Nuvve (NVVE) - 2023 Q3 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents the unaudited interim condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and an evaluation of internal controls and procedures Item 1. Interim Condensed Consolidated Financial Statements and Notes (Unaudited). This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, fair value measurements, and other financial details for the periods ended September 30, 2023, and December 31, 2022 - Nuvve Holding Corp. filed a Quarterly Report on Form 10-Q for the period ended September 30, 2023[1] - As of November 2, 2023, 44,948,934 shares of the issuer's common stock were issued and outstanding[4] Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2023, and December 31, 2022 Balance Sheet Overview (Sep 30, 2023 vs Dec 31, 2022) | Metric | Sep 30, 2023 ($) | Dec 31, 2022 ($) | | :-------------------------------- | :----------- | :----------- | | Total Assets | $34,464,396 | $41,199,590 | | Total Liabilities | $23,619,357 | $13,960,946 | | Total Stockholders' Equity | $6,627,872 | $23,245,400 | - Total assets decreased by $6.7 million, primarily driven by a reduction in inventories and cash[12] - Total liabilities increased by $9.7 million, mainly due to a significant increase in 'Due to customers' from $0 to $9,830,000[13] Condensed Consolidated Statements of Operations This section presents the company's financial performance, including detailed revenue streams, operating expenses, and net loss for the nine months ended September 30, 2023, and 2022 Revenue Performance (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :------- | :----------- | :----------- | :----------- | :--------- | | Products | $4,748,141 | $3,333,825 | $1,414,316 | 42% | | Services | $1,720,262 | $475,806 | $1,244,456 | 262% | | Grants | $219,082 | $416,816 | -$197,734 | (47)% | | Total Revenue | $6,687,485 | $4,226,447 | $2,461,038 | 58.2% | Operating Expenses & Loss (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :--------- | | Cost of products | $5,037,756 | $3,114,573 | $1,923,183 | 62% | | Cost of services | $775,489 | $338,820 | $436,669 | 129% | | Selling, general, and administrative | $18,751,119 | $22,925,745 | -$4,174,626 | (18)% | | Research and development | $6,780,211 | $6,021,535 | $758,676 | 13% | | Total Operating Expenses | $31,344,575 | $32,400,673 | -$1,056,098 | (3.3)% | | Operating Loss | $(24,657,090) | $(28,174,226) | $3,517,136 | (12.5)% | Net Loss Attributable to Common Stockholders (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :---------------------------------------------------------------- | :----------- | :----------- | | Net loss attributable to Nuvve Holding Corp. common stockholders | $(24,697,046)$ | $(17,071,274)$ | | Basic and Diluted EPS | $(0.88)$ | $(0.85)$ | Condensed Consolidated Statements of Comprehensive Loss This section details the company's comprehensive loss, including net loss and other comprehensive income or loss components, for the nine months ended September 30, 2023, and 2022 Comprehensive Loss (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :---------------------------------------------------------------- | :----------- | :----------- | | Net loss | $(23,977,547)$ | $(16,850,827)$ | | Foreign currency translation adjustments, net of taxes | $28,357 | $(101,297)$ | | Total comprehensive loss | $(23,949,190) | $(16,952,124) | | Comprehensive loss attributable to Nuvve Holding Corp. common stockholders | $(23,275,769)$ | $(15,811,951)$ | Condensed Consolidated Statements of Stockholders' Equity This section outlines the changes in the company's stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit, from December 31, 2022, to September 30, 2023 Stockholders' Equity Changes (Dec 31, 2022 to Sep 30, 2023) | Metric | Dec 31, 2022 ($) | Sep 30, 2023 ($) | | :-------------------------------- | :----------- | :----------- | | Common Stock (Amount) | $2,427 | $3,251 | | Additional Paid-in Capital | $144,073,505 | $152,100,803 | | Accumulated Deficit | $(116,956,528)$ | $(140,957,114)$ | | Total Stockholders' Equity | $23,245,400 | $6,627,872 | - The accumulated deficit increased by $24.0 million to $(140,957,114) as of September 30, 2023[22] - Additional paid-in capital increased by $8.0 million, driven by stock-based compensation and proceeds from direct and common stock offerings[22][118][231] Condensed Consolidated Statements of Cash Flows This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2023, and 2022 Cash Flow Summary (Nine Months Ended Sep 30) | Activity | 2023 ($) | 2022 ($) | | :-------------------------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(6,200,232)$ | $(28,184,088)$ | | Net cash provided (used) in investing activities | $1,125,278 | $(1,349,182)$ | | Net cash provided in financing activities | $3,226,403 | $19,029,324 | | Net decrease in cash and restricted cash | $(1,889,250) | $(10,625,164) | - Net cash used in operating activities decreased by $22.0 million, primarily due to improved working capital management[229] - Investing activities provided $1.1 million, mainly from the sale of an equity investment in Switch EV Ltd[27][230] Note 1 – Organization and Description of Business This note describes Nuvve Holding Corp.'s formation, its acquisition of Nuvve Corporation, and the business model of its consolidated entity, Levo Mobility LLC, focusing on V2G-enabled EV fleet deployments - Nuvve Holding Corp. was founded on November 10, 2020, and acquired Nuvve Corporation on March 19, 2021[31] - Levo Mobility LLC, a consolidated entity formed with Stonepeak and Evolve, focuses on V2G-enabled EV fleet deployments, offering Fleet-as-a-Service (FaaS) to eliminate barriers to EV adoption[32][33][34] - Levo's FaaS provides EVs, V2G charging infrastructure, maintenance, energy management, and technical advice for a fixed monthly payment[34] Note 2 – Summary of Significant Accounting Policies This note outlines the company's significant accounting policies, including its going concern assessment, consolidation principles, and the adoption of new accounting standards - The company has incurred recurring losses and negative cash flows, with an accumulated deficit of $141.0 million as of September 30, 2023, raising substantial doubt about its ability to continue as a going concern[40] - Management plans to fund operations through increased revenues, cash saving measures, or raising additional capital via its at-the-market offering agreement[41] - Nuvve consolidates Levo Mobility LLC, a Variable Interest Entity (VIE), as it is deemed the primary beneficiary[46] - The company adopted ASU 2016-13 (CECL model) effective January 1, 2023, which did not have a material impact on its financial statements[58] Note 3 – Revenue Recognition This note details the company's revenue recognition policies, presenting disaggregated revenue by type of service, products, grants, and geographical region for the nine months ended September 30, 2023, and 2022 Disaggregated Revenue (Nine Months Ended Sep 30) | Revenue Type | 2023 ($) | 2022 ($) | | :-------------------------------- | :----------- | :----------- | | Services - engineering | $931,853 | $215,349 | | Grid services | $788,409 | $260,457 | | Grants | $219,082 | $416,816 | | Products | $4,748,141 | $3,333,825 | | Total Revenue | $6,687,485 | $4,226,447 | Revenue by Geography (Nine Months Ended Sep 30) | Region | 2023 ($) | 2022 ($) | | :--------------- | :----------- | :----------- | | United States | $6,290,200 | $3,788,521 | | United Kingdom | $33,047 | $160,616 | | Denmark | $364,238 | $277,310 | | Total Revenue | $6,687,485 | $4,226,447 | Note 4 – Fair Value Measurements This note provides information on fair value measurements, particularly for Level 3 liabilities such as warrants and derivative liabilities, as of September 30, 2023, and December 31, 2022 Fair Value Measurements (Level 3 Liabilities) | Liability Type | Dec 31, 2022 ($) | Sep 30, 2023 ($) | | :----------------------------------------------------- | :----------- | :----------- | | Private warrants | $2,000 | $4 | | Institutional/Accredited Investor warrants | $218,884 | $76,271 | | Derivative liability - non-controlling redeemable preferred shares | $359,225 | $285,640 | | Total recurring fair value measurements | $580,109 | $361,915 | - The fair value of private warrants and institutional/accredited investor warrants decreased significantly from December 31, 2022, to September 30, 2023[67] - Stonepeak and Evolve unvested warrants had a fair value of $0 at September 30, 2023, as the company determined it is unlikely they will vest due to lowered capital deployment forecasts[72][73] Note 5 - Derivative Liability - Non-Controlling Redeemable Preferred Stock This note explains the accounting treatment of redemption features embedded in non-controlling redeemable preferred stock as a derivative liability due to their debt-like economic characteristics - The redemption features embedded in the non-controlling redeemable preferred stock are accounted for as a derivative liability due to their debt-like economic characteristics[77] - The derivative liability for non-controlling redeemable preferred shares was $285,640 at September 30, 2023, down from $359,225 at December 31, 2022[78] Note 6 – Investments This note details the company's equity investments, including its stake in Dreev and the sale of its investment in Switch EV Ltd, along with the resulting gain - Nuvve holds a 13% equity ownership in Dreev and provides consulting services to it[79] - The company sold its investment interest in Switch EV Ltd for $1.3 million on March 30, 2023, recognizing a gain of $0.3 million[80] Note 7 – Account Receivables, Net This note presents the composition of net accounts receivable, including trade receivables, interest receivable, and the allowance for credit losses, as of September 30, 2023, and December 31, 2022 Accounts Receivable, Net (Sep 30, 2023 vs Dec 31, 2022) | Metric | Sep 30, 2023 ($) | Dec 31, 2022 ($) | | :-------------------------- | :----------- | :----------- | | Trade receivables | $3,024,314 | $1,149,301 | | Interest receivable | $53,951 | $31,227 | | Less: allowance for credit losses | $(408,996)$ | $(58,834)$ | | Accounts receivable, net | $2,669,269 | $1,121,694 | - Net accounts receivable increased by $1.5 million, primarily due to an increase in trade receivables[84] - The allowance for doubtful accounts increased significantly from $(58,834) to $(408,996)[84] Note 8 – Inventories This note details the company's inventory composition by category, including DC and AC chargers, vehicles, and component parts, and explains the changes from December 31, 2022, to September 30, 2023 Inventories by Category (Sep 30, 2023 vs Dec 31, 2022) | Category | Sep 30, 2023 ($) | Dec 31, 2022 ($) | | :-------------------- | :----------- | :----------- | | DC Chargers | $6,181,368 | $9,248,398 | | AC Chargers | $220,720 | $123,247 | | Vehicles - School Buses | $0 | $1,620,000 | | Component parts | $431,849 | $560,186 | | Total | $6,833,937 | $11,551,831 | - Total inventories decreased by $4.7 million, mainly due to a reduction in DC Chargers and the absence of school bus inventory[86] Note 9 – Property, Plant and Equipment This note outlines the company's property, plant, and equipment by category, including computers, vehicles, office equipment, and test units, along with changes and depreciation expense Property, Plant and Equipment, Net (Sep 30, 2023 vs Dec 31, 2022) | Category | Sep 30, 2023 ($) | Dec 31, 2022 ($) | | :-------------------------------- | :----------- | :----------- | | Computers & Servers | $154,380 | $130,417 | | Vehicles | $100,230 | $139,788 | | Office furniture and equipment | $356,473 | $326,613 | | Test units and loaned chargers | $404,827 | $256,685 | | Total Property, Plant and Equipment, net | $686,977 | $636,944 | - Net property, plant, and equipment increased by $50,033, primarily due to additions in test units and loaned chargers[88] - Depreciation expense for the nine months ended September 30, 2023, was $132,465, up from $108,277 in the prior year[88] Note 10 – Intangible Assets This note details the company's net intangible assets, their weighted-average remaining life, and the estimated future amortization expense - Net intangible assets decreased slightly to $1,237,061 at September 30, 2023, due to amortization[90] - The weighted-average remaining life for intangible assets is 9.1 years[90] Estimated Future Amortization Expense | Year | Amount ($) | | :--- | :----------- | | 2023 (remaining) | $34,857 | | 2024 | $139,437 | | 2025 | $139,437 | | 2026 | $137,770 | | 2027 | $132,770 | | Thereafter | $652,790 | | Total | $1,237,061 | Note 11 – Stockholders' Equity This note outlines the company's authorized capital stock, details various equity offerings in 2023, and provides a summary of outstanding warrants as of September 30, 2023 - Authorized capital stock includes 100,000,000 common shares and 1,000,000 preferred shares, both with $0.0001 par value[94] 2023 Equity Offerings (Nine Months Ended Sep 30, 2023) | Offering Type | Gross Proceeds ($) | | :-------------------------------- | :------------- | | ATM Offering Program (net) | ~$0.9 million | | February 2023 Registered Direct | ~$0.5 million | | April 2023 Registered Direct | ~$1.0 million | | June 2023 Registered Direct | ~$1.0 million | Warrants Outstanding (as of Sep 30, 2023) | Warrant Type | Number of Warrants (shares) | Exercise Price ($) | Expiration Date | | :-------------------------------- | :----------------- | :------------- | :-------------- | | Public Warrants | 2,875,000 | $11.50 | March 19, 2026 | | Private Warrants | 136,250 | $11.50 | March 19, 2026 | | PIPE Warrants | 1,353,750 | $11.50 | March 19, 2026 | | Stonepeak/Evolve Warrants (Series B-F) | 6,000,000 | $10.00 - $40.00 | May 17, 2031 | | Institutional/Accredited Investor Warrants | 4,000,000 | $3.75 | July 29, 2027 | | Total Warrants | 14,365,000 | | | Note 12 – Stock Option Plan This note details the 2020 Equity Incentive Plan, including the increase in reserved common shares, and presents the stock-based compensation expense by category for the nine months ended September 30, 2023, and 2022 - The 2020 Equity Incentive Plan was amended in June 2023 to increase reserved common shares by 4,000,000, totaling 7,300,000 shares, with 2,681,697 shares available as of November 2, 2023[116] Stock-based Compensation Expense (Nine Months Ended Sep 30) | Category | 2023 ($) | 2022 ($) | | :-------------------------------- | :----------- | :----------- | | Options | $2,014,240 | $1,959,648 | | Restricted stock | $1,409,735 | $2,178,883 | | Stock options - modified options | $33,971 | $55,307 | | Profit interest units | $(260,475)$ | $293,165 | | Total | $3,197,471 | $4,487,003 | - Total unrecognized compensation cost for nonvested restricted stock is $631,929, to be recognized over approximately 0.84 years[126] - Total unrecognized compensation cost for nonvested Class D Incentive Units is $314,607, to be recognized over approximately 2.25 years[179] Note 13 – Income Taxes This note explains that no material income tax expenses were recorded due to operating losses and a full valuation allowance against deferred tax assets, resulting in a 0.0% effective tax rate - No material income tax expenses were recorded for the three and nine months ended September 30, 2023 and 2022[128] - The effective tax rate was 0.0% due to operating losses receiving no tax benefit as a result of a full valuation allowance against deferred tax assets[128][129] Note 14 – Net Loss Per Share Attributable to Common Stockholders This note presents the basic and diluted net loss per share attributable to common stockholders and explains the exclusion of anti-dilutive common stock equivalents from the diluted EPS calculation Net Loss Per Share (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :---------------------------------------------------------------- | :----------- | :----------- | | Net loss attributable to Nuvve Holding Corp. common stockholders | $(24,697,046)$ | $(17,071,274)$ | | Weighted-average shares used in computing net loss per share | 28,172,399 | 19,972,016 | | Net Loss per share, basic and diluted | $(0.88) | $(0.85) | - Various common stock equivalents totaling 22,379,953 for the nine months ended September 30, 2023, were excluded from diluted EPS calculation as they were anti-dilutive[134] Note 15 – Related Parties This note discloses the company's equity interests in and consulting services provided to Dreev, an entity with common stockholder interests, and revenue recognized from an investor entity - Nuvve holds equity interests in and provides consulting services to Dreev, an entity in which a company stockholder owns other equity interests[135] - Revenue of $129,077 was recognized for the nine months ended September 30, 2023, from an investor entity, up from $28,000 in the prior year[135] Note 16 – Leases This note provides details on the company's lease assets and liabilities, operating lease expenses, sublease income, and its investment in leases as a lessor Lease Assets and Liabilities (Sep 30, 2023 vs Dec 31, 2022) | Metric | Sep 30, 2023 ($) | Dec 31, 2022 ($) | | :-------------------------------- | :----------- | :----------- | | Total lease assets | $4,973,256 | $5,324,348 | | Total lease liabilities | $5,622,297 | $5,934,639 | - Operating lease expense for the nine months ended September 30, 2023, was $685,900, up from $582,449 in the prior year[140] - Sublease income of $366,087 was generated for the nine months ended September 30, 2023, from subleasing a portion of the main office space[145] - As a lessor, the company has an investment in leases of $114,865 at September 30, 2023, related to providing EVSE and services under a sale-type lease[146] Note 17 – Commitments and Contingencies This note outlines significant commitments and contingencies, including an arbitration dispute with Rhombus Energy Solutions, EPA Clean School Bus Rebates, a dispute with Blue Bird Bus Sales, and royalty commitments to the University of Delaware - Nuvve is in an arbitration dispute with Rhombus Energy Solutions over $5.0 million in non-conforming DC fast chargers, with a final hearing set for April-May 2024[156][157][227][228] - The company received $21.83 million in EPA Clean School Bus Rebates on behalf of customers, with $9.83 million recorded as 'Due to customers' as of September 30, 2023[158] - A preliminary injunction was granted in a dispute with Blue Bird Bus Sales over $0.45 million in alleged school bus storage fees, with adjudication expected in Q1 2024[159][160] - Nuvve is committed to pay up to $7.5 million in royalties to the University of Delaware upon achievement of milestones related to GIVe platform access[152][153] Note 18 - Non-Controlling Interest This note describes the Levo Series B Redeemable Preferred Stock, classified as mezzanine equity with an 8.0% annual dividend, and the Class D Incentive Units issued to key employees as stock compensation - Levo Series B Redeemable Preferred Stock is classified as mezzanine equity, with 3,138 shares issued and outstanding, paying an 8.0% annual dividend[165][166][167] - Accumulated unpaid accrued preferred dividends totaled $538,668 at September 30, 2023[166][167] - Class D Incentive Units, issued to key employees, are considered stock compensation, with 80% vesting over four years and 20% upon a Change of Control[172][173] - Compensation expenses for Class D Incentive Units for the nine months ended September 30, 2023, were $95,908[174] Note 19 - Subsequent Events This note discloses significant events occurring after the reporting period, including October 2023 capital raising efforts through marketed and registered direct offerings, and the termination of the ATM Offering Program - In October 2023, Nuvve completed a marketed offering, raising approximately $1.0 million gross from common stock sales and an additional $0.1 million from an over-allotment exercise[180][224] - A registered direct offering in October 2023 raised approximately $2.1 million gross from the sale of common stock and pre-funded warrants[181][225] - The 2023 ATM Offering Program was terminated on October 16, 2023[183] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This section provides management's perspective on Nuvve's financial performance and condition, highlighting its V2G technology platform and Fleet-as-a-Service (FaaS) offerings through Levo Mobility. It details revenue growth, operating expenses, and net losses for the three and nine months ended September 30, 2023, and discusses the company's liquidity challenges, capital-raising efforts, and ongoing legal disputes - Nuvve is a green energy technology company providing a globally-available, commercial V2G technology platform (GIVe) for EV batteries to store and resell unused energy to the grid[188][189] - Levo Mobility LLC, a consolidated subsidiary, offers Fleet-as-a-Service (FaaS) to accelerate EV fleet deployments, including school buses, by funding and managing EVs and charging infrastructure[192][193] - The company expects to generate revenue primarily from grid services via its GIVe software platform and sales of V2G-enabled charging stations[191] Overview This section introduces Nuvve's core business, focusing on its globally available V2G technology platform (GIVe) and the Fleet-as-a-Service (FaaS) offerings through its subsidiary, Levo Mobility LLC - Nuvve provides a globally-available, commercial V2G technology platform (GIVe) that enables EV batteries to store and resell unused energy to the local electric grid and provide other grid services[188][189] - The GIVe software platform aggregates EVs and small stationary batteries to provide grid services like frequency regulation, demand charge management, and energy arbitrage[189] - Levo Mobility LLC, a consolidated subsidiary, offers Fleet-as-a-Service (FaaS) to accelerate EV fleet deployments by funding vehicles and charging infrastructure, simplifying electrification for customers[192][193] Backlog This section provides the estimated backlog as of September 30, 2023, representing revenue expected to be recognized in future periods - Estimated backlog on September 30, 2023, was $5.6 million, expected to be earned in future periods[194] Results of Operations This section analyzes the company's financial performance, including revenue, operating expenses, and net loss, for the three and nine months ended September 30, 2023, compared to the prior year Revenue Performance (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :------- | :----------- | :----------- | :----------- | :--------- | | Products | $4,748,141 | $3,333,825 | $1,414,316 | 42% | | Services | $1,720,262 | $475,806 | $1,244,456 | 262% | | Grants | $219,082 | $416,816 | -$197,734 | (47)% | | Total Revenue | $6,687,485 | $4,226,447 | $2,461,038 | 58.2% | Operating Loss (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :--------------- | :----------- | :----------- | | Operating Loss | $(24,657,090)$ | $(28,174,226)$ | Net Loss Attributable to Nuvve Holding Corp. (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :---------------------------------------------------------------- | :----------- | :----------- | | Net loss attributable to Nuvve Holding Corp. common stockholders | $(24,000,586)$ | $(16,390,964)$ | Revenue This section details the company's total revenue performance, highlighting significant growth and the composition of revenue streams for the three and nine months ended September 30, 2023 Total Revenue (Three Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :------------ | :----------- | :----------- | :----------- | :--------- | | Total Revenue | $2,712,572 | $553,687 | $2,158,885 | 389.9% | Total Revenue (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | Change ($) | Change (%) | | :------------ | :----------- | :----------- | :----------- | :--------- | | Total Revenue | $6,687,485 | $4,226,447 | $2,461,038 | 58.2% | - Revenue for the nine months ended Sep 30, 2023, included $1.0 million from school buses, $3.7 million from DC and AC Chargers, $0.8 million from grid services, and $0.9 million from engineering services[199] Cost of Product and Service Revenue This section analyzes the cost of product and service revenue, explaining changes in product and service margins for the three and nine months ended September 30, 2023 Cost of Products and Services Revenue (Three Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :-------------------------------- | :----------- | :----------- | | Cost of product | $2,314,854 | $215,068 | | Cost of service | $86,371 | $61,417 | | Total Cost of Products and Services | $2,401,225 | $276,485 | - Product and service margin decreased to 9.0% for the three months ended September 30, 2023, compared to 43.3% in the prior year, mainly due to a higher mix of lower-margin hardware charging stations and school bus sales[200] - Product and service margin for the nine months ended September 30, 2023, increased slightly to 10.1% from 9.4% in the prior year[201] Selling, General and Administrative Expenses This section examines the trends and drivers behind selling, general, and administrative expenses, highlighting key reductions for the nine months ended September 30, 2023 SG&A Expenses (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :-------------------------------- | :----------- | :----------- | | Selling, general and administrative | $18,751,119 | $22,925,745 | - SG&A expenses decreased by $4.2 million (18.2%) for the nine months ended September 30, 2023, primarily due to decreases in compensation ($1.2 million), insurance ($0.8 million), and professional fees for internal operational reviews ($1.9 million)[204] Research and Development Expenses This section analyzes the increase in research and development expenses, attributing it to higher compensation and subcontractor costs aimed at advancing platform functionality and vehicle integration R&D Expenses (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :-------------------------- | :----------- | :----------- | | Research and development | $6,780,211 | $6,021,535 | - R&D expenses increased by $0.8 million (12.6%) for the nine months ended September 30, 2023, primarily due to higher compensation and subcontractor expenses to advance platform functionality and vehicle integration[206] Other Income (Expense) This section discusses the significant decrease in total other income, primarily driven by changes in the fair value of warrants liability, partially offset by gains from equity investment sales and sublease income Total Other Income, Net (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :-------------------- | :----------- | :----------- | | Total other income, net | $679,543 | $11,323,399 | - Total other income decreased by $10.6 million (94.0%) for the nine months ended September 30, 2023, primarily due to a significant negative change in the fair value of warrants liability[197][208] - This decrease was partially offset by gains from the sale of the equity investment in Switch EV Ltd and sublease income[208] Income Taxes This section explains the absence of material income tax expenses due to operating losses and the application of a full valuation allowance against deferred tax assets - No material income tax expenses were recorded for the three and nine months ended September 30, 2023 and 2022, due to operating losses and a full valuation allowance against deferred tax assets[209] Net loss This section analyzes the increase in net loss, primarily driven by a decrease in other income and higher cost of products, partially offset by revenue growth Net Loss (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :----------- | :----------- | :----------- | | Net loss | $(23,977,547)$ | $(16,850,827)$ | - Net loss increased by $7.1 million (42.3%) for the nine months ended September 30, 2023, primarily due to a decrease in other income and an increase in cost of products, partially offset by revenue growth[211] Net Income (Loss) Attributable to Non-Controlling Interest This section explains the shift in net income (loss) attributable to non-controlling interests, reflecting the proportional ownership of Stonepeak and Evolve in Levo Mobility LLC Net Income (Loss) Attributable to Non-Controlling Interests (Nine Months Ended Sep 30) | Metric | 2023 ($) | 2022 ($) | | :------------------------------------------------ | :----------- | :----------- | | Net income (loss) attributable to non-controlling interests | $23,039 | $(459,863)$ | - Net income attributable to non-controlling interest shifted from a loss of $0.46 million in 2022 to an income of $0.02 million in 2023[212] - This allocation is proportional to the 49% ownership of Stonepeak and Evolve in Levo Mobility LLC, a consolidated VIE[212] Liquidity and Capital Resources This section discusses the company's liquidity position, including operating losses, cash balance, and working capital, along with capital-raising efforts and the going concern assessment - Nuvve is an early-stage company with recurring net losses and negative cash flows, reporting an accumulated deficit of $141.0 million and a cash balance of $13.9 million as of September 30, 2023[40][214] - The company faces substantial doubt about its ability to continue as a going concern and plans to fund operations through increased revenues, cost savings, and additional capital raises[40][41][214][223] - Recent capital raising efforts include various stock offerings in 2023, raising approximately $2.5 million gross from registered direct offerings and an additional ~$3.2 million gross from October 2023 offerings[97][98][99][180][181][219][220][222][224][225] - An ongoing arbitration dispute with Rhombus Energy Solutions over $5.0 million in non-conforming DC chargers has a hearing set for April-May 2024[157][227][228] Sources of Liquidity This section details the company's cash position, working capital, and available capital raising capacity under its shelf registration statement, while noting operating losses and negative cash flows - Nuvve incurred operating losses of $24.7 million and negative cash flows from operations of $6.2 million for the nine months ended September 30, 2023[214] - As of September 30, 2023, cash balance was $13.9 million, working capital $8.6 million, and stockholders' equity $6.6 million[214] - A shelf registration statement allows for up to $100.0 million in securities offerings, but is currently limited by the 'Baby Shelf Rule' to one-third of public float (as public float is below $75 million)[216][217] 2023 ATM Offering Program This section outlines the 2023 At-The-Market (ATM) Offering Program, including the amount of common stock sold, net proceeds generated, and its subsequent termination - Nuvve entered into an ATM Agreement to sell up to $25 million in common stock, limited to $4 million due to the 'Baby Shelf Rule'[96][218] - Sold 1,512,172 shares for approximately $0.9 million net proceeds during the nine months ended September 30, 2023[96][218] - The ATM Agreement was terminated on October 16, 2023[183][218] February 2023 Registered Direct Offering This section details the February 2023 registered direct offering, including the number of common stock shares issued and the gross proceeds generated - Issued 543,478 shares of common stock at $0.92 per share, generating approximately $0.5 million in gross proceeds[97][219] April 2023 Registered Direct Offering This section details the April 2023 registered direct offering, including the number of common stock shares issued and the gross proceeds generated - Issued 1,818,181 shares of common stock at $0.55 per share, generating approximately $1.0 million in gross proceeds[98][220][221] June 2023 Registered Direct Offering This section details the June 2023 registered direct offering, including the number of common stock shares issued and the gross proceeds generated - Issued 2,492,530 shares of common stock at $0.40 per share, generating approximately $1.0 million in gross proceeds[99][222] October 2023 Offerings This section details the capital raised through marketed and registered direct offerings in October 2023, including gross proceeds from common stock and pre-funded warrant sales - A marketed offering in October 2023 raised approximately $1.0 million gross from common stock sales and an additional $0.1 million from an over-allotment exercise[180][224] - A registered direct offering in October 2023 raised approximately $2.1 million gross from the sale of common stock and pre-funded warrants[181][225] Levo This section describes Levo Mobility LLC, a joint venture focused on accelerating electric fleet deployment through V2G hubs and Transportation as a Service (TaaS), supported by significant capital commitments - Levo Mobility LLC, a joint venture with Stonepeak and Evolve, aims to accelerate electric fleet deployment through V2G hubs and Transportation as a Service (TaaS)[226] - Conditional capital contribution commitments from Stonepeak and Evolve total $750 million, with an option to increase to $1.0 billion upon achieving $500 million in aggregate capital expenditures[226] Purchase Commitments This section details the ongoing arbitration dispute with Rhombus Energy Solutions, Inc. regarding a $13.2 million purchase order for DC fast chargers, alleging non-conformance and fraudulent inducement - Nuvve is in an arbitration dispute with Rhombus Energy Solutions, Inc. over a $13.2 million purchase order for DC fast chargers, alleging non-conformance and fraudulent inducement[156][227] - Rhombus claims Nuvve failed to pay $5.0 million for purchase orders, with the final arbitration hearing scheduled for April 29 - May 4, 2024[157][228] Cash Flows This section summarizes the company's cash flows from operating, investing, and financing activities, highlighting the net decrease in cash and restricted cash for the nine months ended September 30, 2023 Net Cash Flows (Nine Months Ended Sep 30) | Activity | 2023 ($) | 2022 ($) | | :-------------------------------------------------- | :----------- | :----------- | | Operating activities | $(6,200,232)$ | $(28,184,088)$ | | Investing activities | $1,125,278 | $(1,349,182)$ | | Financing activities | $3,226,403 | $19,029,324 | | Net decrease in cash and restricted cash | $(1,889,250) | $(10,625,164) | - Net cash used in operating activities decreased by $22.0 million, primarily due to improved working capital management[229] - Net cash provided by investing activities was $1.1 million, mainly from the sale of an equity investment[230] Off-Balance Sheet Arrangements This section confirms that Nuvve Holding Corp. is not a party to any off-balance sheet arrangements - Nuvve Holding Corp. is not a party to any off-balance sheet arrangements[232] Critical Accounting Policies and Estimates This section highlights management's reliance on estimates and assumptions in preparing consolidated financial statements under U.S. GAAP and refers to the 2022 Form 10-K for detailed policies - Management's discussion and analysis relies on consolidated financial statements prepared under U.S. GAAP, requiring estimates and assumptions that could materially differ from actual results[233] - For a detailed summary of significant accounting policies and critical accounting estimates, refer to Note 2 of the 2022 Form 10-K[234] Recent Accounting Pronouncements This section directs readers to Note 2 of the 2022 Form 10-K for information on recent accounting pronouncements - For information on recent accounting pronouncements, refer to Note 2 of the 2022 Form 10-K[235] Emerging Growth Company Accounting Election This section explains Nuvve's status as an 'emerging growth company' (EGC) and its election to use an extended transition period for new accounting standards, which may affect comparability - Nuvve is an 'emerging growth company' (EGC) and has elected to take advantage of the extended transition period for complying with new or revised financial accounting standards, which may affect comparability with other public companies[236][237] - The company intends to rely on other JOBS Act exemptions, including those for auditor attestation and certain executive compensation disclosures[238] - EGC status will continue until the earliest of five years post-IPO, $1.235 billion in annual gross revenue, becoming a 'large accelerated filer' ($700 million public float), or issuing over $1.0 billion in non-convertible debt[239] Item 3. Quantitative and Qualitative Disclosures About Market Risk. This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company - Not applicable[240] Item 4. Controls and Procedures. Nuvve's management, including the CEO and CFO, concluded that disclosure controls and procedures were not effective as of September 30, 2023, due to previously identified material weaknesses in internal control over financial reporting. Despite these weaknesses, management believes the condensed consolidated financial statements fairly present the company's financial position. Remediation efforts for these material weaknesses are ongoing, with no other material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were not effective as of September 30, 2023, due to material weaknesses in internal control over financial reporting[241] - Despite material weaknesses, management concluded that financial statements fairly present the company's financial position, results of operations, and cash flows[241] - Remediation efforts for identified material weaknesses are ongoing, with no other material changes in internal control over financial reporting during the quarter[242][243] Evaluation of Disclosure Controls and Procedures This section presents management's conclusion that disclosure controls and procedures were not effective due to material weaknesses, yet the financial statements are believed to be fairly presented - Management concluded that disclosure controls and procedures were not effective as of September 30, 2023, due to previously identified material weaknesses in internal control over financial reporting[241] - Notwithstanding the material weaknesses, management believes the condensed consolidated financial statements fairly present the company's financial position, results of operations, and cash flows[241] Remediation of Material Weaknesses This section confirms that remediation efforts to address the identified material weaknesses in internal control over financial reporting are currently ongoing - Remediation efforts to address the identified material weaknesses in internal control over financial reporting are ongoing[242] Changes in Internal Control over Financial Reporting This section reports no material changes in internal control over financial reporting during the quarter, apart from those related to ongoing remediation efforts - Except for changes related to ongoing remediation of previously identified material weaknesses, there has been no material change in internal control over financial reporting during the quarter ended September 30, 2023[243] PART II—OTHER INFORMATION This section addresses legal proceedings, updates on risk factors including Nasdaq compliance, and lists the exhibits filed with the quarterly report Item 1. Legal Proceedings Beyond the commitments and contingencies disclosed in Note 17, there are no material changes to legal proceedings previously reported in the 2022 Form 10-K. The company is subject to ordinary course legal claims, with inherently uncertain outcomes that could impact financial condition due to defense costs and resource diversion - No material changes to legal proceedings beyond those disclosed in Note 17 of the Notes to Condensed Consolidated Financial Statements[245] - The company is subject to ordinary course legal proceedings, with inherently uncertain outcomes that could adversely impact financial condition due to defense and settlement costs, and diversion of resources[245] Item 1A. Risk Factors This section updates the risk factors from the 2022 Form 10-K, specifically highlighting Nuvve's non-compliance with the Nasdaq Capital Market's $1.00 minimum bid price requirement. The company received a second notice, extending its compliance period until April 8, 2024, and is considering options like a reverse stock split. Failure to regain compliance could lead to delisting, negatively impacting stock price and capital-raising ability. Additionally, sales of a substantial number of shares under its shelf registration could depress the stock price - Nuvve is not in compliance with the Nasdaq Capital Market's $1.00 minimum bid price requirement[246] - The company received a second notice from Nasdaq, extending its compliance period until April 8, 2024, and is considering options such as a reverse stock split[248][249] - Failure to regain compliance could result in delisting, negatively impacting the stock price and the company's ability to raise additional capital[250] - Sales of a substantial number of shares of common stock in the public market under the shelf registration statement could cause the stock price to fall[251][252] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. This section states that there were no unregistered sales of equity securities or use of proceeds to report - None[254] Item 3. Defaults Upon Senior Securities. This section states that there were no defaults upon senior securities to report - None[254] Item 4. Mine Safety Disclosures. This section states that mine safety disclosures are not applicable to the company - Not applicable[254] Item 5. Other Information. This section states that there is no other information to report - None[254] Item 6. Exhibits. This section lists the exhibits filed with the Form 10-Q, including underwriting agreements, pre-funded warrants, securities purchase agreements, and certifications (CEO/CFO) - Exhibits include the Underwriting Agreement (October 18, 2023), Form of Pre-Funded Warrants (October 27, 2023), and Form of Securities Purchase Agreement (October 25, 2023)[256] - Rules 13a-14(a) Certifications and Section 1350 Certifications of the Chief Executive Officer and Chief Financial Officer are filed[256]