Financial Condition - As of December 31, 2023, the Corporation had negative working capital of $2.862 million, raising substantial doubt about its ability to continue as a going concern[34]. - The Corporation has expressed substantial doubt regarding its ability to continue as a going concern, relying on the renewal of a $30 million credit facility and a C$10 million asset-based lending facility[34]. - The Corporation's financial results may vary significantly due to fluctuations in operating costs and other factors, impacting revenue generation[28]. - The Corporation expects its operating and financial results to vary significantly due to fluctuations in operating costs and other external factors[46]. - The Corporation has identified material weaknesses in its internal control over financial reporting, which could lead to material misstatements in financial statements[142]. - Material adjustments were required to the Corporation's financial statements for the year ended December 31, 2023, indicating weaknesses in the financial statement close process[144]. - The Corporation has not remediated identified material weaknesses in internal controls over financial reporting as of the filing date, which could lead to material misstatements in financial statements[146]. - The Corporation maintains a significant portion of its cash with RBC, and any failure of this institution could adversely affect its financial position[127]. Revenue and Sales Performance - The Corporation's total revenue for 2023 was $19,050,000, a slight increase of 3.1% compared to $18,475,000 in 2022, but a decrease of 2.6% from $19,554,000 in 2021[171]. - Bus sales decreased to $6,678,000 in 2023 from $11,699,000 in 2022, reflecting a decline of 43.3%[171]. - Truck sales significantly increased to $6,973,000 in 2023 from $982,000 in 2022, marking a growth of 610.5%[171]. - Revenue for the three months ended December 31, 2023 was $5,093 compared to $2,035 for the same period in 2022, representing a 150% increase[219]. - Revenue for the year ended December 31, 2023 was $19,050 compared to $18,475 for the year ended December 31, 2022, indicating a growth of 3.1%[219]. - Net loss for the year ended December 31, 2023 was $16,633 compared to a net loss of $17,948 for the year ended December 31, 2022, showing an improvement[219]. Operational Risks - The Corporation's operations are at risk due to potential disruptions in the supply of lithium-ion battery cells, which could increase operating costs and reduce margins[38]. - The Corporation relies on third-party suppliers, some of which are single-source, and any disruption in supply could materially affect its business and financial condition[42]. - The Corporation's ability to forecast supply and demand accurately is limited, which may lead to inefficiencies and hinder revenue generation[45]. - Increased freight and shipping costs could adversely affect the Corporation's ability to make sales and earn profits[53]. - The Corporation faces significant risks associated with product liability claims, which could materially adversely affect its business and financial condition[81]. - The Corporation maintains insurance for product liability claims, but there is no assurance that future claims will not exceed coverage, potentially impacting earnings[82]. - Significant product warranty claims or recalls could adversely impact the Corporation's financial condition, despite current quality control measures[84]. - The Corporation's operational systems are vulnerable to cybersecurity risks, which could disrupt business operations and harm its reputation[86]. - A significant cyber incident could impact the Corporation's manufacturing capacity and result in regulatory actions or litigation, materially affecting its financial condition[90]. Market and Competitive Environment - The Corporation's growth may be adversely affected if it cannot establish a sufficient dealer network in Canada and the United States[28]. - The Corporation's ability to maintain and strengthen its brand is critical for customer acceptance of its vehicles, which is challenged by competition from larger manufacturers[37]. - The Corporation faces competitive pressures in the battery electric vehicles industry, including pricing strategies from competitors and the introduction of alternative fuel vehicles[63]. - Increased competition in the electric vehicle market may lead to lower sales and price pressures, adversely affecting the Corporation's financial results[73]. - Demand for the Corporation's vehicles is influenced by government incentives and regulations promoting battery electric vehicles, which could change or expire[76]. - The Corporation's ability to obtain government grants and incentives is competitive and may materially affect its financial condition if unsuccessful[77]. Strategic Initiatives - The Corporation is developing a dealer network in North America to enhance market penetration, which is critical for its growth strategy[51]. - The Corporation is expanding its VMC 1200 truck dealer distribution network in Canada to enhance sales and service capabilities[188]. - The Corporation's strategic partnerships and supply agreements span Europe, Asia, Canada, and the United States, supporting global manufacturing capabilities[169]. - The Corporation partnered with ADASTEC Corp. to develop a "SAE Level-4" automated Vicinity Lighting EV transit bus for deployment in mid-2024[219]. - The Corporation secured four new VMC 1200 distribution agreements to establish new dealerships in strategic markets across Canada[219]. Future Outlook - The Corporation's future growth is contingent upon the adoption of battery electric vehicles by the busing industry and other customers[29]. - The Corporation's future growth is highly dependent on the adoption of battery electric vehicles by the commercial busing industry and other target consumers[66]. - The Corporation's focus on electric vehicles aligns with increasing demand driven by environmental regulations and funding programs in the U.S. and Canada[198][202]. - Order backlog as of December 31, 2023 exceeded $125 million, with over 75% attributed to electric vehicles[219]. - The Corporation is still in the development phase for certain vehicles, with commercial deliveries not expected until Q2 2024, which could impact its reputation and financial results[52]. Compliance and Governance - Compliance with government contract laws and regulations is essential, as violations could lead to fines, penalties, or termination of contracts, adversely affecting the Corporation's business[109]. - The Corporation faces significant risks related to compliance with anti-corruption laws, including the FCPA, which could lead to penalties and adverse consequences[121]. - The Corporation's governance is subject to Canadian corporate laws, which may differ from U.S. laws and affect shareholder rights[156]. - The Corporation's management is exploring options to regain compliance with Nasdaq listing standards to avoid potential delisting[147]. - The Corporation received a Nasdaq compliance letter on October 25, 2023, indicating it failed to maintain a minimum bid price of $1.00 per share for 30 consecutive business days, with a compliance period until April 22, 2024[147].
VMC(VEV) - 2023 Q4 - Annual Report