Envirotech Vehicles(EVTV) - 2023 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2023, sales were $100,024, a decrease of 90.3% compared to$ 1,029,280 for the same period in 2022[18]. - Gross profit for the three months ended September 30, 2023, was $19,741, down 94.4% from$ 351,425 in the prior year[18]. - Operating expenses for the three months ended September 30, 2023, totaled $6,004,278, an increase of 252.5% compared to$ 1,704,160 for the same period in 2022[18]. - The net loss for the three months ended September 30, 2023, was $5,988,423, compared to a net loss of$ 1,323,768 for the same period in 2022, representing a 352.5% increase in losses[18]. - For the nine months ended September 30, 2023, the company reported a net loss of $9,510,360 compared to a net loss of$ 5,437,212 for the same period in 2022, indicating an increase in losses of approximately 75.5%[23]. Assets and Liabilities - Total current assets decreased to $13,591,953 as of September 30, 2023, down 26.0% from$ 18,339,239 at the end of 2022[16]. - Total assets decreased to $25,422,084 as of September 30, 2023, down 24.0% from$ 33,483,689 at the end of 2022[16]. - The accumulated deficit increased to $(61,438,880) as of September 30, 2023, compared to$ (51,928,520) at the end of 2022[16]. - Cash and cash equivalents decreased to $879,042 as of September 30, 2023, down 68.2% from$ 2,765,068 at the end of 2022[16]. Inventory and Receivables - The company had finished goods inventory valued at $6,894,676 as of September 30, 2023, compared to$ 5,683,755 at the end of 2022, representing an increase of approximately 21.3%[41]. - Trade accounts receivable stood at $1,895,587 with an allowance for doubtful accounts of$ 271,218, resulting in a net trade accounts receivable balance of $1,624,369 as of September 30, 2023[40]. - The company reported inventory deposits of$ 3,133,753 as of September 30, 2023, down from $4,829,933 at the end of 2022, indicating a decrease of approximately 35.2%[42]. Goodwill and Impairment - The company reported a goodwill impairment charge of$ 3,392,129 for the three months ended September 30, 2023[18]. - The company incurred a goodwill impairment charge of $3,392,129 during the nine months ended September 30, 2023, which was not present in the prior year[23]. - Goodwill impairment charge of$ 3,392,129 recorded for the three and nine months ended September 30, 2023, resulting in a goodwill balance of $11,290,491[49]. Research and Development - Research and development costs increased to$ 46,734 and $175,546 for the three and nine months ended September 30, 2023, compared to$ 25,000 and $112,412 for the same periods in 2022[50]. Cash Flow - Cash flows from operating activities showed a net cash used of$ 4,039,576, an improvement from $8,271,750 in the prior year, reflecting a decrease in cash outflow of approximately 51%[23]. - The company had cash, restricted cash, and cash equivalents of$ 879,042 at the end of the period, down from $2,683,230 at the end of the previous year, a decrease of approximately 67.3%[23]. Lease and Rent Expenses - The company entered into a sublease for a warehouse in the Philippines, with a monthly rent of$ 15,000 for the first year, escalating to $15,750 in the second year[77][78]. - Total net rent expense for the three months ended September 30, 2023, was$ 59,857, compared to $52,579 for the same period in 2022, reflecting an increase of 14.5%[99]. - Total lease cost for the nine months ended September 30, 2023, was$ 177,397, slightly down from $180,746 in 2022, indicating a decrease of 1.9%[100]. - Rent expense under the ABCI Office Lease was$ 53,400 for the nine months ended September 30, 2023, compared to $25,200 for the same period in 2022[91]. Legal Matters - The company has settled a class action lawsuit with Electric Drivetrains, resulting in no proceeds paid in the settlement[86]. - The company is involved in ongoing litigation with GreenPower Motor Company, alleging breach of fiduciary duties and seeking damages[81]. Management Compensation - Phillip W. Oldridge, the CEO, has an annual base salary of$ 300,000 and is eligible for a bonus based on 5% of the company's net income[76]. - The company reimbursed the CEO $81,269 for the use of a personal airplane for business-related activities during the first nine months of 2023[75]. Market Risks - The Company does not currently face material market risks such as interest rate fluctuation risk and foreign currency exchange risk, as most expenses are denominated in U.S. dollars[147]. - The Company anticipates risks associated with raw material costs, particularly batteries, as it moves into production, which could materially affect operating results[148].