Phoenix Motor (PEV) - 2024 Q2 - Quarterly Report

Financial Performance - Revenues for the three months ended June 30, 2024, were $12,032 thousand, a significant increase from $1,158 thousand in the same period of 2023, representing a growth of approximately 938%[7] - Gross profit for the six months ended June 30, 2024, was $4,334 thousand, compared to a gross profit of $112 thousand for the same period in 2023, indicating a substantial improvement[7] - The company reported a net loss of $2,258 thousand for the three months ended June 30, 2024, compared to a net loss of $3,177 thousand for the same period in 2023, showing a reduction in losses[7] - Net income for the six months ended June 30, 2024, was $12,541, compared to a net loss of $5,955 for the same period in 2023[10] - The Group recorded a net loss of $2,258 for the three months ended June 30, 2024, compared to a net loss of $3,177 for the same period in 2023, while for the six months ended June 30, 2024, the net income was $12,541, contrasting with a net loss of $5,955 in 2023[107] Assets and Liabilities - Total current assets as of June 30, 2024, reached $60,524 thousand, a dramatic increase from $6,016 thousand as of December 31, 2023[6] - Total liabilities increased to $45,613 thousand as of June 30, 2024, from $16,475 thousand as of December 31, 2023, reflecting a rise of approximately 177%[6] - The accumulated deficit improved to $(36,666) thousand as of June 30, 2024, from $(49,207) thousand as of December 31, 2023, indicating a positive trend in financial health[6] - The company’s total stockholders' equity as of June 30, 2024, was $21,857 thousand, a significant recovery from a deficit of $(4,839) thousand as of December 31, 2023[6] Revenue Sources - Revenue from sales of transit buses for the six months ended June 30, 2024, was $19,116, while sales of EVs were $483, and lease of EVs was $90[25] - The company’s total revenue for the six months ended June 30, 2024, was $21,452, significantly higher than $2,939 in 2023[25] - For the six months ended June 30, 2024, revenues were $21.5 million, up 641% from $2.9 million in the same period of 2023, with the transit business unit contributing $20.7 million[153] Operating Expenses - Operating expenses for the three months ended June 30, 2024, were $8,929 thousand, compared to $3,100 thousand for the same period in 2023, representing an increase of approximately 187%[7] - Operating expenses for the three months ended June 30, 2024, were $8.9 million, an increase from $3.1 million in the same period of 2023, largely due to increased salary expenses from the Proterra acquisition[162] Cash Flow and Financing - Total cash used in operating activities for the six months ended June 30, 2024, was $(1,599), a slight improvement from $(1,678) in 2023[10] - The company generated $10,596 from financing activities in the six months ended June 30, 2024, compared to $2,687 in 2023[10] - Net cash used in operating activities was $1.6 million for the six months ended June 30, 2024, primarily due to a net income of $12.5 million adjusted by non-cash items[177] - Net cash generated from financing activities was $10.6 million for the six months ended June 30, 2024, mainly from net proceeds of $11.1 million from private placements[180] Acquisitions - The company completed the acquisition of Proterra transit business unit for $10,000 in cash, assuming warranty liabilities of $14,994[16] - The Group recorded a gain on bargain purchase of $32,072 million from the acquisition of Proterra's identifiable net assets[52] - The Group completed the acquisition of the Proterra Transit Business Unit for $3.5 million and the Proterra Battery Lease Agreements for $6.5 million in early 2024[140] Inventory and Receivables - As of June 30, 2024, total inventories increased to $47,833 million from $1,796 million as of December 31, 2023[62] - Accounts receivable increased by $(3,205) in the six months ended June 30, 2024, compared to $(271) in 2023[10] - Accounts receivable, net increased significantly to $3,656 million as of June 30, 2024, compared to $451 million as of December 31, 2023[60] Challenges and Risks - The Company faces challenges related to supply chain issues, including significant delivery delays and shortages of key components, impacting operations[144] - The Inflation Reduction Act of 2023 is expected to impact the demand for electric vehicles, with potential delays in customer orders due to uncertainty regarding tax credits[182] - Supply chain challenges continue to affect the company, with increased lead times and capital spending necessary for the development of new generation electric vehicles[183] Compliance and Governance - The Group received a deficiency letter from Nasdaq regarding the minimum bid price requirement, with a compliance deadline of October 9, 2024[123] - The Company must file its Form 10-Q for the period ended June 30, 2024, by October 31, 2024, to avoid delisting from Nasdaq[136] - The Company received a letter from Nasdaq granting an additional 180 calendar days until April 7, 2025, to regain compliance with the Minimum Bid Price Requirement[126] Internal Controls - The company identified material weaknesses in internal controls over financial reporting, including ineffective control environment and risk assessment processes[190] - The company plans to hire qualified staff and enhance financial reporting resources to address identified weaknesses[192] - The company has not experienced any material changes in internal control over financial reporting during the quarter ended June 30, 2024[193]