Financial Performance - The company reported a net loss of 986,471 for the fiscal year ended December 31, 2023[25]. - As of December 31, 2024, the net accounts receivable balance was 464,637, which is required to be set aside from accumulated profits[100]. - Revenue from sales of two-wheeled electric vehicles for fiscal year 2024 was RMB 80 million (USD 4.2 million), representing 20% of total revenue[212]. - Revenue from sales of four-wheeled electric vehicles for fiscal year 2024 was RMB 4.5 million (USD $624,000), representing 3% of total revenue[214]. Competition and Market Risks - The company faces intense competition in the e-bicycles and AI robotic products market, which may adversely affect its ability to generate revenues[35]. - The company’s growth strategy relies on successful product launches and effective marketing, but there are risks associated with managing this growth[34]. - The company’s marketing strategy aims to appeal to a diversified user base, but there is no assurance of success, which could impact revenues[42]. - Changes in international trade policies, particularly between the U.S. and China, could adversely affect demand for the company's products and overall financial condition[85]. - Economic downturns may negatively impact consumer discretionary spending, affecting demand for the company's products and services[90]. Operational Challenges - The company has limited experience in high-volume manufacturing, which may hinder its ability to meet production standards and volumes[33]. - The production cycle for new products takes one to two months, and the company must continuously enhance product functionality to remain competitive[39]. - The company faces challenges in establishing new distribution networks and integrating operations in new markets, which may increase costs and complicate management[71]. - Production difficulties may arise from mechanical failures, utility shortages, or natural disasters, potentially leading to reduced output and increased operational costs[73]. - The company is dependent on a continuous supply of utilities, and any disruption could adversely affect production and inventory management[74]. Supply Chain and Quality Control - The company relies heavily on third-party suppliers for key components, and any quality issues with these components could compromise product quality and brand image[45]. - The company relies on external suppliers for key components, with two suppliers accounting for over 10% of total purchases in 2024, raising concerns about supply stability[80]. - The company may experience quality problems with its products, which could harm sales and reputation[44]. - The company maintains a diversified supply chain with over 337 suppliers in 2024, with the top ten suppliers accounting for 54% of total purchases[216]. Regulatory and Compliance Issues - The company identified two material weaknesses in its internal control over financial reporting, which could lead to inaccurate financial results and loss of investor confidence[29]. - The company does not maintain any insurance for product liability claims, which could lead to significant expenses and negatively impact brand image[52]. - The company is subject to various costs and risks due to continued expansion into new geographic markets[69]. - The company is subject to stricter labor laws and regulations, which may limit its ability to manage employment practices effectively[104]. - The company faces regulatory challenges in utilizing proceeds from offshore offerings for investments in its PRC subsidiaries, which could impact liquidity and expansion plans[111]. Human Resources and Management - The average wage level for employees has increased, and the company expects employee costs to rise, which may impact profitability if these costs cannot be passed on to customers[78]. - The company has experienced difficulties in hiring and retaining highly skilled employees, which may impact its future operations[92]. - The company’s management team includes experienced professionals with over 20 years in the telecommunications, IT, and e-bicycle industries[186]. Strategic Initiatives - The company aims to become a hidden champion in the field of intelligent urban tricycles and off-highway four-wheeled electric shuttles over the next decade[192]. - LOBO EV plans to prioritize the manufacture of e-bicycles and launch new products, including solar-powered e-bicycles[193]. - The company has entered into joint research and development agreements with Jiangsu Research Institute and Jinan University, which may involve risks such as sharing proprietary information and non-performance by third parties[93]. - The company plans to increase marketing expenses on the Alibaba international platform and participate in international exhibitions to expand its dealer network in 2024[198]. Corporate Governance - The company may lose its foreign private issuer status if more than 50% of its voting securities are owned by U.S. residents, which would result in increased reporting obligations and costs[156]. - Minority shareholders may have less protection under BVI law compared to U.S. law, with limited rights to initiate derivative actions[163]. - The company may choose to rely on exemptions from corporate governance requirements as a "controlled company," potentially affecting shareholder protections[160]. - The common law rights for shareholder protection in the BVI are largely dependent on English common law, which may limit the effectiveness of shareholder actions[165]. Future Outlook - The company does not expect to pay dividends in the foreseeable future, relying instead on price appreciation for returns on investment[147]. - The trading price of the company's Ordinary Shares may be volatile due to market factors and the performance of other Chinese companies listed in the U.S.[141].
LOBO(LOBO) - 2024 Q4 - Annual Report