Financial Performance - For the years ended December 31, 2023 and 2022, the company's net losses were $12.7 million and $43.8 million, respectively, with non-cash charges of approximately $6.4 million and $38.7 million included in those losses [17]. - Total sales for the year ended December 31, 2023, were $2,862,853, a decrease of 36.5% compared to $4,504,621 in 2022 [298]. - Gross profit for 2023 was $1,005,580, down 42.0% from $1,731,948 in 2022 [298]. - Net loss for 2023 was $12,683,979, significantly improved from a net loss of $43,804,160 in 2022, representing a reduction of 72.9% [298]. - Basic and diluted net loss per share improved to $(0.84) in 2023 from $(2.92) in 2022 [298]. - The accumulated deficit grew to $(64,612,499) in 2023 compared to $(51,928,520) in 2022, indicating a worsening financial position [294]. - The company's total assets decreased to $22,653,169 from $33,483,689 in 2022, representing a decline of approximately 32.4% [294]. - The total stockholders' equity decreased to $20,633,578 in 2023 from $31,994,980 in 2022, a decline of about 35.3% [294]. - Cash and cash equivalents significantly decreased to $456,719 in 2023 from $2,765,068 in 2022, a reduction of about 83.5% [294]. - Total current liabilities increased to $1,773,546 in 2023 from $1,472,038 in 2022, reflecting an increase of approximately 20.5% [294]. Electric Vehicle Market and Government Initiatives - Approximately 10.5 million passenger electric vehicles were sold globally in 2022, representing 14% of total vehicle sales and a 62% increase from the previous year [21]. - The U.S. government plans to replace approximately 456,000 government vehicles with U.S.-manufactured electric vehicles, equating to approximately $25 billion in total value [34]. - The EPA has committed to distributing $5 billion over five years via the Clean School Bus Program, with approximately $1 billion allocated in both 2022 and 2023 [33]. - The market for electric buses and medium- and heavy-duty trucks is expected to grow, with nearly 66,000 electric buses and 60,000 medium- and heavy-duty trucks sold worldwide in 2022 [25]. - The federal government has allocated $5 billion for the Clean School Bus Program and another $5 billion for the National Electric Vehicle Infrastructure program, indicating significant funding for electric vehicle purchases [62]. - California's zero-emission vehicle mandate may result in over $800 million in aggregate funding available for cleaner vehicles over the next several years [63]. - The HVIP program has allocated over $1.7 billion for clean transportation incentives for the fiscal year 2022-23 [64]. - HVIP vouchers can provide up to $85,000 per vehicle for Class 6 and Class 7 zero-emission trucks, with potential increases for disadvantaged areas [65]. - The New Jersey Zero Emissions Incentive Program offers up to $175,000 towards the purchase of battery-electric vehicles, with a total program budget of $90 million [70]. - The California program for electric school buses provides per vehicle incentives of $750,000, with several states allocating funds specifically for electric vehicles [71]. - The Inflation Reduction Act invests $1 billion to support the replacement of heavy-duty vehicles with clean, zero-emission vehicles and associated infrastructure [82]. - The Clean School Bus program may award up to 100% of the cost for replacing existing school buses with clean alternatives [81]. - The New York Truck Voucher Incentive Program can provide funding of up to $385,000 per vehicle for eligible trucks and buses [67]. - The Commercial Clean Vehicle Credit allows businesses to qualify for a tax credit of up to $40,000 for purchasing qualified commercial clean vehicles [78]. Company Operations and Strategy - The company offers a range of zero-emission vehicles including Class 2 through 4 logistics vans, Class 4 through 5 urban trucks, school buses, electric forklifts, and street sweepers [14]. - The company plans to install manufacturing equipment in Osceola, Arkansas, in 2024 to begin producing vehicles in the United States, moving towards becoming a fully integrated electric vehicle manufacturer [51]. - The company aims to expand its zero-emission vehicles into ancillary product verticals, including charging infrastructure and stationary energy storage [40]. - The company has established relationships with multiple vendors to mitigate supply chain risks and ensure adequate access to raw materials [55]. - The company’s current primary focus is on Class 3 to 5 trucks, cargo vans, and school buses, targeting public and private fleet operators [41]. - The company has participated in numerous demonstration events across the U.S., Canada, and Asia in 2023 to showcase its product offerings [40]. - The company has not reestablished its in-house sales team since 2020 and has relied on executives and industry consultants for sales activities [40]. - The company’s zero-emission products may expand to include automated charging infrastructure and intelligent stationary energy storage [16]. Financial Management and Risks - The company anticipates risks associated with raw material costs, particularly batteries, as it moves into production, which could materially affect operating results [278]. - The company has not faced material market risks such as interest rate fluctuation risk and foreign currency exchange risk, which may positively impact future financial stability [277]. - The company reported a net allowance for accounts receivable of $20,929 in 2023, compared to $271,218 in 2022, indicating improved receivables management [294]. - The company had accounts receivable of $692,102 as of December 31, 2023, down from $2,073,691 in 2022, indicating a 66.7% decrease [313]. - Eight customers accounted for approximately 75% of the annual revenue in 2023, compared to three customers accounting for 43% in 2022 [313]. Employee and Stock Information - The company has a total of 14 full-time employees as of December 31, 2023, with no employees covered by collective bargaining agreements [57]. - The company has 1,389,584 outstanding warrants as of December 31, 2023, with a weighted average exercise price of $17.43 and a remaining contractual life of 1.93 years [355]. - The total stock compensation expense recorded for the year ended December 31, 2023, was $1,095,199, with options granted during the year having a weighted average fair market value of approximately $4.71 per option [363]. - The company awarded 85,000 restricted shares in exchange for marketing services, resulting in a stock compensation expense of $204,850 for the year ended December 31, 2023 [364]. - The Company awarded 65,660 restricted shares to a vendor for marketing services, resulting in a stock compensation expense of $22,528 for the year ended December 31, 2023 [365]. Inventory and Assets - The company's inventory increased to $6,830,593 in 2023 from $5,671,326 in 2022, representing a rise of approximately 20.4% [294]. - Finished goods inventory on hand was $6,843,022 as of December 31, 2023, with a net inventory balance of $6,830,593 after an inventory valuation allowance of $12,429 [320]. - The Company had inventory deposits of $3,300,388 as of December 31, 2023, a decrease from $4,829,933 as of December 31, 2022 [321]. - Total property and equipment, net was $320,687 as of December 31, 2023, compared to $368,461 as of December 31, 2022 [343]. - The Company recorded a non-cash goodwill impairment charge of $5,098,784 for the year ended December 31, 2023, compared to $37,093,047 for the year ended December 31, 2022 [331]. Lease and Financing Agreements - The Company entered into a two-year sublease agreement for a warehouse in the Philippines to expand its production capabilities [308]. - The Company entered into a two-year and two-month lease for a warehouse in the Philippines, with a monthly rent starting at $15,000, escalating to $16,530 in the final year [371]. - The total monthly payment obligation under the SRI Equipment Leases is $7,771, leading to a rent expense of $93,247 for the year ended December 31, 2023 [365]. - The Company recorded a rent expense of $68,400 for the ABCI Office Lease, with a monthly rent of approximately $5,000 [368]. - Total lease costs for the year ended December 31, 2023 amounted to $278,189, compared to $228,747 in 2022, reflecting an increase of approximately 21.6% [384]. - A convertible note agreement for $1,000,000 was entered into with an unrelated third-party investor, with an origination fee of $99,000 [388]. - The Company plans to deliver 200 electric high roof vans and trucks to PlugD for a total of approximately $16.2 million over the next 13 months [389].
Envirotech Vehicles(EVTV) - 2023 Q4 - Annual Report