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Envirotech Vehicles(EVTV) - 2025 Q2 - Quarterly Report

Part I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for the periods ended June 30, 2025, and 2024, detailing financial position, performance, and cash flows, impacted by a goodwill impairment and new business segments Unaudited Consolidated Balance Sheets The company's total assets decreased from $32.7 million at year-end 2024 to $22.7 million as of June 30, 2025, primarily due to the complete impairment of goodwill. Total liabilities increased from $11.7 million to $16.8 million over the same period, while stockholders' equity fell sharply from $20.9 million to $5.9 million Consolidated Balance Sheet Highlights (as of June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $942,241 | $1,941,181 | | Goodwill | $0 | $10,103,048 | | Total Assets | $22,744,082 | $32,671,302 | | Total Liabilities | $16,836,671 | $11,748,839 | | Total Stockholders' Equity | $5,907,411 | $20,922,463 | - Goodwill was fully impaired, decreasing from $10,103,048 at the end of 2024 to zero by June 30, 202517 Unaudited Consolidated Statements of Operations The company reported a net loss of $5.1 million for Q2 2025, a substantial increase from the $0.8 million loss in Q2 2024. For the six-month period, the net loss widened to $19.2 million from $5.3 million year-over-year, primarily driven by a $10.1 million goodwill impairment charge and increased operating expenses Statement of Operations Summary | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales, net | $1,047,029 | $812,770 | $1,637,595 | $1,623,260 | | Gross profit (loss) | ($1,457,717) | $203,823 | ($1,338,326) | $512,042 | | Loss from operations | ($4,799,626) | ($1,324,541) | ($18,531,300) | ($4,280,837) | | Net loss | ($5,146,737) | ($755,092) | ($19,183,118) | ($5,287,455) | | Net loss per share | ($2.01) | ($0.48) | ($8.10) | ($3.41) | - A significant non-cash goodwill impairment charge of $10,103,048 was recorded in the first six months of 2025, which was the primary driver of the increased net loss19 Unaudited Consolidated Statement of Stockholders' Equity Stockholders' equity decreased from $20.9 million at the end of 2024 to $5.9 million by June 30, 2025, primarily due to the $19.2 million net loss, partially offset by capital raised through note conversions and stock-based compensation Change in Stockholders' Equity (Six Months Ended June 30, 2025) | Description | Amount | | :--- | :--- | | Balance, December 31, 2024 | $20,922,463 | | Convertible note conversions | $3,581,011 | | Stock based compensation | $587,055 | | Net loss | ($19,183,118) | | Balance, June 30, 2025 | $5,907,411 | Unaudited Consolidated Statements of Cash Flows For the first six months of 2025, net cash used in operating activities increased to $5.4 million from $1.7 million in the prior-year period, with $4.6 million raised from financing activities, primarily through convertible notes, to fund operations Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($5,385,357) | ($1,700,563) | | Net cash used in investing activities | ($176,828) | ($135,288) | | Net cash provided by financing activities | $4,563,245 | $1,816,196 | | Net change in cash | ($998,940) | ($19,655) | - The company received $4.75 million in proceeds from the issuance of convertible notes in the first half of 2025, which was the primary source of financing25 Notes to Unaudited Consolidated Financial Statements The notes provide critical details on accounting policies and financial results, including business expansion, a reverse stock split, a goodwill impairment, related-party transactions, and new reporting segments - In Q1 2025, the company expanded its business portfolio by adding two new operations: medical supplies and drones28 - A 1-for-10 reverse stock split was effected on August 8, 2025, and all share and per-share data has been retroactively adjusted29 - A non-cash goodwill impairment of $10,103,048 was recorded during the first quarter of 2025 due to a decline in the company's stock price5668 - All revenue from the new medical supplies segment in H1 2025 was from Maddox Defense, Inc., a company owned by Envirotech's President and Interim CFO, Jason Maddox107 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's operational and financial results, highlighting diversification into medical supplies and drones, a significant net loss driven by goodwill impairment, and actions taken to address Nasdaq compliance, while noting dependence on external financing and acknowledging tariff risks - The company began operating under three segments in January 2025: electric vehicles, medical supplies, and drones131 - A Nasdaq deficiency notice for failing to meet the $1 minimum bid price was received on March 6, 2025. The company subsequently effected a 1-for-10 reverse stock split on August 6, 2025, to regain compliance136137 - Sales in the electric vehicle segment decreased due to less favorable market conditions, while the new medical supplies segment generated $1.29 million in revenue for the first six months of 2025156 - As of June 30, 2025, the company had cash of $942,241 and negative working capital of approximately $120,030. Management believes existing cash and financing plans are sufficient for the next twelve months175 Item 3. Quantitative and Qualitative Disclosure about Market Risk The company currently faces no material market risks from interest rate or foreign currency fluctuations but identifies potential future risks related to raw material costs, particularly batteries, as production scales - The company does not currently face material market risks such as interest rate or foreign currency exchange risk191 - Potential risks may arise from the costs of raw materials, primarily batteries, as the company goes into production192 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness related to an inability to maintain appropriate segregation of duties - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025194 - The ineffectiveness is due to a material weakness from the inability to maintain appropriate segregation of duties194 Part II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no material developments in its ongoing litigation with GreenPower Motor Company Inc. and continues to defend itself vigorously against the claims - The company is involved in ongoing litigation with GreenPower Motor Company Inc. and believes it has meritorious defenses111197 Item 1A. Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There were no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K197 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported for the period198 Item 6. Exhibits This section provides a list of all exhibits filed with the Form 10-Q, including corporate governance documents, certifications by the CEO and CFO, and interactive data files (XBRL) - The report includes certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL documents204