,576 equipment financing agreement with Navitas Credit Corp., with monthly payments of$2,648.99, and a current balance of $5,298 as of March 31, 2023[47] - A$18,755 loan with Wells Fargo for facility grounds equipment has a current balance of $21,360, with$6,252 classified as current and $15,108 as long-term[48] - The Company secured a$225,000 premium financing agreement with First Insurance Funding, which was fully paid off by March 31, 2023[49] - A second premium financing agreement for $214,088 has a current balance of$48,451, classified as current[50] - The Company has a total monthly payment obligation of $7,771 under lease agreements with SRI Professional Services, resulting in a rent expense of$23,312 for Q1 2023[65] Stock and Compensation - The Company recorded stock compensation expense of $87,144 for 85,000 restricted shares awarded during Q1 2023[63] - The Company has 608,266 outstanding stock options with an intrinsic value of$355,670 as of March 31, 2023[62] - As of March 31, 2023, the Company has 1,389,584 outstanding warrants with an average exercise price of $17.43 and a remaining life of 2.68 years[53] Legal Matters - The Company is involved in ongoing litigation with GreenPower Motor Company, alleging breach of fiduciary duties and seeking damages[73] - The company resolved the Mollik Litigation on September 30, 2023, with the court dismissing the action with prejudice, indicating no financial proceeds from the company were used for the resolution[77] - The Brooks Litigation, where the plaintiff sought$13.5 million in damages, has been completely dismissed following a settlement approved by the court on March 7, 2022[79] Lease and Rent Expenses - As of March 31, 2023, the company reported total lease costs of $58,264, a decrease of 67.7$180,746 in the same period of 2022[90] - The company has entered into a new sublease agreement in March 2023 for a warehouse in the Philippines, with a monthly rent starting at $15,000, escalating to$16,530 over the lease term[88] - The company has recognized an operating liability and corresponding Right-Of-Use asset related to its leases, with a weighted-average discount rate of 14% as of March 31, 2022[90] - The company’s rent expense under the SRI Equipment Leases was $23,312 for both the three months ended March 31, 2023, and March 31, 2022[81] - The company’s weighted-average remaining lease term for operating leases was 0.62 years as of March 31, 2022[90] Market Risks - The company does not currently face material market risks such as interest rate fluctuation risk or foreign currency exchange risk, as most expenses are denominated in U.S. dollars[131] - The company anticipates potential risks associated with the costs of raw materials, particularly batteries, as it moves into production[132]