EDGAR 10-K Filing

Company CIK: 1563568
Filing Year: 2025
Filename: 1563568_10-K_2025_0001437749-25-012095.json

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ITEM 1. BUSINESS
Item 1.
BUSINESS
Overview
We are a provider of purpose-built zero-emission electric vehicles focused on reducing the total cost of vehicle ownership and helping fleet operators unlock the benefits of green technology. We serve commercial and last-mile fleets, school districts, public and private transportation service companies and colleges and universities to meet the increasing demand for light to heavy-duty electric vehicles. Our vehicles address the challenges of traditional fuel price cost instability and local, state and federal environmental regulatory compliance. We currently offer Class 2 through 4 logistics vans, Class 4 through 5 urban trucks, school buses, electric forklifts, street sweepers, neighborhood electric vehicles and right-hand drive vans and urban trucks.
Our vehicles are manufactured by original equipment manufacturers ("OEM") located in China, Malaysia and the Philippines and can be marketed, sold, warrantied and serviced through our developing distribution and service network.
Our vehicles include options for telemetrics for remote monitoring, electric power-export and various levels of grid-connectivity. Our zero-emission products may also grow to include automated charging infrastructure and “intelligent” stationary energy storage that enables fast vehicle charging, emergency back-up facility power, and access to the developing, grid-connected opportunities for the aggregate power available from groups of large battery packs.
For the years ended December 31, 2024 and 2023, our net losses were $8.8 million and $12.7 million, respectively. Included in the net losses for 2024 and 2023 were non-cash charges of approximately $2.7 million and $6.6 million, respectively.
On October 30, 2024, we entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Maddox Industries, LLC, a Puerto Rico limited liability company (“Maddox Industries”), and Jason Maddox, the sole member of Maddox Industries (the “Seller”), pursuant to which, subject to the terms and conditions of the Purchase Agreement, we purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) in Maddox Industries (the “Maddox Acquisition”). In connection with the Maddox Acquisition, our Board of Directors (the “Board”) also appointed Jason Maddox as our President in October 2024.
As consideration for the Purchased Interests, at the closing of the Maddox Acquisition on December 18, 2024 (the “Closing”), the Company issued 3,100,000 shares of the Company’s common stock, par value $0.00001 per share (the “common stock”), to the Seller (the “Stock Consideration”). In addition, during the six-month period following the Closing (the “Earnout Period”), the Seller was eligible to receive up to six monthly cash payments in an aggregate amount of up to $1 million (each such monthly payment, an “Earnout Payment”), with the Earnout Payment for each calendar month being equal to the aggregate amount of gross revenue received by Maddox Industries in respect of any closing receivable, as specified in the Purchase Agreement, during such calendar month, subject to an aggregate limit of $1 million with respect to all Earnout Payments payable under the Purchase Agreement.
See Note 3 - Acquisitions to the consolidated financial statements for additional information regarding the Maddox Acquisition.
Market Overview
Concerns regarding climate change and other environmental considerations have led to the implementation of laws and regulations that restrict, cap, or tax, emissions in the automotive industry and throughout other industries. In particular, the Environmental Protection Agency ("EPA"), Tier 4 emission standards, California Air Resources Board ("CARB") regulations, and European Union Stage I, II, III, IV, V and VI regulations require significant reductions in the level of emissions and particulate matter produced by diesel power systems and are increasing the costs associated with producing carbon-intensive fuels. On June 25, 2020, CARB passed a first-in-the-world rule, generally referred to as the Advanced Clean Truck regulation (the “Advanced Clean Truck Regulation”), requiring truck manufacturers to sell increasing percentages of zero-emission medium and heavy-duty trucks, starting with the 2024 model year. Numerous other states have adopted California’s standards established under this rule. More recently, on April 28, 2023, CARB issued the Advanced Clean Fleets rule (the “Advanced Clean Fleets Rule”) that would require owners of medium- and heavy-duty vehicle fleets to begin their transition toward zero-emission vehicles starting in 2024. However, in January 2025, CARB withdrew its request to the EPA for waiver of the Clean Air Act’s federal preemption provisions for the Advanced Clean Fleets Rule, and now the status of this rule remains uncertain.
On January 20, 2025, President Trump signed Executive Order 14154 “Unleashing American Energy” (“Executive Order 14154”), which may have direct implications on the policies and regulations that impact the automotive and transportation industries. This executive order seeks to rescind waivers granted by the EPA for California's zero emission vehicle regulations with a focus on eliminating any “electric vehicle mandates” and terminating “state emission waivers that function to limit sales of gasoline-powered vehicles” (which would include the Advanced Clean Truck Regulation) and modify and/or eliminate the greenhouse gas standards for trucks discussed above. As a result, the status of the U.S. and state emission regulations discussed above remain uncertain. Moreover, federal support for electric vehicle adoption generally may be in jeopardy under the Trump administration, as President Biden’s executive orders directing the federal government to transition to an all-electric fleet of cars and trucks have been rescinded. Additionally, the Trump administration has halted all federal funding for electric vehicle infrastructure and has ordered the termination of federal subsidy programs for EVs.
These developments threaten the incentive structure needed for EVs. Even so, other regulations are expected to increase both the cost and size of emission-compliant diesel power products, primarily due to the need to incorporate additional combustion and after-treatment components. A variety of market factors are contributing to the increased use of alternative fuels and growth of alternative fuel technology, including economics, energy independence, environmental concerns, and the widespread availability of alternative fuels. As the price of crude oil remains volatile and the threats of climate change and air pollution increase as public concerns, we believe the search for more cost-effective and cleaner fuels has become more important. Electricity has emerged as a cleaner-fuel solution to these challenges. The price of alternative fuels such as electricity is often substantially less than diesel or gasoline, and alternative fuels can result in the production of lower amounts of greenhouse gases and other air pollutants. In addition, several public utilities in California and elsewhere have applied to their states’ public utility commissions for rate increases to be used for the purchase or leasing of electric vehicles and infrastructure. Additional requests have been made by the utilities to offer favorable costs for electric bus charging.
According to the Global EV Outlook 2024 report by the International Energy Agency (“IEA”), nearly 14 million new electric vehicles were registered globally in 2023. This amount was 3.5 million higher than in 2022, a 35% year-on-year increase. According to the IEA, electric vehicles sales accounted for 18% of all cars sold globally in 2023, up from 14% in 2022. In 2024, electric car sales in the United States are projected to rise by 20% compared to the previous year, translating to almost half a million more sales, relative to 2023. According to the 2024 Global Hybrid & Electric Cars industry profile report by MarketLine, the global market for hybrid and electric cars is set to follow a double-digit growth trend over the forecast period between 2023 and 2028. The Asia-Pacific and European regions have been the leaders in electric vehicles adoption, accounting for 53% and 29% of the global market for hybrid and electric cars in 2023, respectively, with North America representing 15% of the market. Government policy, however, remains ever-changing and likely continues to play a foundational role in the rate of adoption around the world.
In China, the government has mandated that electric vehicles make up 40% of all auto sales by 2030. Meanwhile, we believe that tightening emissions standards and high fuel taxes in Europe will result in substantial increases in the market share of electric vehicles. According to the Global EV Outlook 2024 report by the IEA, in 2023, just under 60% of new electric vehicle registrations were in China, compared to just under 25% in Europe and 10% in the United States. In the U.S., new electric vehicle registrations totaled 1.4 million in 2023, increasing by more than 40% compared to 2022. The overall market for electric vehicles consists of multiple, discrete markets for various vehicle types, including passenger cars, buses, two-wheelers and others. Passenger cars are the most prominent, but two-wheelers are far more prevalent, particularly in Asia, and buses and trucks, although smaller in number, are significantly higher in price and often purchased in bulk by major corporate customers or government or transit agencies.
Charging infrastructure is another important factor in electric vehicles adoption rates. According to Pew Research Center report, there were approximately 61,000 publicly accessible electric vehicles charging stations in the United States as of February 2024, with the number of charging stations more than doubling since 2020. S&P Global estimates that by 2030, the United States will need 2.13 million Level 2 and 172,000 Level 3 chargers. In an effort to help address this need, in September 2022, the National Electric Vehicle Infrastructure Program, established and funded by the Infrastructure Investment and Jobs Act (the “IIJA”), which was signed into law on November 15, 2021, provided $5 billion in funding to all 50 U.S. states, D.C. and Puerto Rico to strategically deploy electric vehicles charging infrastructure and to establish an interconnected network to facilitate data collection, access, and reliability. Additionally, the IIJA included $7.5 billion to build a national network of 500,000 chargers by 2030. However, in early 2025, the Trump administration issued a pause on all IIJA funding directed towards, among other programs, electric vehicles infrastructure development and subsidy programs. That funding remains paused subject to the review of the Office of Management and Budget (the “OMB”). The OMB has released some paused IIJA funding, but funding for the programs focused on supporting the electric vehicles industry remains frozen. The future of key federal funding and electric vehicles tax credits from the IIJA and Inflation Reduction Act (the “IRA”) is uncertain as Congress moves forward with its tax reform bill expected to pass early summer 2025. The House and Senate have both passed their respective budget resolutions on strict party-line votes, and the Republican majorities in both chambers of Congress have signaled that clean energy tax credits are possible targets for elimination to pay for extending the 2017 Tax Cuts and Jobs Act (TCJA) tax cuts and other key aspects of the Trump administration’s agenda. The extent to which the IIJA funding and IRA tax credits, specifically those supporting electric vehicles, will be amended or eliminated remains unclear. However, it is likely that some if not all of these funding avenues will be affected.
Commercial Vehicles
In 2023, according to the IEA’s Global EV Outlook 2024 report by the IEA, nearly 50,000 electric buses and around 54,000 medium- and heavy-duty trucks were sold worldwide, representing about 3% of all bus sales and over 2.5% of truck sales worldwide. China continues to dominate production and sales of electric (and fuel cell) trucks and buses, contributing to about 60% of global electric bus sales in 2023. However, the global market is growing and is expected to continue to grow in the foreseeable future.
Medium- and Heavy-Duty Trucks:
According to the International Council on Clean Transportation (“ICCT”) report, “Zero-Emission Bus and Truck Market in the U.S. (Jan-June 2024)”, U.S. sales of zero-emission heavy-duty vehicles saw notable growth, with 1,381, or 0.56%, of the approximately 120,000 new heavy-duty vehicles being registered in the U.S. during the first half of 2024 being zero-emission vehicles. This represents a significant increase from the 0.30% share observed in 2023. According to the ICCT, zero-emission buses in the U.S. reached a milestone in the first quarter of 2024, representing nearly 11% of all bus registrations-the first instance of double-digit market penetration in any heavy-duty vehicle segment. Despite technological advancements, electric trucks still represent a small fraction of total truck sales. Challenges such as supply chain issues and inadequate charging infrastructure have impeded more rapid adoption.
Environmental Benefits
Because heavy-duty commercial vehicles consume considerably more fuel than light duty passenger vehicles, the environmental benefits of replacing conventionally fueled commercial vehicles with electric vehicles can also be substantial. Whereas an electric passenger car may reduce greenhouse gas (“GHG”) emissions by 3 tons per year as compared to a conventional car, replacing a conventional Class 8 port drayage truck with an electric equivalent can substantially reduce GHG emissions. Specifically, electric buses and trucks produce zero tailpipe emissions, leading to reductions in nitrogen oxides (NOx) and particulate matter (PM). This shift can improve air quality, particularly in urban areas, benefiting public health. Replacing a conventional diesel bus with an all-electric bus can achieve a 78 metric ton (approximately 171,961 pounds) reduction in GHG emissions. Electric buses can also reduce nitrous oxide emissions by 47 kg (approximately 104 pounds) per year compared to a diesel bus and 19 kg (approximately 42 pounds) compared to a clean natural gas (“CNG”) bus. As discussed below, we believe these pollution reductions have had the greatest impact in the electric bus market, where municipalities are the principal purchasers.
A first-of-kind, comprehensive study was released in December 2019 assessing the environmental benefits and economics of various alternative fuel truck technologies. The study, conducted by the ICF International research firm (“ICF”), demonstrates that electric trucks and buses are a triple-win in terms of helping meet California’s climate and air quality targets; the least cost to own and operate across nearly all truck and bus classes by 2030, and provide the greatest job and economic benefits to the state. The study was commissioned by the Natural Resource Defense Council (“NRDC”) and the California Electric Transportation Coalition (an industry group representing utilities and vehicle manufacturers) and was sponsored by the Union of Concerned Scientists, Earthjustice, BYD, Ceres, and NextGen Climate America. Advisory support was provided by East Yard Communities for Environmental Justice and University of California, Davis. The study concluded that the costs of battery packs, and therefore the cost of electric trucks and buses, will decline such that by 2030, they will be the most attractive technology from a total cost of ownership perspective for nearly all truck and bus classes, even without incentives.
According to recent research of Energy Innovation Policy & Technology, the decline in costs of electric heavy duty vehicles as compared to their diesel counterparts has accelerated, meaning that costs will fall faster than previously expected in 2030. By 2030, even when excluding available consumer incentives, electric heavy duty vehicles in most categories will be less expensive than their diesel counterparts. Governments worldwide are implementing policies to accelerate the adoption of electric commercial vehicles. For example, Transport for London embarked on a mission to electrify London’s iconic red business and, today, London boasts one of Europe’s largest electric bus fleets, with more than 1,600 zero-emission buses out of a total of 9,000. Similarly, the Los Angeles County Metropolitan Transportation Authority has committed to transitioning its entire bus fleet to zero emissions by 2030, with significant progress already made in electrifying certain bus lines. However, the future of federal policy towards electric vehicles in the U.S. remains uncertain.
In summary, the transition to electric heavy-duty vehicles presents significant environmental advantages, including substantial reductions in GHG emissions and air pollutants. Ongoing technological advancements, supportive policies, and successful case studies underscore the potential for widespread adoption of electric buses and trucks in the coming years.
Trucks
Some of the main markets for electric trucks include delivery vans, shuttle buses, and utility or work trucks, each of which has its own set of challenges. Where hybrid electric vehicles have greater operational flexibility, and require less charging infrastructure, battery electric vehicles can be either short range, which can charge quickly and operate with limited interruption, or long range, which requires longer charging times but more intraday operational flexibility. Because of charging needs and restrictions, we believe short-haul fleet vehicles that operate in a limited geographic area and return to central locations, such as delivery vans and shuttle buses, are the best candidates for electrification.
Transit Buses
Some public transportation operators are facing pressure to purchase and operate low-emissions vehicles. For public entities, cleaner transportation systems can provide benefits beyond reduced operating costs, in the form of less pollution and lower abatement and cleanup costs. Electric transit buses are likely to have lower fuel and maintenance costs which is typically a significant cost component for transit operators as compared to conventional diesel buses. Electric buses generally have smoother, faster acceleration and provide a quieter ride, thus benefiting both passengers and the surrounding urban environment.
Similar to other commercial fleet electric vehicles, transit buses have a higher initial acquisition cost than their traditional-fueled counterparts, and the logistics of charging remains a challenge. Electric buses can be two to nearly five times as expensive as conventional buses.
In addition to public health and environmental benefits, school districts and transit agencies are able to experience cost savings due to reduced fuel and maintenance costs of electric buses. While electric transit buses cost approximately $200,000 more than diesel buses (depending on battery pack size) before incentives, lifetime fuel and maintenance savings of electric transit buses approximate $400,000.
Electrification in the medium- and heavy-duty vehicle sector is increasing in the U.S. with California leading the way. Increasing investment in the sector from public and private sources, however, is expected to generate growth and significantly increase the number of electric trucks and buses on the road in the near term. Upfront costs associated with electric trucks and buses are expected to decline significantly through 2030 as battery prices fall, making them competitive on a total cost of ownership basis.
U.S.-Federal Laws and Incentives
During the first few months of 2025, the Trump administration introduced significant change in the prior administration’s positions and policies supporting electric vehicles. As part of the Executive Order 14154, the Trump administration eliminated the “electric vehicle mandate,” specifically directing the termination of state emissions waiver programs and other subsidies exclusively designed to support the electric vehicle market. Executive Order 14154 also paused all funding disbursed under the IRA and the IIJA directed at “Green New Deal” infrastructure and specifically mentioned electric vehicle charging stations as an industry subject to the pause. In March 2025, the EPA announced that EPA would be reconsidering vehicle emissions regulations but have not yet announced any proposed changes.
Along with holding many U.S. certifications, we are identified as an eligible manufacturer by the Internal Revenue Service ("IRS") of light- to heavy-duty electric vehicles in the United States. This is significant because, as of January 1, 2023, federal tax credits are available for electric cars and trucks from eligible manufacturers. Individuals that purchase electric vehicles weighing less than 14,000 lbs. will receive a credit of $7,500. Commercial operators will receive a tax credit of up to $40,000 for each purchased vehicle over 14,000 lbs. Furthermore, with the Alternative Fuel Infrastructure Tax Credit, depending on the size of the chargers, businesses are eligible for a tax credit of up to 30% of the cost of the chargers and infrastructure, up to $100,000 per unit. Additionally, the Senate passed the IRA, the budget reconciliation bill that includes $3 billion over five years to establish a new grant program to install electrified equipment and reduce emission at ports. Each of these credits may be subject to amendment, reduction, or elimination in Congress’s upcoming reconciliation bill.
We source components and parts to build our all-electric vehicles from suppliers globally, and the importation of these parts, components and vehicles to North America are subject to tariffs which have recently increased and may increase further in the future. In particular, electric vehicles and electric vehicle batteries that are imported from China to the United States became subject to a 100% and 25% tariff, respectively, in 2024. In March 2024, the Trump administration imposed a 20% additional tariff on all goods imported from China. While the tariffs on electric vehicles imported from China may increase competitiveness within the U.S. market, these tariffs are also expected to increase the costs of manufacturing electric vehicles in the U.S. The Trump administration’s inconsistent tariff policies have also contributed to declines in major stock indices. The S&P 500 and Nasdaq Composite experienced significant downturns since the start of 2025, with concerns over tariffs potentially accelerating inflation and creating uncertainty for business leaders.
In addition, on January 29, 2025, Secretary of Transportation directed the Department of Transportation to rescind existing corporate average fuel economy standards and eliminate electric vehicle incentives. In March 2025, the EPA announced a formal reconsideration of the 2009 Endangerment Finding that classified greenhouse gases as harmful to human health. This finding is the legal underpinning of a host of climate regulations for motor vehicles, power plants and other pollution sources.
In summary, recent policy shifts have significantly altered the trajectory of electric vehicle adoption and environmental regulations in the U.S. The rollback of incentives, imposition of tariffs, and deregulatory measures have created a complex landscape for manufacturers, consumers, and policymakers involved in the electric vehicles sector.
U.S.-State Laws and Incentives
Numerous U.S. states continue to play a central role in the promotion and adoption of electric vehicles, including zero-emission medium- and heavy-duty commercial vehicles (Class 4-8). Among these, California remains a leader in electric vehicles policy, having pioneered regulations and incentive programs that have since been adopted or adapted by other jurisdictions.
California offers a suite of incentives for both individual and fleet electric vehicle owners, including tax credits and rebates, access to high-occupancy vehicle lanes, and various grant and loan programs. California maintains the nation’s most stringent tailpipe emissions standards and continues to implement the Zero-Emission Vehicle ("ZEV") program, which mandates automakers to produce an increasing percentage of zero-emission vehicles. These regulations have fostered the creation of a market for trading compliance credits among manufacturers, further incentivizing electric vehicles production and sales.
California, New York, and New Jersey have also implemented voucher-based programs that significantly lower the cost of electric vehicles for both individuals and businesses. These programs offer additional incentives for qualifying entities, including minority-, women, and veteran-owned businesses and those operating in designated low-income or disadvantaged communities. Furthermore, California and New York have enacted legislation to ban the sale of new internal combustion engine (“ICE”) vehicles by 2035, establishing long-term regulatory clarity and market demand for zero-emission alternatives.
Key state-level commercial vehicle incentives include:
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California - HVIP (Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project): Offers point-of-sale vouchers ranging from $20,000 to over $120,000 per eligible Class 4-8 vehicle, depending on vehicle size, fuel type, and fleet characteristics. Bonus incentives are available for vehicles operating in disadvantaged communities.
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New Jersey - NJZIP (New Jersey Zero Emission Incentive Program): Provides vouchers up to $175,000 per Class 4-8 zero-emission vehicle. Small businesses, minority-, women-, and veteran-owned enterprises may qualify for additional bonus incentives.
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New York - NYTVIP (New York Truck Voucher Incentive Program): Offers vouchers of up to $215,000 per battery-electric Class 4-8 truck and up to $385,000 for transit buses. Fleets operating in environmental justice communities or owned by disadvantaged businesses receive priority funding.
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Texas - Texas Emissions Reduction Plan (TERP): While primarily focused on emissions reductions from ICE vehicles, TERP provides funding for fleets replacing older diesel trucks with new zero-emission alternatives. Texas also offers a $2,500 light-duty electric vehicles rebate.
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Pennsylvania - Medium- and Heavy-Duty Zero Emission Vehicle (ZEV) Grant Program: Offers funding to replace Class 4-8 diesel vehicles with zero-emission models. Grants may cover up to 90-100% of project costs for government or financially distressed municipalities.
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Colorado - Clean Fleet Vehicle and Charging Incentives: Offers stackable grants and tax credits for commercial electric vehicle purchases and infrastructure installation. Incentives scale with vehicle weight and community impact.
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Utah - Heavy-Duty Alternative Fuel Vehicle Tax Credit: Provides up to $12,000 per vehicle (phasing down annually) for eligible alternative fuel Class 4-8 vehicles.
These state initiatives complement federal programs, including the Commercial Clean Vehicle Credit, which as of 2024 provides a tax credit of up to $40,000 per qualifying commercial vehicle over 14,000 lbs. (Class 4-8), and the Alternative Fuel Infrastructure Tax Credit, which offers up to 30% of the cost of commercial charging stations, capped at $100,000 per unit.
These policies collectively provide a supportive regulatory and financial framework for fleet operators and manufacturers investing in electric commercial vehicle platforms. They also create an opportunity for companies positioned to supply zero-emission trucks and infrastructure to high-demand urban corridors, port areas, and disadvantaged communities aligned with state climate and environmental justice goals.
Our Solution
We are a provider of purpose-built zero-emission electric vehicles focused on reducing the total cost of ownership. Our vehicles are manufactured by OEMs located in China and Malaysia and marketed, sold, warrantied and serviced through our developing distribution and service network. Our vehicles are designed to help fleet operators unlock the benefits of technology that reduces GHG, NOx, PM and other pollutants, as well as to address the challenges of local, state and federal regulatory compliance and traditional-fuel price cost instability.
We seek to enable our customers to:
• Add Emission-Compliant Vehicles to Their Fleets. Our commercial fleet vehicles are designed to reduce or eliminate the use of traditional petroleum-based fuels that create GHG and particulate matter.
• Reduce Total Cost of Ownership. Our technology is designed to reduce fuel budgets and maintenance costs by eliminating or reducing reliance on traditional petroleum-based fuels through the use of more energy efficient and less variably priced grid-provided electricity.
• Reduce Maintenance Costs of Existing Vehicles. Zero-emission electric vehicles generally have lower maintenance costs. These reduced maintenance costs may take the form of longer service intervals between brake system maintenance, elimination of internal combustion engine oil and oil filter changes, reduction or elimination of transmission oil and oil filter changes, reduction or elimination of air filter changes, elimination of emissions systems services, elimination of diesel emission fluid use, elimination of emissions and the elimination of certification tests.
• Plan for Natural Disasters When Fuel Supply May be Interrupted. Our zero-emissions systems are designed, when optionally equipped, to serve as on-site emergency back-up energy storage if grid power becomes intermittent or fails temporarily during natural or man-made disasters.
• Improve the Environment Around Vehicles. As a result of our zero-emission systems, drivers, operators, customers and the communities they serve could have healthier environments in and around these vehicles.
Our Strategy
We intend to capitalize on these opportunities by pursuing the following key strategies:
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Build VSP Fleet Sales and Develop Sales Staff. Following the impact of the COVID-19 pandemic and associated economic challenges in 2020, we eliminated our in-house sales team. While we were unable to fully reestablish a dedicated sales force through 2021, 2022, and 2023, we began rebuilding our commercial sales team in 2024. We supplemented these efforts with executive-led outreach, as well as collaboration with industry professionals with established relationships in the commercial trucking sector, municipal and state transportation departments, and school districts. As we saw the growing demand for electric logistics vans with independent Vehicle Service Providers (“VSPs”) that have service contracts under franchise agreements with major retailers we engaged Plugd as a dealer and partner that would buy and lease our electric vans to these VSPs. The VSPs have been slow to purchase or lease fleets and requirements of building specific Class 2 Vans have not been as quick to convert to sales as expected. While we shall continue to work towards VSP fleet sales, we will also focus on building our internal sales team to set up physical dealers in key states such California, New Jersey, New York, and Texas, and other states that have heavy incentives for our electric vehicle products.
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Build Dealership and Service Networks. We plan to continue with a buildout of our dealership and service network to support sales, delivery, and post-sale service of our purpose-built, zero-emission electric commercial vehicles. In 2024, we added a New Jersey service center to fully support our largest customer base which is in the New Jersey corridor between New York City and Philadelphia. We have invested in a full- service station with battery services to make sure there is support for our New Jersey customers. We have invested in a full-service station with battery services to make sure there is support for our New Jersey customers. We also plan to open a service center in Houston, Texas. In addition to our buildout of our service centers, we plan to build out dealer service centers, which will include a parts department to create additional revenue for our company as well as our dealers as well as provide warranty work and a program for dealers. We also plan to develop training programs for our dealers to support their sales efforts. We plan to have a strong focus on building out our California dealers as we have submitted our new model year vehicles to CA HVIP which we believe should qualify for state incentives that we expect to drive small business and fleet sales in the state of California.
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Develop Third-Party Relationships. We finalized several strategic partnerships in 2024 and remain actively engaged in discussions to expand our relationships with third-party service providers, suppliers, upfitters, technology integrators, and distribution partners. These relationships are key to supporting our vehicle deployments and ensuring customer satisfaction across target geographies and vehicle classes.
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Provide Demonstrations. We plan to have product demonstrations to key fleet services and government agencies. These demonstrations remain a key element of our market development strategy, particularly as new product classes move from prototype to commercialization.
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Obtain Approvals from Incentive Programs. Our vehicles have been approved for several critical state and federal incentive programs. As of 2024, our Class 4 through 8 vehicles remain eligible for the Commercial Clean Vehicle federal tax credit of up to $40,000 per vehicle. Our new products have also been submitted to be eligible under the California HVIP program and to continue under the New Jersey NJZIP voucher program, among others. These programs materially reduce the total cost of vehicle ownership for our customers and increase our competitive positioning.
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Grow Our Manufacturing, Installation and Service Capability. In 2024, we made substantial progress in expanding our operational footprint at our Osceola, Arkansas facility. We began final assembly and integration of vehicle sub-systems at this location. We built a battery balancing room within the facility to house battery components and perform battery assembly and balancing tasks. We plan to open up our headquarters in Houston, Texas as we believe having administrative functions in a large metro area will give us larger access to executive level talent and logistics customers that operate from Houston. We also plan to open a final assembly and pre-delivery location for sales and support within the Houston and the broader Texas region. The Houston location will also house R&D (as defined below), engineering, and sales efforts for us as well as production and logistics functions for the recent Maddox Acquisition.
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Expand Technical Support Capabilities. In response to growing customer demand and vehicle deliveries, we have expanded our technical support team, including the hiring of additional service technicians and field support staff. These resources are focused on providing maintenance, diagnostics, warranty support, and repairs for deployed vehicles in both domestic and international markets.
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Introduce New Products and Platforms. As market demand for electrification expands, we plan to grow our product offerings beyond vehicle platforms. Our development roadmap includes the integration of Electric Vehicle Supply Equipment, vehicle-to-grid hardware, stationary energy storage systems, and advanced power management technologies. These complementary offerings will enable us to provide fleet customers with a more complete zero-emission transportation ecosystem.
Our Customers
Our current primary focus is Class 3 to 5 trucks, Class 3 and 4 cargo vans and school buses. Our target customers primarily include public and private fleet operators that have an interest in meeting or exceeding local, state and federal emission regulatory guidelines while saving money on fuel and maintenance costs over the lifecycle of their fleet vehicles and that also have an interest in tangible demonstrations of their GHG-reducing efforts. These targets include:
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Public and private schools that operate “white fleet” vehicles for non-student transportation use, such as facility service trucks, food service delivery vans/trucks, campus security vehicles and golf cart-type vehicles.
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Commercial fleet operators that provide high daily mileage vehicles for use on routes in and around airports, hotels and offsite parking facilities.
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Last mile delivery companies with fleets of delivery vans, short haul trucks and distribution/sorting facility center vehicles.
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Large agricultural and food processing industry-focused companies that operate Class 1 through 7 trucks, buses and/or delivery vans.
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Public and private transportation services that are involved in prisoner transportation.
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Large companies that operate shuttle buses, transit style buses and facility-based vehicles, including on and off road-type vehicles for employee transport to/from remote parking areas, to/from special events, and the various vehicles used for facilities maintenance, services and security.
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Private transportation contractors that shuttle large companies’ employees from common public transportation hubs to their campuses.
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Public and private colleges and universities that operate shuttle buses, transit-style buses, facility service vans and trucks and utilize golf cart-type vehicles on their campuses.
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Community-based, public/privately funded shuttle buses serving special-needs community members.
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Retirement communities, municipalities, shopping malls, movie studio lots, and large warehouse facilities that currently use golf cart-type vehicles for moving people and goods.
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The current market of approximately 3.5 million e-trike users in the Philippines, most of which currently operate gasoline or diesel- powered vehicles.
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Public and private K-12 schools that operate Type-A, C and D school buses, and special-needs student buses.
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Student transportation contractors that serve public and private schools.
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Port, railway and distribution center operators that use traditionally-fueled loading equipment, tractors, material handling equipment, forklifts, Class 1 through 7 trucks, delivery vans, yard goats, and other similar vehicles, that could be replaced with zero-emission alternatives.
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Mining companies with fleets of above-ground service vehicles and underground staff transport and support vehicles.
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Oil and gas companies with fleets of field trucks.
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Electric utility companies with fleets of service trucks that are in the public eye.
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Military-based fleet operators that have non-combat fleet vehicles of all sizes.
Our Products and Services
Our products and services primarily include purpose-built, zero-emission vehicles and chassis of all sizes manufactured by OEMs, and are marketed, sold, warrantied and serviced through our developing distribution and service network.
We engage OEMs to design and supply vehicles for us that meet our specifications. In addition, our products and services may in the future include some or all of the following:
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Zero-emission electric systems for ship-through integration by outside OEMs into their own privately branded medium to heavy-duty commercial fleet vehicles.
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Automated charging infrastructure for commercial fleet vehicles.
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“Intelligent” stationary energy storage that enables fast vehicle charging.
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“Intelligent” stationary energy storage that enables emergency back-up facility power during grid power outages.
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“Intelligent” stationary energy storage that enables access to the developing grid-connected opportunities for the aggregate power available from groups of large battery packs.
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“Intelligent” stationary energy storage that enables avoidance of electric utility demand charges for commercial customers integrated with or independent of Envirotech-supplied, zero-emission fleet vehicle(s).
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Energy storage systems (battery packs) replacements with better energy density and/or expected lifecycles for existing electric vehicles and equipment that has outlived their OEM-provided energy storage systems. For example, replace flooded lead acid (“FLA”) battery packs of existing industrial forklifts and underground mining equipment with more energy dense and higher cycle-life battery packs composed of lithium-ion cells.
Testing
Our suppliers are vetted before their products are accepted for use in our products. Our drivetrain systems and finished products are inspected, road-tested (when applicable) and receive quality control testing prior to delivery.
Customer Service, Support and Training
Our sales team has historically been used as the first point of customer contact for customer support and training. We are hiring sales personnel and other internal staff currently to support our current and planned operations.
Technology
Zero-emission electric drivetrain systems for purpose-built new vehicles generally include the following: electric traction motor/generator of sufficient kW power for grade, speed, acceleration and efficiency requirements, a motor controller/inverter system that modulates electrical power flow between the battery packs and traction motor, a gear reduction system or multispeed transmission, systems to electrify power steering/brakes, a VCU, high-voltage traction battery packs with integrated BMS, battery disconnect units, thermal management systems, vehicle charging hardware, electric HVAC systems, DC to DC inverter(s) to reduce traction battery pack voltage sufficient to operate on-board, low voltage systems, wiring harnesses, user/driver interface and remote diagnostic/tracking/fault code/data logging systems. Although clear industry power-export standards have not yet been adopted, systems and options for a variety of vehicle-to-other power management options (such as grid, building, stationary energy storage, etc.) are being developed by multiple vendors and their inclusion may be offered as additional cost options in the future.
Sales and Marketing
Sales
We intend to build out our marketing and sales network by hiring sales personnel to form a team of dedicated sales employees with responsibility for each of the geographic regions we serve.
Marketing
We plan to focus our marketing efforts on increasing brand awareness, generating demand for our products, communicating product advantages and generating qualified leads for our sales force. We intend to rely on a variety of marketing vehicles, including our website and social media, participation in industry conferences and trade shows, public relations and our collaborative relationships with our business and teaming partners to share our technical message and the benefits of our product offering, with customers.
Manufacturing
We currently contract with third-party suppliers to manufacture our products. In 2022, we increased our integration efforts and began completing the final assembly of sub-assembly components at our Osceola, Arkansas, facility. We also intend to install the manufacturing equipment in Osceola required to begin producing our vehicles ourselves in the United States, which will be a key step towards our longer-term strategy of becoming a fully integrated electric vehicle manufacturer.
Envirotech Electric Vehicles Incorporated ("EEVI")
EEVI is a Canadian company engaged in the design, prototyping and certification of electric components and vehicles, including complete drivetrain systems. Previously, we engaged EEVI to design and supply a series of zero-emission electric Class 3 and 6 trucks, cargo vans and chassis built to our specifications and requirements. The vehicles are initially comprised of a cab, chassis and electric drivetrain system. Any customer can then customize the trucks by adding a box or stake bed to the vehicle in accordance with their needs. We received the first truck and cargo van pursuant to our arrangement with EEVI. As the dealer for EEVI, we submitted additional information to the HVIP Department of CARB and received our HVIP listing in November 2019, which renders the trucks and vans eligible for buy-down funding based on the gross vehicle weight rating ("GVWR").
We also own certain rights under an Exclusive Supply Agreement entered into with EEVI (the “Exclusive Distribution Agreement”). Pursuant to the Exclusive Distribution Agreement, EEVI appointed us as the exclusive distributor of all of EEVI’s products in the United States on the terms and subject to the conditions set forth therein. Unless earlier terminated in accordance with the terms thereof, the Exclusive Distribution Agreement will remain in effect for a term expiring on December 17, 2070. The Exclusive Distribution Agreement provides us certainty of product supply and consistency of design between different classes or type of vehicles; allows us to license the products to third party resellers, distributors and others which should enhance our ability to sell vehicles and permits us to use trademarks associated with the vehicles, all of which we believe is very advantageous to executing our business plan.
Raw Materials and Supply Chain
Prices for the systems, components and raw materials we use in our vehicles and drivetrain systems, many of which are OEM items used by many companies in different applications, can fluctuate depending on market conditions and global demand. Our purchase of raw materials is currently limited due to sales volume, but we attempt to limit our exposure to raw material price increases and availability fluctuations by having relationships with a dynamic group of vendors that sell us value-added hardware, components and systems. We have further mitigated these supply chain risks by establishing purchasing relationships with multiple vendors that are diversified by type of product offered, brand of products offered, country of origin of products (which is relevant for “Buy American” provisions that we encounter with our customers), individual specification requirements, purchase quantity requirements, quality, availability and price. Our drivetrain systems allow for component substitution, which further mitigates our exposure to any one supplier or component. We believe that we have adequate supplies and access to the sources of the systems, components and materials to meet our current and anticipated future production and supply requirements.
Backlog
As of December 31, 2024, we had a backlog of two zero-emission Class 4 trucks and 42 zero-emission Class 4 cargo vans, which consists of unfilled firm orders for products undersigned contracts with customers.
Employees
As of December 31, 2024, we had 22 employees in total, which are all full-time employees. None of our employees were covered by collective bargaining agreements and we believe our employee relations are good.
Competition
The electric vehicle market has experienced significant turbulence, with numerous companies facing financial challenges, restructuring, or ceasing operations altogether.
The electric vehicle market remains highly competitive, with both established manufacturers and new entrants striving to capture market share. Traditional automotive companies, such as Ford and General Motors, continue to invest heavily in electric vehicle development despite facing operational challenges. Newer companies like Rivian are working to overcome production hurdles to establish a foothold in the market. The recent bankruptcies and operational difficulties among several electric vehicle startups highlight the volatility and capital-intensive nature of the industry.
As the market evolves, companies with robust financial backing, scalable production capabilities, and strong strategic partnerships are better positioned to navigate the challenges inherent in the electric vehicle sector.
Intellectual Property
The protection of our technology and intellectual property is an important component of our success. We rely on intellectual property laws, including trade secret, copyright, trademark and patent laws in the United States and abroad, and use contracts, confidentiality procedures, non-disclosure agreements, employee disclosure and invention assignment agreements and other contractual rights to protect our intellectual property.
We maintain a trademark portfolio including common law trademarks and service marks and have three service marks registered and two trademark registrations in the United States.
Circumstances outside of our control could pose a threat to our intellectual property rights. Effective intellectual property protection may not be available in the United States or other countries in which we provide our solution. In addition, the efforts we have taken to protect our intellectual property rights may not be sufficient or effective. Any impairment of our intellectual property rights could harm our business, our ability to compete and harm our operating results. In addition, as the number of competitors grows and solutions of competitors overlap, we may in the future face claims by third parties that we infringe upon or misappropriate their intellectual property rights, and we may be found to be infringing upon or to have misappropriated such rights. In the future, we, or our customers, may be the subject of legal proceedings alleging that our solutions or underlying technology infringe or violate the intellectual property rights of others.
Governmental Programs and Incentives
We believe that the availability of government subsidies and incentives currently is an important factor considered by our customers when purchasing vehicles that utilize our technology, and that our growth depends in part on the availability and amounts of these subsidies and incentives. This is especially true over the next five to ten years. While the federal government previously allocated $5 billion for the Clean School Bus Program, another $5 billion for the National Electric Vehicle Infrastructure program, $3 billion over 5 years to establish a new grant program to install electrified equipment and reduce emission at ports and federal tax incentives, the status of this funding and several other related programs remains uncertain due to the current Trump administration’s change in policies and pause on any funding for any “Green New Deal” infrastructure under the IRA. While we do not yet know the nature of these policy changes, such changes may have a material and adverse effect on the implementation and continued existence of key electric vehicles support programs.
Overview of Incentive Programs Most Applicable to Our Products
We intend to have our products approved for various local, state and federal incentive programs, including those set forth below. In particular, California’s zero-emission vehicle mandate, which requires a percentage of an automobile manufacturer’s sales to be zero-emission vehicles, has resulted in numerous incentive programs designed to accelerate the purchase and/or repower of cleaner, more efficient vehicles in California.
Clean Truck and Bus Voucher Incentive Project (“HVIP”)
HVIP is a CARB program administered by CALSTART, the purpose of which is to help speed the early market introduction of clean, low-carbon hybrid and electric trucks and buses. Under HVIP, dealers and fleet operators may request vouchers from HVIP on a first-come first-served basis, up to the funding amount available for that year, to reduce the cost of purchasing hybrid and zero-emission medium- and heavy-duty trucks and buses. It is a statewide program. On November 17, 2022, CARB approved the Fiscal Year 2022-23 Funding Plan for Clean Transportation Incentives, which included an allocation of over $1.7 billion to be administered by HVIP. On November 16, 2023, CARB approved the Fiscal Year 2023-2024 Funding Plan for Clean Transportation Incentives, which included an allocation of $80 million to be administered through HVIP. On November 21, 2024, CARB approved the Fiscal Year 2024-25 Funding Plan for Clean Transportation Incentives, which did not include any additional allocation funding to HVIP for Fiscal Year 2024-2025 due to limited funds and needs of other project categories. Funds from previous years are expected to support HVIP until the next budget appropriation.
HVIP vouchers range in amounts depending on the gross vehicle weight of the purchased vehicle and the number of vehicles purchased. Zero-emission Class 3 trucks are currently eligible for up to $45,000 per vehicle. Class 4 and Class 5 vehicles are funded at the $60,000 per vehicle level and Class 6 and Class 7 vehicles are eligible for $85,000 per vehicle. Depending on project location (i.e. if in a disadvantaged area community census tract) those amounts can be increased to $51,750, $69,000 and $107,525 per vehicle, respectively. However, HVIP may also be revising per vehicle amounts available for future grant periods.
HVIP funds the purchase of only fully commercialized hybrid and zero-emission trucks and buses. Vehicles still in the demonstration or evaluation stage are not eligible for inclusion in HVIP. Vehicle manufacturers must apply to have their hybrid and zero-emissions trucks and buses included in HVIP’s voucher program. Once a make and model is included in the program, the manufacturer is not required to submit a full application for the succeeding year’s program unless the vehicle has been modified. We intend to comply with the HVIP guidelines and continue to qualify our vehicles for the HVIP vouchers.
New York Truck Voucher Incentive Program ("NYTVIP")
NYTVIP is a first-come, first-served incentive program funded by the New York State Energy Research & Development Authority. The structure and process for fleets to secure incentives is similar to that of HVIP discussed above. Eligible vehicles include all-electric, hybrid-electric, and CNG trucks and buses. Funding for eligible vehicles domiciled in New York State can reach $385,000 per vehicle. Class 4 and 5 all electric trucks are eligible for up to $100,000 per vehicle and $125,000 per vehicle in funds respectively (i.e., up to 95% of the incremental cost over diesel). We were named an approved dealership in the summer of 2020, and our vehicles are included on the NYTVIP eligible vehicle list for the program. As of March 2024, the New York State Energy Research & Development Authority website reported $46.1 million in total funding availability under NYTVIP.
New York School Bus Incentive Program (“NYSBIP”)
As of January 31, 2024, NYTVIP no longer funds school buses. Funding for zero emission school buses and charging equipment is now awarded separately through NYSBIP.
In the 2022 budget, the New York State Legislature and Governor established a deadline for the transition to zero-emission school buses. Specifically, all school buses purchased in New York State must be zero-emission buses by 2027 and all school buses operating within the state must be zero-emission by 2035. Further, in 2022, voters across New Yorkers voted to approve the Clean Air, Clean Water and Green Jobs Environmental Bond Act (“Bond Act”), which includes $500 million to support the transition to zero-emission buses. New York State Energy Research & Development Authority established NYSBIP to distribute the Bond Act funding to school districts to achieve the state’s zero-emission goals and assist school districts in complying with the zero-emission school bus mandate.
New York City Clean Trucks Voucher Program ("NYCCTVP")
In support of the transition to all-electric vehicles, in early February 2020, New York City Mayor Bill de Blasio signed an executive order requiring electrification of the city’s entire municipal vehicle fleet by 2040.
In October 2020, we were named an approved dealership and our vehicles have been listed on the eligible vehicles list for the New York City Clean Trucks Program. This program provides funding for new electric truck purchases by New York City customers to replace and scrap older polluting ICE vehicles. The rebate incentive funding program provides New York City fleet owners $100,000 per vehicle for an all-electric Class 4 truck sold to them by Envirotech, and $125,000 per vehicle for a Class 5 all-electric truck. The amounts increase for Class 6-Class 8 trucks.
New Jersey Zero Emissions Incentive Program ("NJZIP")
The New Jersey Zero Emissions Incentive Program is a $90 million pilot voucher program that supports businesses and institutions purchasing new, zero-emission vehicles operating in New Jersey by offering up to $175,000 towards the purchase of battery-electric vehicles. In June 2021, we were named an approved vendor in the program. The program will fund vouchers ranging in value from $20,000 to $175,000 for businesses and institutional organizations looking to transition their fleets to zero emissions. Bonuses are available for small businesses and minority-, women-, and veteran-owned businesses. NJZIP is funded by proceeds allocated to the New Jersey Economic Development Authority by the Regional Greenhouse Gas Initiative (“RGGI”) for the purposes of reducing harmful emissions, especially in communities disproportionately impacted by transportation emissions, and creating economic opportunity within the state.
Volkswagen Environmental Mitigation Trust Funds
Beginning in 2018, all 50 states were eligible for millions in funds per year to on-road vehicle projects. Several states have provided carve outs specifically for electric vehicles and, in some cases, electric school buses. For example, California, Illinois, Indiana, Michigan and Ohio have each allocated funds directly to electric school bus projects. For instance, California’s Zero-Emission School Bus and Infrastructure project provides per vehicle incentives of up to $375,000. These states have been in the process of funding their initial rounds or are developing specific funding plans. We have engaged with several of these states to support the development of such plans, including funding the purchase of other commercial vehicles, provided that the buyer surrenders a qualifying existing fossil-fueled vehicle in order to qualify for the funding.
California Air Resources Board (“CARB”)
CARB gathers air quality data for the State of California, ensures the quality of this data, designs and implements air models, and sets ambient air quality standards for the state, with a particular focus on regulating tailpipe emissions and other mobile sources. CARB compiles the state’s emissions inventory and performs air quality and emissions inventory special studies. CARB uses the Emissions Inventory and Air Quality Models to evaluate air quality and reduce emissions in each of California’s 35 local air districts.
CARB also manages several incentive and rebate programs and awards hundreds of millions of dollars in grants to reduce emissions from on- and off-road vehicles and equipment. CARB is responsible for program oversight. CARB awards grants and funds through the Air Quality Improvement Program (AB 118), the Carl Moyer Program, the Voucher Incentive Program for enhanced fleet modernization and emission reduction, and the Lower- Emission School Bus Program/School Bus Retrofit and Replacement Account. On June 25, 2020, CARB passed the Advanced Clean Truck Regulation, requiring truck manufacturers to sell increasing percentages of zero-emission trucks starting with the 2024 model year. Numerous other states have adopted California’s standards established under this rule. More recently, on April 28, 2023, CARB issued the Advanced Clean Fleets Rule that would require owners of medium- and heavy-duty vehicle fleets to begin their transition toward zero-emission vehicles starting in 2024. However, in January 2025, CARB withdrew its request to the EPA for waiver of the Clean Air Act’s federal preemption provisions for the Advanced Clean Fleets Rule, and now the status of this rule remains uncertain.
California Energy Commission ( “ CEC ” )
The California Energy Commission has several core responsibilities, including but not limited to setting energy policy, developing renewable energy, achieving energy efficiency, and transforming California’s transportation infrastructure. One goal of the CEC is to mitigate GHG emissions and reduce the impact of climate change. The CEC carries out its responsibilities pursuant to several of California’s landmark environmental laws. In 2006, the Legislature passed and then Governor Arnold Schwarzenegger signed two landmark pieces of legislation with far-reaching implications for energy policy. The most comprehensive is AB 32, the California Global Warming Solutions Act of 2006, which set an economy-wide cap on California GHG emissions at 1990 levels by no later than 2020. At the time, this was an aggressive goal that represented an approximately 11% reduction from then-current emissions levels and nearly a 30% reduction from projected business-as-usual levels in 2020. In 2015, California passed Senate Bill (SB) 350, which further committed California to reducing GHG emissions by establishing a 2030 greenhouse gas reduction target of 40% below 1990 levels and to achieve 100% clean energy by 2045. The transportation sector represents a significant portion of California’s GHG emissions. This bill was amended with respect to implementation, but the targeted goals remain the same as originally passed. In 2007, AB 118 created the Alternative and Renewable Fuel and Vehicle Technology Program. The program is intended to increase the use of alternative and renewable fuels and innovative technologies that will transform California’s fuel and vehicle types to help attain the state’s climate change policies. AB 118 authorizes the CEC to provide approximately $100 million annually as incentives to public agencies, vehicle and technology consortia, businesses, public-private partnerships, workforce training partnerships and collaboratives, fleet owners, consumers, recreational boaters, and academic institutions for projects that: develop and improve alternative and renewable low-carbon fuels; optimize alternative and renewable fuels for existing and developing engine technologies; improve light-, medium-, and heavy-duty vehicle technologies; and retrofit medium-and heavy-duty on-road and non-road vehicle fleets.
Air Quality Management Districts (“AQMD”) and Air Pollution Control Districts (“APCD”)
California’s AQMDs/APCDs are responsible for controlling emissions primarily from stationary sources of air pollution such as large power plants and refineries. They also have a role in distributing funds and administering incentive programs from mobile sources-primarily cars, trucks and buses, construction equipment, ships and trains, from which approximately 75% of emissions are generated. The largest AQMD/ APCDs are the South Coast AQMD, Bay Area AQMD, San Joaquin Valley APCD, and the San Diego APCD. Local AQMDs/APCDs develop and adopt an Air Quality Improvement Plans, which serves as the blueprint to bring the respective areas into compliance with federal and state clean air standards. Rules are adopted to reduce emissions from various sources, including specific types of equipment, industrial processes, paints and solvents, even consumer products. Permits are issued to many businesses and industries to ensure compliance with air quality rules. Local AQMDs award grants to help reduce emissions in their local communities. These grants and incentive programs include programs aimed at reducing emissions from mobile sources such as buses and trucks. For example, the San Joaquin Valley Air District’s Truck Replacement Program is a program that is open year-round, and which offers grant funding equal to HVIP. In some cases, air district funding programs such as this can be combined with other sources including state and federal grants.
Clean Cities
Clean Cities is a program administered by the DOE’s Office of Efficiency and Renewable Energy, Vehicle Technology Program. According to the DOE, the mission of Clean Cities is to advance the energy, economic, and environmental security of the United States by supporting local decisions to adopt practices that reduce the use of petroleum in the transportation sector. Clean Cities is a government-industry partnership. Under the program, public and private stakeholders from businesses, city and state governments, the automotive industry, fuel providers, and community organizations form coalitions throughout the country, which then work with the DOE to establish a plan for reducing petroleum consumption in their respective geographic areas.
Congestion Mitigation and Air Quality (“CMAQ”) Improvement Program
The CMAQ Improvement Program, which is jointly administered by the Department of Transportation Federal Highway Administration and Federal Transit Administration, provides funding to states to support surface transportation projects and other related efforts that contribute air quality improvements and provide congestion relief. CMAQ funding is allocated to the states annually based on a statutory formula that is based on population and air quality classification as designated by the EPA. Each state’s transportation department then is responsible for distributing the funds. State transportation departments may spend CMAQ funds on projects that reduce ozone precursors, and at least 16 states have used CMAQ funds for alternative fuel vehicle projects (such as purchasing electric or hybrid vehicles).
Funding for this program is authorized through the IIJA and may be subject to pause in funding implemented under Executive Order 14154.
Commercial Clean Vehicle Credit
Businesses and tax-exempt organizations that buy a qualified commercial clean vehicle may qualify for a clean vehicle tax credit of up to $40,000 under Internal Revenue Code (IRC) 45W. The maximum credit is $7,500 for qualified vehicles with GVWRs of under 14,000 pounds and $40,000 for all other vehicles. This tax credit may be subject to amendment or elimination in 2025 reconciliation bill.
Zero Emissions Airport Vehicle ("ZEAV") and Infrastructure Incentives
The Zero Emissions Airport Vehicle and Infrastructure Pilot Program provides funding to airports for up to 50% of the cost to acquire ZEAVs and install or modify supporting infrastructure for acquired vehicles. The program gives priority to applicants located in nonattainment areas, as defined by the Clean Air Act, and projects that achieve the greatest air quality benefits, as measured by the number of emissions reduced per dollar of funds spent under the program.
Bus and Bus Facilities Grants
The U.S. Department of Transportation’s Federal Transit Administration (FTA) administers the Grants for Buses and Bus Facilities Competitive Program. Eligible applicants include state, local, and tribal governments, fixed-route bus operators, and private nonprofit organizations engaged in public transportation.
Clean School Bus Program
The EPA's Clean School Bus program provides funding to eligible applicants for the replacement of existing school buses with clean, alternative fuel school buses or zero-emission school buses. EPA may award up to 100% of the cost of the replacement bus, charging equipment, or fueling infrastructure. Eligible applicants are school districts, state and local government programs, federally recognized Native American tribes, non-profit organizations, and eligible contractors.
Funding for this program is authorized through the IIJA and is likely subject to the Executive Order 14154’s funding pause directed at electric vehicles infrastructure or subsidy programs.
Heavy-Duty Zero Emission Vehicle ("ZEV") and Infrastructure Grants
During the Biden administration, EPA announced its plan to create a grant program for heavy-duty ZEVs and associated infrastructure by spring 2024. The IRA invested $1 billion to replace dirty heavy-duty vehicles with clean, zero-emission vehicles, support zero-emission vehicle infrastructure, and to train and develop workers. The EPA planned on distributing this $1 billion in funding for clean heavy-duty vehicles between 2024 and 2031.
On March 12, 2025, the EPA announced that it would be reconsidering heavy-duty vehicle emissions regulations promulgated during the Biden administration. It is likely that these grants will be paused, eliminated, or amended to expand grant eligibility to include non-electric vehicles.
Diesel Emissions Reduction Act ("DERA")
The EPA established the DERA Program to reduce pollution emitted from diesel engines through the implementation of varied control strategies and the involvement of national, state, and local partners. DERA includes programs for existing diesel fleets, regulations for clean diesel engines and fuels, and regional collaborations and partnerships.
Funding for the DERA program was created under the Energy Policy Act of 2005. The Trump administration has not indicated that this program will be amended or eliminated.
Other State Incentives
Most state provides a variety of electric vehicles incentives, as well as private enterprises incentives. The states with the most significant state-specific incentives include California, New Jersey, New York and Massachusetts.
Government Regulation
Our products are designed to comply with a significant number of governmental regulations and industry standards, some of which are evolving as new technologies are deployed. Government regulations regarding the manufacture, sale and implementation of products and systems similar to ours are subject to future change. We cannot predict what impact, if any, such changes may have upon our business. We believe that vehicles that utilize our technology are in conformity with all applicable laws in all relevant jurisdictions.
Emission and Fuel Economy Standards
Government regulation related to climate change is under consideration at the U.S. federal and state levels. The EPA and National Highway Traffic Safety Administration (“NHTSA”) issued a final rule for greenhouse gas emissions and fuel economy requirements for trucks and heavy-duty engines on August 9, 2011, which had an initial phase-in starting with model year 2014 and a final phase-in occurring in model year 2017. NHTSA standards for model years 2014 and 2015 were voluntary, while mandatory standards first went into effect in 2016. In August 2016, the EPA and NHTSA jointly finalized Phase 2 standards for medium- and heavy-duty vehicles through model year 2027 to improve fleet fuel efficiency and cut carbon emissions.
The rule provides emission standards for carbon dioxide and fuel consumption standards for three main categories of vehicles: (i) combination tractors, (ii) heavy-duty pickup trucks and vans, and (iii) vocational vehicles. According to the EPA and NHTSA, vocational vehicles consist of a wide variety of truck and bus types, including delivery, refuse, utility, dump, cement, transit bus, shuttle bus, school bus, emergency vehicles, motor homes and tow trucks, and are characterized by a complex build process, with an incomplete chassis often built with an engine and transmission purchased from other manufacturers, then sold to a body manufacturer.
The EPA and NHTSA rule also establishes multiple flexibility and incentive programs for manufacturers of alternatively fueled vehicles, including an engine averaging banking and trading (“ABT”) program, a vehicle ABT program and additional credit programs for early adoption of standards or deployment of advanced or innovative technologies. The ABT programs allows for emission and/or fuel consumption credits to be averaged, banked or traded within defined groupings of the regulatory subcategories. The additional credit programs allow manufacturers of engines and vehicles to be eligible to generate credits if they demonstrate improvements in excess of the standards established in the rule prior to the model year the standards become effective or if they introduce advanced or innovative technology engines or vehicles.
On March 12, 2025, the EPA announced that it would be reconsidering medium-duty and heavy-duty vehicle emissions regulations, signaling a rollback of emissions standards. The extent to which these regulations will be changed is unknown, but it is likely that restrictions on vehicle emission limits will be reduced or eliminated.
Vehicle Safety and Testing
The National Traffic and Motor Vehicle Safety Act of 1966 (“Safety Act”), regulates motor vehicles and motor vehicle equipment in the United States in two primary ways. First, the Safety Act prohibits the sale in the United States of any new vehicle or equipment that does not conform to applicable motor vehicle safety standards established by NHTSA. Meeting or exceeding many safety standards is costly, in part because the standards tend to conflict with the need to reduce vehicle weight in order to meet emissions and fuel economy standards. Second, the Safety Act requires that defects related to motor vehicle safety be remedied through safety recall campaigns. A manufacturer is obligated to recall vehicles if it determines that the vehicles do not comply with a safety standard. Should we or NHTSA determine that either a safety defect or noncompliance exists with respect to any of our modified vehicles, the cost of such recall campaigns could be substantial.
Battery Safety and Testing
We believe our battery packs conform to mandatory regulations that govern transport of “dangerous goods,” which includes lithium-ion batteries that may present a risk in transportation. The governing regulations, which are issued by the Pipeline and Hazardous Materials Safety Administration, are based on the United Nations ("UN") Recommendations on the Safe Transport of Dangerous Goods Model Regulations, and related UN Manual of Tests and Criteria. The requirements for shipments of these goods vary by mode of transportation, such as ocean vessel, rail, truck and air.
Business Developments and Operational Updates
As part of the Company’s ongoing growth strategy, several significant operational initiatives and partnerships were pursued and announced in recent periods. The following provides context and updates on these developments, including matters relating to property acquisition, production agreements, incentive programs, and financing discussions.
Osceola Facility Development and Acquisition
The Company has entered into a purchase agreement, through its wholly owned affiliate 1425 Ohlendorf Road LLC, for a manufacturing facility located in Osceola, Arkansas. While a contractual framework was established and the Company commenced investment in the facility under a lease agreement, the transaction has not yet closed, and legal title to the property has not yet transferred. Discussions with the City of Osceola are ongoing and have involved revisions to certain terms, including facility improvements, easement arrangements, and purchase conditions. The Company continues to work diligently toward finalizing the transaction and enhancing the facility to support future production capacity.
Arkansas Incentive Program Engagement
The Company engaged with the Arkansas Economic Development Commission (AEDC) regarding potential state-level incentive support for its Arkansas-based operations. AEDC provided a proposal outlining the potential for up to $27 million in incentives, subject to various approvals, documentation, and performance thresholds. While initial steps were taken to align with program requirements, the final agreement was not executed by AEDC, and the proposed incentive package remains subject to formalization. The Company remains in contact with relevant stakeholders and continues to explore avenues of support for its activities in the region.
Production for International Fleet Operators
The Company entered into a right-hand drive electric school bus development initiative for a Southeast Asia-based transportation provider, Yeap Transport Services. Development and homologation efforts were completed to meet applicable standards. However, due to unforeseen changes in leadership within the customer organization, the Company was notified in late 2024 that the program would not proceed. Discussions regarding potential redeployment of those units are ongoing as part of the Company’s broader international strategy.
Customer Orders and Strategic Agreements
From time to time, the Company announces the execution or anticipated execution of agreements with distributors, customers, or funding partners. In certain cases, these arrangements may be subject to further documentation, execution of final purchase orders, or third-party approvals. For example:
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An anticipated vehicle purchase arrangement with DaVinci Innovations was discussed and included early-stage dealership activity, though no final binding purchase order has been received to date.
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Discussions with capital providers, including Karla Mae Capital, involved exploration of non-dilutive financing mechanisms. A related purchase order discounting facility for up to $10 million was subsequently finalized with GOBA Capital, reflecting the Company’s continued pursuit of flexible funding options to support growth.
Sales Incentive Programs
As part of its participation in the New Jersey Zero-Emission Incentive Program (NJ ZIP), the Company has delivered a cumulative total of 76 vehicles to qualified recipients since its initial involvement in 2021. These deliveries occurred over the course of the program and reflect the Company’s commitment to supporting clean vehicle deployment in key markets.
Company Information
We file electronically with the U.S. Securities and Exchange Commission (the “SEC”) our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. Our website is www.evtvusa.com. Our website and the information contained on or connected to our website are not incorporated by reference herein, and our web address is included as an inactive textual reference only.

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ITEM 1A. RISK FACTORS
Item 1A. RISK FACTORS
Investing in our securities involves significant risks, including the potential loss of all or part of your investment. These risks could materially affect our business, financial condition and results of operations and cause a decline in the market price of our common stock. You should carefully consider all of the risks described in this Annual Report, in addition to the other information contained in this Annual Report, before you make an investment in our securities. In addition to other matters identified or described by us from time to time in filings with the SEC, there are several important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or results that are reflected from time to time in any forward-looking statement.
Summary Risk Factors
The following is a summary of the principal risks that could adversely affect our business, operations and financial results. Such risks are discussed more fully below and include, but are not limited to, risks related to:
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Our history of losses and our ability to achieve and/or sustain profitability in the future;
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Significant fluctuations in our operating results, and the resulting difficulty in predicting our operating results;
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Our future growth being dependent upon demand for new mid-sized zero-emission trucks and cargo vans, and other fleet vehicles;
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Our ability to compete successfully against current and future competitors;
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Our sales cycle, which can be long and unpredictable and require considerable time and expense before executing a customer agreement, which may make it difficult to project when, if at all, we will obtain new customers and generate revenue from those customers;
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Developments in alternative technologies or improvements in the internal combustion engine, which may materially adversely affect the demand for electric vehicles and our products;
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Our ability to keep up with advances in zero-emission electric vehicles technology, which will impact our ability to obtain or maintain a competitive position in the market;
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The demand for commercial zero-emission electric vehicles depending, in part, on the continuation of current trends resulting from historical dependence on fossil fuels;
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Our ability to reduce and adequately control the costs and expenses associated with operating our business, including our material and production costs;
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Our ability to manage our anticipated growth effectively, which will affect our ability to execute our business plan, maintain high levels of service and adequately address competitive challenges;
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The possible performance of our zero-emission electric vehicles in a manner that is not consistent with our customers’ expectations, which could harm our ability to develop, market and sell our vehicles;
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Our dependence on third parties to deliver raw materials, parts, components and services in adequate quantity in a timely manner and at reasonable prices, quality levels, and volumes acceptable to us;
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The possibility that the facilities or operations of our third-party providers could be damaged or adversely affected as a result of disasters or unpredictable events;
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Our dependence on information technology and the possibility that any breakdown, interruption or breach of our information technology systems could subject us to liability or interrupt the operation of our business;
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Harm to our brand image that could result from a failure of our suppliers to use ethical business practices and comply with applicable laws and regulations;
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The success of our strategic relationships with third parties and our ability to identify and form adequate strategic relationships in the future;
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The ability of our suppliers to scale their zero-emission vehicle manufacturing and assembling processes effectively and quickly from low volume production to high volume production;
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Our exposure to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims;
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The possibility of being compelled to undertake product recalls;
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The adequacy of our warranty reserves to cover future warranty claims;
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The adequacy of our insurance strategy to protect us from all business risks;
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Our ability to design, develop, market and sell zero-emission electric vehicles and other product offerings that address additional market opportunities;
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The availability and amounts of government subsidies and incentives and the application of regulations that encourage conversion to EVs;
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Our service model, which may be costly for us to operate and may not address the service requirements of our prospective customers;
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Our exposure to substantial regulation and unfavorable changes in such regulations;
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Vehicle dealer and distribution laws, which could adversely affect our ability to sell our commercial zero-emission electric vehicles;
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Environmental laws and regulations that could impose substantial costs upon us and cause delays in opening our sales, service and assembly facilities;
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Failure to protect our intellectual property rights, which could impair our ability to protect our proprietary technology;
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Our exposure to claims of infringement of another party’s intellectual property rights;
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Legal and administrative proceedings that could result in substantial liabilities;
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Our use of battery packs composed of lithium-ion battery cells, which, if not appropriately managed and controlled, on rare occasions have been observed to catch fire or vent smoke and flames;
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Unfavorable conditions in the global economy, inflation and high interest rates and capital market liquidity issues;
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Our dependence on our Chief Executive Officer and management team, retaining and attracting qualified management, key employees and technical personnel and expanding our sales and marketing capabilities;
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Our management team’s limited experience in operating a public company;
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Forecasts of market growth that may prove to be inaccurate, and our ability to grow our business at similar rates, or at all;
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The availability of additional capital on acceptable terms, if at all, to support business growth;
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Our ability to maintain effective internal control over financial reporting and effective disclosure controls and procedures;
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Our ability to utilize a significant portion of our net operating loss or research and development tax credit carryforwards;
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Volatility in the price of our common stock, which could result in substantial losses for our stockholders;
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Securities or industry analysts not publishing research or publishing inaccurate or unfavorable research about our business;
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Our ability to meet our publicly announced guidance or other expectations about our business;
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Our intent to not pay dividends for the foreseeable future; and
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Provisions in our charter documents and under Delaware law that could discourage a takeover that stockholders may consider favorable.
Risks Related to Our Business
We have a history of losses and we may not achieve and/or sustain profitability in the future.
For the years ended December 31, 2024 and 2023, we incurred net losses of $8.8 million and $12.7 million, respectively. The 2023 net loss included approximately $5.1 million of non-cash goodwill impairment charges. As of December 31, 2024, we had working capital of approximately $5.9 million and accumulated deficit of approximately $73.5 million. To date, we have financed our operations primarily through capital raises from issuing common stock. We may not achieve profitability in the future as we anticipate that our operating expenses will increase significantly in the foreseeable future as we:
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make investments required to move our operations to our new corporate headquarters and manufacturing facility in Houston, Texas;
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design, develop and manufacture our light to medium to heavy-duty fleet vehicles and their components;
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increase our sales and marketing to acquire new customers; and
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increase our general and administrative functions to support our growing operations.
These efforts may prove more expensive than we currently anticipate and we may not succeed in increasing our revenue sufficiently to offset these higher costs. Even if we are successful in generating revenue and increasing our customer base, we may not become profitable in the future or may be unable to maintain any profitability achieved if we fail to increase our revenue and manage our operating expenses or if we incur unanticipated liabilities. Even if our revenue increases, we may not be able to sustain the rate of revenue growth. Revenue growth may be slower than anticipated or revenue may decline for a number of reasons, including continued problems accessing various incentive programs to assist our customers with their purchase of our vehicles, lack of demand for our zero-emission vehicles and drivetrain systems, increasing competition, lengthening sales cycles, decelerating growth of, or declines in, our overall market, or our failure to capitalize on growth opportunities or to introduce new offerings. Any failure by us to achieve and maintain revenue or profitability could cause the price of our common stock to decline.
While we believe that our existing cash and cash equivalents and our working capital as of December 31, 2024 will be sufficient to fund our operations during the next twelve months, we may not successfully execute our business plan, and if we do not, we may need additional capital to continue our operations. In February 2022, we acquired a US manufacturing facility in Osceola Arkansas that will require additional debt and/or equity capital in order to purchase related equipment and set up production lines which is expected to require significant additional investment through 2027. Recently, we announced that we will be moving our corporate headquarters and certain functions of our manufacturing facility to Houston, Texas. As a result, this transition will incur costs that may be significant. In addition, additional capital expenditures will be required to set up the infrastructure that is necessary to our operations.
Our operating results may fluctuate significantly, which makes out future operating results difficult to predict and could cause our operating results to fall below expectations.
We may experience quarterly fluctuations in our operating results due to a number of factors, many of which are outside our control, which make our future results difficult to predict and could cause our operating results to fall below expectations.
Additionally we expect our period-to-period operating results to vary based on our operating costs, which we anticipate will increase significantly in future periods as we, among other things, design and develop our zero-emission vehicles and drivetrain systems, open new design, sales and service facilities, hire additional technology staff, increase our travel and operational budgets, increase our facility costs, hire and train service personnel, increase our sales and marketing activities, and increase our general and administrative functions to support our growing operations. As a result comparing our operating results, on a period-to-period basis may not be meaningful. You should not consider our past results in any projected growth rate or as indicative of our future performance. We have a limited ability to forecast our future revenue, costs and expenses and, as a result, our operating results may from time to time fall below our estimates.
In addition, recent changes to our business model as a result of the Maddox Acquisition make it difficult to evaluate our current business and our future prospects. We have limited insight into other trends that may emerge and affect our business. Our operating results may not meet expectations of equity research analysts or investors. If any of this occurs, the trading price of our common stock could decline, either suddenly or over time.
Our future growth is dependent upon demand for new mid-sized zero-emission trucks and cargo vans, and other fleet vehicles.
Our growth is highly dependent upon the market acceptance of, and we are subject to an elevated risk of any reduced demand for, new zero-emission trucks and other fleet vehicles. If this market does not develop as we expect or develops slower than expected, our business, prospects, financial condition and operating results will be harmed, and we may need to raise additional capital. This market is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors. Factors that may influence the market acceptance of new zero-emission vehicles include:
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perceptions about zero-emission electric vehicles quality, safety design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of any electric vehicle;
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perceptions about the limitations in the technology resulting in a limited range over which zero-emission electric vehicles may be driven on a single battery charge (increases in distance requires additional batteries, which increases weight, and, at some point, too much weight diminishes the additional distance being sought before requiring a charge);
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perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technology;
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the availability of alternative fuel vehicles, including competitive vehicles and improvements in the fuel economy of the internal combustion engine may cause a slow-down in the demand to switch to zero-emission electric vehicles;
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the availability of service for zero-emission electric vehicles;
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the environmental consciousness of owners of diesel- and gasoline-powered buses, truck and other fleet vehicles;
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changes in the cost of oil and gasoline;
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government regulations and economic incentives, including a change in the administrations and legislations of federal and state governments, promoting fuel efficiency and alternate forms of energy;
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access to charging stations both public and private, standardization of electric vehicle charging systems and perceptions about convenience and cost to charge an electric vehicle;
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the availability of tax and other governmental incentives and rebates to purchase and operate electric vehicles or future regulation requiring increased use of zero-emission or hybrid vehicles;
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perceptions about and the actual cost of alternative fuel; and
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macroeconomic factors such as, among other things, inflation and high interest rates which could diminish our ability to access the capital markets for funding our business.
To the extent that we are not able to build our products in accordance with customer expectations, our future sales could be harmed.
We may also become subject to regulations that require us to alter the design of our vehicles, which could negatively impact consumer interest in our products.
The influence of any of the factors described above may cause current or potential customers not to purchase our electric vehicles, which would materially adversely affect our business, operating results, financial condition and prospects.
We may not be able to compete successfully against current and future competitors.
The market for commercial zero-emission electric vehicles is relatively new, rapidly evolving, and characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors.
Most of our existing and potential competitors, including Ford, Nissan, Navistar, Freightliner, Mercedes-Benz, Odyne Systems, Lightning Systems, Nordresa, Workhorse, Mitsubishi/Fuso, BYD, Proterra, TransPower, Lion Electric Company, Rivian, GreenPower Motor Company, General Motors, Blue Bird, Tesla, Volkswagen, Volvo, PeterBilt, Nikola, and Motiv, have substantially greater financial resources, more extensive engineering, manufacturing, marketing and customer service and support capabilities, longer operating histories and greater name recognition than we do. They may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products. Virtually all of our competitors have more extensive customer bases and broader customer and industry relationships than we do. Our competitors may be in a stronger position to respond quickly to new technologies and may be able to design, develop, market and sell their products more effectively. As a result, our competitors may be able to compete more aggressively and sustain that competition over a longer period of time than we can. Each of these competitors has the potential to capture market share in our target market, which could have an adverse effect on our position in our industry and on our business and operating results.
We expect competition in our industry to intensify in the future in light of anticipated increased demand for alternative fuel vehicles, continued globalization, and consolidation in the worldwide automotive industry. Increased competition may lead to lower vehicle unit sales and increased inventory, which may result in further downward price pressure which may materially and adversely affect our business, financial condition, operating results and prospects. Our ability to successfully compete in our industry will be fundamental to our future success in existing and new markets and to our overall market share. There can be no assurances that we will be able to compete successfully in our markets. If our competitors introduce new products or services that compete with or surpass the quality, price or performance of our products or services, we may be unable to satisfy existing customers or attract new customers at the prices and levels that would allow us to generate attractive rates of return on our investment. A disruptive technology advancement in the electric vehicle industry by a competitor, such as in energy storage, traction motors or power electronics, could adversely affect the sales of our products.
Demand in the zero-emission electric vehicles vehicle industry is volatile, which may materially and adversely affect our business, prospects, operating results and financial condition.
The markets in which we currently compete and plan to compete in the future have been subject to considerable volatility in demand in recent periods. As a low volume producer, we have fewer financial resources than more established providers have to withstand changes in the market and disruptions in demand. Volatility in demand may lead to lower vehicle unit sales and increased inventory, which may result in further downward price pressure and adversely affect our business, prospects, financial condition and operating results. These effects may have a more pronounced impact on our business given our relatively smaller scale and financial resources as compared to many incumbent providers.
Our sales cycle can be long and unpredictable and require considerable time and expense before executing a customer agreement, which may make it difficult to project when, if at all, we will obtain new customers and generate revenue from those customers.
The sales cycle for our business, from initial contact with a potential lead to contract execution and implementation, typically takes significant time and is difficult to predict. Our sales cycle, in some cases, has lasted nine months or more. Our sales efforts involve educating our customers about the use, capabilities and benefits of our products and services. Some of our customers undertake a significant evaluation process that frequently involves not only our products and services but also the offerings of our competitors. This process can be costly and time-consuming. In addition, once a customer is inclined to purchase our products, their ability, in most cases, to issue a purchase order is dependent on being granted funding towards the purchase. It is very difficult for us or our customers to predict the timing of the release of such funding, or if they will receive at all. As a result, it is difficult to predict when we will obtain new customers and begin generating revenue from these new customers. As part of our sales cycle, we may incur significant expenses before executing a definitive agreement with a prospective customer and before we are able to generate any revenue from such agreement. The substantial time and money spent on our sales efforts may not generate significant revenue. If conditions in the marketplace generally or with a specific prospective customer change negatively, it is possible that no definitive agreement will be executed, and we will be unable to recover any of these expenses. If we are not successful in targeting, supporting and streamlining our sales processes, our ability to grow our business, and our operating results and financial condition may be adversely affected. If our sales cycles lengthen, our future revenue could be lower than expected, which would have an adverse impact on our consolidated operating results and could cause our stock price to decline.
Developments in alternative technologies or improvements in the internal combustion engine may materially adversely affect the demand for electric vehicles and our products.
Significant developments in alternative technologies, such as advanced diesel, ethanol and other renewable fuels, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. For example, compressed natural gas or propane, which are abundant and relatively inexpensive in North America, may emerge as consumers’ preference. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies or customer preferences, could result in the loss of competitiveness of our products, decreased revenue and a loss of market share to competitors.
If we are unable to keep up with advances in zero-emission electric vehicles technology, we may suffer an inability to obtain a competitive position in the market or suffer a decline in our competitive position.
There are companies in the zero-emission electric vehicle industry that have developed or are developing vehicles and technologies that compete or will compete with our vehicles. Our competitors may be able to provide products and services similar to ours more efficiently or at greater scale. We may be unable to keep up with changes in zero-emission electric vehicle technology and, as a result, may suffer a decline in our competitive position, which would materially and adversely affect our business, prospects, operating results and financial condition. Our research and development efforts may not be sufficient to adapt to changes in zero-emission electric vehicle technology. As technologies change, we plan to upgrade or adapt our vehicles and introduce new vehicles in order to continue to provide vehicles with the latest technology, in particular battery cell technology. However, our vehicles may not compete effectively with alternatives if we are unable to source and integrate the latest technology into our vehicles. For example, we do not currently manufacture the items required to produce our vehicles, including battery cells, which makes us dependent upon other suppliers of technology for our battery packs, motors and other components of our electric vehicles. If for any reason we are unable to keep pace with changes in commercial electric vehicle technology, particularly battery technology, our competitive position may be adversely affected.
The demand for commercial zero-emission electric vehicles depends, in part, on the continuation of current trends resulting from historical dependence on fossil fuels. Extended periods of low diesel or other petroleum-based fuel prices could adversely affect demand for vehicles that utilize our technology, which could adversely affect our business, prospects, financial condition and operating results.
We believe that much of the present and projected demand for commercial zero-emission electric vehicles results from concerns about volatility in the cost of petroleum-based fuel, the dependency of the United States on oil from unstable or hostile countries, government regulations and economic incentives promoting fuel efficiency and alternative forms of energy, as well as the belief that poor air quality and climate change results in part from the burning of fossil fuels. If the cost of petroleum-based fuel decreased significantly, or the long-term supply of oil in the United States improved, the government may eliminate or modify its regulations or economic incentives related to fuel efficiency and alternative forms of energy. If there is a change in the perception that the burning of fossil fuels does not negatively impact the environment, the demand for commercial zero-emission electric vehicles could be reduced, and our business and revenue may be harmed. Diesel and other petroleum- based fuel prices have been extremely volatile, and we believe this continuing volatility will persist. Lower diesel or other petroleum-based fuel prices over extended periods of time may lower the current perception in government and the private sector that cheaper, more readily available energy alternatives should be developed and produced. If diesel or other petroleum-based fuel prices remain at deflated levels for extended periods of time, the demand for commercial electric vehicles may decrease, which could have an adverse effect on our business, prospects, financial condition and operating results.
We may not be able to reduce and adequately control the costs and expenses associated with operating our business, including our material and production costs.
If we are unable to reduce and/or maintain a sufficiently low level of cost for designing, manufacturing, marketing, selling and distributing and servicing our zero-emission electric vehicles relative to their selling prices, our operating results, gross margins, business and prospects could be materially and adversely impacted. We have made, and will be required to continue to make, significant investments for the design, manufacture, and sales of our zero-emission vehicles.
We incur significant costs related to procuring the materials and components required to build our vehicles. As a result, without including the impact of government or other subsidies, incentives, or tariffs, our costs and therefore the purchase prices for our commercial zero-emission electric vehicles currently are higher than the purchase prices for gas or diesel-fueled vehicles with comparable features.
Additionally, in the future we may be required to incur substantial marketing costs and expenses to promote our zero-emission vehicles, including the use of traditional media such as television, radio and print even though our marketing expenses to date have been relatively limited. If we are unable to keep our operating costs aligned with the level of revenues we generate, our operating results, business and prospects will be harmed. Many of the factors that impact our operating costs are beyond our control. For example, global demand from all manufacturers of zero-emission vehicles for the same resources could create shortages and drive the costs of our raw materials and certain components, such as lithium-ion battery cells, to a higher level and reduce profit or create or increase losses. Indeed, if the popularity of zero-emission electric vehicles exceeds current expectations without significant expansion in battery cell production capacity and advancements in battery cell technology, shortages could occur which would result in increased material and component parts costs to us and could also negatively impact our ability to meet production requirements if the batteries were simply not available.
If we fail to manage our anticipated growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately.
We have expanded our operations in the last several years and anticipate that further expansion will be required to achieve our business objectives. The growth and expansion of our business, including the requirements of being a public company, places a continuous and significant strain on our management, operational and financial resources. Our future operating results depend largely on our ability to manage this expansion and growth successfully. Risks that we face in undertaking this expansion include:
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establishing sufficient sales, service and service facilities in a timely manner;
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forecasting production and revenue;
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hiring and training new personnel as production scales;
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controlling expenses and investments in anticipation of expanded operations;
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implementing and enhancing administrative infrastructure, systems and processes; and
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addressing new markets;
We may in the future hire a significant number of additional personnel, including design and manufacturing personnel and service technicians for our zero-emission electric vehicles, the timing of which will depend on the success of our sales efforts. Because vehicles that utilize our technology are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in zero-emission electric vehicles may not be available to hire, and we may need to expend significant time and expense in training the employees we hire. Competition for individuals with experience designing, manufacturing and servicing zero-emission electric vehicles is intense, and we may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future, which could seriously harm our business and prospects.
In this regard, we will be required to continue to improve our operational, financial and management controls and our reporting procedures and we may not be able to do so effectively. Further, to accommodate our expected growth we must continually improve and maintain our technology, systems and network infrastructure. We therefore may be unable to manage our expenses effectively in the future, which would negatively impact our gross margin or operating expenses in any particular quarter. If we fail to manage our anticipated growth and change in a manner that preserves the quality of our zero-emission vehicles and services and our ability to deliver in a timely manner, it will negatively affect our brand and reputation and harm our ability to retain and attract customers.
Public health crises and other global health pandemics, epidemics or disease outbreaks could adversely impact our business, results of operation and financial condition.
A significant public health crisis, pandemic or disease outbreak, could adversely impact our business as well as those of our suppliers and customers. For example, the COVID-19 pandemic disrupted the global vehicle industry and customer sales, production volumes, supply of components critical to our business, and purchases of zero-emission electric vehicles by end-consumers. Any future significant public health crisis could adversely impact the global economy, our industry and the overall demand for our products. In addition, preventative or reactionary measures taken by governmental authorities may disrupt the ability of our employees, suppliers and other business partners to perform their respective functions and obligations relative to the conduct of our business. Our ability to predict and respond to future changes resulting from potential health crises is uncertain as are the ultimate potential impacts on our business. The extent to which a pandemic or similar significant health crises will impact our business in the future is uncertain. In addition, to the extent such significant health crises may adversely affect our business, financial condition, results of operations and cash flows, they may also have the effect of heightening many of the other risk factors in this section.
Unfavorable conditions in the global economy, rising interest rates and capital market liquidity issues could limit our ability to grow our business and negatively affect our operating results.
Revenue growth and potential profitability of our business depends on the level of demand in the markets we serve. To the extent that weak economic conditions cause our customers and potential customers to freeze or reduce their capital expenditure or operational budgets, particularly those for zero-emission electric vehicles, demand for our products and services may be negatively affected. Historically, economic downturns have resulted in overall reductions in these budgets and corresponding spending. If economic conditions deteriorate or do not materially improve, our customers and potential customers may elect to decrease their operational budgets or defer or reconsider product and service purchases, which would limit our ability to grow our business and negatively affect our operating results.
Our business depends on our Chief Executive Officer and management team, retaining and attracting qualified management, key employees and technical personnel and expanding our sales and marketing capabilities.
Our success depends upon the continued service of Mr. Phillip Oldridge, our Chief Executive Officer, as well as other members of our senior management team. It also depends on our ability to continue to attract and retain additional highly qualified management, technical, engineering, operating and sales and marketing personnel. We do not currently maintain key person life insurance policies on any of our employees. Our business also requires skilled technical, engineering, product and sales personnel, who are in high demand and are difficult to recruit and retain. As we continue to innovate and develop our products and services and develop our business, we will require personnel with expertise in these areas. There is increasing competition for talented individuals such as design engineers, manufacturing engineers, and other skilled employees with specialized knowledge of electric vehicles. This competition affects both our ability to retain key employees and hire new ones. Key talent may leave us due to various factors, such as a very competitive labor market for talented individuals with automotive or transportation experience. Our success depends upon our ability to hire new employees in a timely manner and retain current employees. Additionally, we compete with both mature and prosperous companies that have far greater financial resources than we do and start-ups and emerging companies that promise short-term growth opportunities. The loss of Mr. Oldridge or an inability to attract, retain and motivate additional highly skilled employees required for the planned development and expansion of our business, could delay or prevent the achievement of our business objectives and could materially harm our business.
Our management has limited experience in operating a public company. If we fail to manage our growth effectively, we may not be able to develop, produce, make or sell our products or services successfully.
Most of our executive officers have limited experience in the management of a publicly traded company. Management may not successfully or effectively manage a public company that is subject to significant regulatory oversight and reporting obligations under federal securities laws. Management’s limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of our executive officers’ time may be devoted to these activities, which will result in less time being devoted to the management and growth of the Company. Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition.
Additionally, we may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies in the U.S. The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the U.S. may require costs greater than expected. Competition for individuals with this experience is intense, and we may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business, prospects, financial condition and operating results.
The forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business may not grow at similar rates, if at all.
Growth forecasts are subject to significant uncertainty and are based on assumptions and estimates, which may not prove to be accurate. Forecasts relating to the expected growth in zero-emission EVs, electric drivetrain systems and conversions and other markets may prove to be inaccurate. Even if these markets experience the forecasted growth, we may not grow our business at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
We may selectively pursue acquisitions of complementary businesses and technologies, which could divert capital and our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and adversely affect our operating results.
We may selectively pursue acquisitions of complementary businesses and technologies that we believe could complement or expand our applications, enhance our technical capabilities or otherwise offer growth opportunities. For example, in December 2024, we completed the Maddox Acquisition. As with our prior acquisitions, the pursuit of potential future acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.
In addition, we have limited experience with acquiring other businesses or technologies. If we acquire businesses or technologies, we may not be able to integrate the acquired personnel, operations and technologies successfully, or effectively manage the combined business following the acquisition. We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including:
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inability to integrate or benefit from acquired technologies or services in a profitable manner;
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unanticipated costs or liabilities associated with the acquisition;
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incurrence of acquisition-related costs;
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difficulty integrating the accounting systems, operations and personnel of the acquired business;
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difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;
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difficulty converting the customers of the acquired business onto our applications and contract terms, including disparities in the revenue, licensing, support or professional services model of the acquired company;
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diversion of management’s attention from other business concerns;
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adverse effects to our existing business relationships with business partners and customers as a result of the acquisition;
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the potential loss of key employees;
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use of resources that are needed in other parts of our business; and
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use of substantial portions of our available cash to consummate the acquisition.
In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to record impairment charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations.
Acquisitions could also result in dilutive issuances of equity securities and/or the incurrence of debt, which could adversely affect our operating results. We may also unknowingly inherit liabilities from acquired businesses or assets that arise after the acquisition and that are not adequately covered by indemnities. In addition, if an acquired business fails to meet our expectations, our operating results, business and financial position may suffer.
Risks Relating to the Design, Supply and Manufacturing of our Products
If our zero-emission electric vehicles fail to perform as expected, our ability to develop, market and sell our vehicles could be harmed.
Our zero-emission vehicles may not perform in a manner that is consistent with our customers’ expectations for a variety of reasons. If our vehicles were to contain defects in design and manufacture that cause them not to perform as expected or that require repair, or experience any other failure to perform as expected, it could harm our reputation and result in delivery delays, product recalls, product liability claims, significant warranty and other expenses, which could have a material adverse impact on our ability to develop, market and sell our zero-emission vehicles. For example, should we have a significant sale of either new vehicles or re-power conversion kits and a defect (from a supplier-purchased product or internally assembled components) were to be discovered after delivery that could not be corrected in a timely manner, we could suffer an adverse public relations event that harms the company in a way that it may not be able to recover from, or which turns out to be so costly as to cause a significant loss. Although we attempt to remedy any issues we observe in our products as effectively and as rapidly as possible, such efforts may not be timely, may hamper production or may not provide satisfaction to our customers. While we have performed extensive internal testing, we currently have a limited frame of reference by which to evaluate the long-term performance of our zero-emission products. There can be no assurance that we will be able to detect and fix any defects in our products prior to their sale to customers. Further, the performance of our zero-emission products may be negatively impacted by other factors, such as limitations inherent in existing battery technology and extreme weather conditions.
Any vehicle product defects or any other failure of our commercial zero-emission electric vehicles to perform as expected could harm our reputation and result in delivery delays, product recalls, product liability claims, significant warranty and other expenses, customer losses and lost revenue, any of which could have a material adverse impact on our business, financial condition, operating results and prospects.
We are dependent on third parties to deliver raw materials, parts, components and services in adequate quantity in a timely manner and at reasonable prices, quality levels and volumes acceptable to us. Our business, prospects, financial condition and operating results could be adversely affected if we experience disruptions in our supply chain.
We provide zero-emission electric vehicles assembled from components supplied by third parties. For example, we rely on third parties for batteries, traction motors, power electronics, connectors, cables, and metal fabrication for battery storage boxes. As a result, we are particularly dependent on those third parties to deliver raw materials, parts, components and services in adequate quality and quantity in a timely manner and at reasonable prices. Some components of our vehicles and drivetrain systems include materials such as copper, lithium, rare-earth and strategic metals that have historically experienced price volatility and supply interruptions. In addition, we do not currently maintain long-term agreements with our suppliers with guaranteed pricing because we cannot at this time guarantee them adequate volume, which exposes us to fluctuations in component, materials and equipment prices and availability.
There have been significant changes to U.S. trade policies, including tariffs affecting China, Canada and Mexico, and there continues to be significant discussion regarding other potential changes to U.S. trade policies, treaties and tariffs, including the potential for additional tariffs. In addition, retaliatory tariffs have been imposed and additional retaliatory tariffs are likely. These changes have resulted in uncertain economic and political conditions that have made it difficult for us and our suppliers to accurately forecast and plan future business activities. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity and have a material adverse effect on the business and financial condition of our suppliers, which, in turn, would negatively impact us.
Furthermore, currency fluctuations weakening the U.S. dollar against foreign currencies may adversely affect our purchasing power for such raw materials, parts and components and manufacturing equipment from foreign suppliers. Substantial increases in the prices for such raw materials, components and equipment would increase our operating costs, and could reduce our margins if we cannot recoup the increased costs through increased prices. We may not be able to recoup these increased costs by increasing the prices of our products.
In cases where we rely on a sole supplier for a component or system, if there is an interruption of supply or increased industry demand it may be difficult for us to substitute one supplier for another, increase the number of suppliers or change one component for another in a timely manner or at all. Additionally, many of our current suppliers are small companies that produce a limited number of specialized products. If any of these suppliers were to go out of business or be acquired by a competitor of ours or any other third party that decides to discontinue our supply relationship, we would need to find an alternative supplier, which we may not be able to do.
This limited supply chain exposes us to multiple potential sources of delivery failure or component shortages for the production of our zero-emission electric products. We may experience delays due to supply chain disruptions with respect to any of our zero-emission electric products we may produce. In addition, our currently ongoing transition from low to high volume production tooling for our zero-emission electric products may take longer than expected, which may adversely impact our short-term financial results.
Furthermore, if we experience significantly increased demand, or need to replace certain existing suppliers, there can be no assurance that additional supplies of component parts will be available when required on terms that are favorable to us, or that any supplier would allocate sufficient supplies to us in order to meet our requirements or fill our orders in a timely manner, or that we could engineer replacement components ourselves.
Changes in our supply chain may result in increased future costs. We have also experienced cost increases from certain of our suppliers in order to meet our quality targets and development timelines as well as due to design changes that we made, and we may experience similar cost increases in the future. Additionally, we are negotiating with existing suppliers for cost reductions, seeking new and less expensive suppliers for certain parts, and attempting to redesign certain parts to make them less expensive to produce. If we are unsuccessful in our efforts to control and reduce supplier costs, our operating results will suffer.
If we encounter unexpected difficulties with our current suppliers, and if we are unable to fill these needs from other suppliers, we could experience production delays, which could have a material adverse effect on our financial condition and operating results.
The inability of these suppliers to deliver, or their refusal to deliver, necessary raw materials, parts and components of our zero-emission drivetrain systems and services in a timely manner at prices, quality levels, and volumes acceptable to us would have a material adverse effect on our financial condition and operating results. Our business, prospects, financial condition and operating results could be adversely affected if we experience disruptions in our supply chain.
The facilities or operations of our third-party providers could be damaged or adversely affected as a result of disasters or unpredictable events.
If major disasters such as earthquakes, tornadoes, fires, floods, hurricanes, wars, terrorist attacks, computer viruses, pandemics or other events occur, the production facilities of some of our third-party providers may be seriously damaged, or they may have to stop or delay production and shipment of our products. We may also experience downtime due to a third-party provider’s delay in production and shipment of our products due to, among other reasons, their inability to obtain supplies and materials. Either of these delays could have a material adverse impact on our business, operating results and financial condition.
We have become increasingly dependent on information technology and any breakdown, interruption or breach of our information technology systems could subject us to liability or interrupt the operation of our business, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.
We are increasingly dependent upon information technology systems and infrastructure in connection with the conduct of our business. We must routinely update our information technology infrastructure and our various information technology systems throughout the organization may not continue to meet our current and future business needs. Furthermore, modification, upgrade or replacement of such systems may be costly. In addition, any breakdown, interruption, corruption or unauthorized access to or cyber-attack on these systems could create system disruptions, shutdowns or unauthorized disclosure of confidential information. While we attempt to take appropriate security and cyber-security measures to protect our data and information technology systems and to prevent such breakdowns and unauthorized breaches and cyber-attacks, these measures may not be successful and these breakdowns and breaches in, or attacks on, our systems and data may not be prevented. Such breakdowns, breaches or attacks may cause business interruption and could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common stock to decline, and we may suffer financial damage or other losses as a result of lost or misappropriated information.
If our suppliers fail to use ethical business practices and comply with applicable laws and regulations, our brand image could be harmed due to negative publicity.
We do not control our independent suppliers or their business practices and, as such, they may not comply with ethical or legal business practices, such as environmental responsibility, fair wage practices, appropriate sourcing of raw materials, and compliance with child labor laws, among others. A lack of demonstrated compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations.
Violation of labor or other laws by our suppliers or the divergence of an independent supplier’s labor or other practices from those generally accepted as ethical in the U.S. or other markets in which we do business could also attract negative publicity for us and our brand. This could diminish the value of our brand image and reduce demand for our zero-emission vehicles and drivetrain systems technology if, as a result of such violation, we were to attract negative publicity. If we, or others in our industry, encounter similar problems in the future, it could harm our brand image, business, prospects, financial condition and operating results.
Our business success will depend in part on the success of our strategic relationships with third parties. We may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future.
Our business success will depend in part on our ability to continue to successfully manage and enter into productive strategic relationships with third parties. We depend on various third parties to provide critical parts for our process. We currently maintain strategic relationships with key manufacturers of components we require for our zero-emission electric products. Maintaining and expanding our strategic relationships with third parties is critical to our continued success. Further, our relationships with these third parties are typically non-exclusive and do not prohibit the other party from working with our competitors. These relationships may not result in additional customers or enable us to generate significant revenue. Identifying suitable business partners and negotiating and documenting relationships with them require significant time and resources. If we are unsuccessful in establishing or maintaining our relationships with these third parties, our ability to successfully sell our products and services, compete in the marketplace or to grow our revenue could be impaired and our operating results would suffer.
While we may be able to establish alternate supply relationships or engineer replacement components for any single source components, we may be unable to do so in the short term, or at all, at prices or costs that are favorable to us. In particular, while we believe that we will be able to secure alternate sources of supply for most of our single sourced components in a relatively short time frame, qualifying alternate suppliers or developing our own replacements for certain highly customized components of our products may be time consuming, costly and may force us to make additional modifications to a product’s design, or at a minimum require us to delay delivery of orders.
We currently have and are seeking to establish new relationships with third parties to provide alternative parts sources, such as batteries, controllers and battery management systems. For example, we continue to test additional battery manufacturers’ products in order to have back-up options should our existing supplier have delivery or quality issues. However, we may not be able to identify or secure suitable business relationship opportunities in the future or to ensure that our competitors will not capitalize on such opportunities before we do. Our strategic relationships for batteries, motors and controllers will keep us competitive if maintained properly. We may not be able to offer benefits to companies that we would like to establish and maintain strategic relationships with. Moreover, identifying such opportunities could demand substantial management time and resources, and negotiating and financing relationships involves significant costs and uncertainties. If we are unable to successfully source and execute on strategic relationship opportunities in the future, our overall growth could be impaired, and our business, prospects and operating results could be materially adversely affected.
Our suppliers must scale their zero-emission vehicle manufacturing and assembling processes effectively and quickly from low volume production to high volume production.
Our existing production model utilizing third parties may not be well suited for the high-volume production required to scale our business. We do not know whether we or our existing suppliers will be able to develop efficient, low-cost manufacturing and assembly capability and processes, and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes required, to successfully develop our business. Any failure by us or our suppliers to develop such manufacturing and assembly processes and capabilities and reliable sources of component supply within our projected costs and timelines could have a material adverse effect on our business, prospects, operating results and financial condition.
The ability of our suppliers to scale their manufacturing and assembling processes is in part dependent on ours and their supply chain and on our collective ability to execute our decentralized production strategy. Even if we and our suppliers are successful in developing our high-volume manufacturing and assembly capability and processes, and reliable sources of component supply, we do not know whether we will be able to do so in a manner that avoids significant delays and cost overruns, including, as a result of factors beyond our control, such as problems with suppliers and vendors, in time to meet our commercialization schedules or to satisfy the requirements of customers. In addition, certain components we or our third-party suppliers integrate into may not be available on a consistent basis or in large quantities. Our business, prospects, financial condition and operating results could be adversely affected if we or our suppliers experience disruptions in our respective supply chains or if we or they cannot obtain materials of sufficient quality at reasonable prices.
The complexity in our business is expected to continue growing as we introduce new products and services. We have limited experience in simultaneously designing, testing, manufacturing, upgrading, adapting and selling our zero-emission products as well as limited experience allocating our available resources among the design and production of multiple zero-emission units. As we add complexity to our product line and introduce new products and services, we may experience unexpected delays.
If we and our suppliers are unable to scale our respective existing assembly processes and systems quickly while maintaining our current quality level, including supply chain constraints and the inability to manage complexity in our business, we may be unable to meet our customers’ vehicle quality and quantity requirements or our forecasted production schedule or lower our cost of sales. As a result, we may not be able to meet our customers’ delivery schedules and could face the loss of customers or be exposed to liability to customers to which we promised delivery, which could adversely affect our business, prospects, financial condition and operating results.
We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
We may become subject to product liability claims, which could harm our business, prospects, operating results and financial condition if we are not able to successfully defend or insure against such claims. The zero-emission electric vehicles industry may experience significant product liability claims and we face inherent risk of exposure to claims in the event our zero-emission products do not perform as expected or malfunction and personal injury or death results. Our risks in this area are particularly pronounced given the limited field experience of our zero-emission vehicles, number of vehicles delivered to date and limited field experience of those vehicles. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our products and business and inhibit or prevent commercialization of other future vehicle candidates, which would have a material adverse effect on our brand, business, prospects and operating results. We have added product liability insurance on a claims-made basis for all our zero-emission products with appropriate annual limits. However, our insurance may not be sufficient to cover all potential product liability claims. Any lawsuit seeking significant monetary damages either in excess of our coverage, or outside of our coverage, may have a material adverse effect on our reputation, business and financial condition.
We may be compelled to undertake product recalls.
Any product recall in the future may result in adverse publicity, damage our brand and adversely affect our business, prospects, operating results and financial condition. We may at various times, voluntarily or involuntarily, initiate a recall if any of our zero-emission drivetrain system components prove to be defective. Such recalls, voluntary or involuntary, involve significant expense and diversion of management attention and other resources, which would adversely affect our brand image in our target markets and could adversely affect our business, prospects, financial condition and results of operations.
Our warranty reserves may be insufficient to cover future warranty claims, which could adversely affect our financial performance.
If our warranty reserves are inadequate to cover future warranty claims on vehicles that utilize our technology, our business, prospects, financial condition and operating results could be materially and adversely affected. We provide a three-year warranty on parts and workmanship and a five-year warranty on powertrain and batteries with every zero-emission electric product. Most of our warranty offering, with the exception of workmanship, is covered by the component manufacturers’ warranty. In addition, customers have the opportunity to purchase an Extended Service Plan for the period after the end of the standard warranty to cover additional services for an additional three-year period or 100,000 miles, whichever comes first. The warranty is similar to other providers’ warranty programs and is intended to cover all parts and labor to repair defects in material or workmanship in the product. We plan to record and adjust warranty reserves based on changes in estimated costs and actual warranty costs. However, because we have only recently begun delivering our first zero-emission vehicles, and we have extremely limited operating experience with them, we therefore have little experience with warranty claims for these zero-emission vehicles or with estimating warranty reserves. We will monitor our warranty reserves based on our actual warranty claim experience. We may be required to provide for increases in warranty reserves in the future. Our future warranty reserves may not be sufficient to cover all claims or our limited experience with warranty claims may not adequately address the needs of our customers to their satisfaction.
Our insurance strategy may not be adequate to protect us from all business risks.
We may be subject, in the ordinary course of business, to claims resulting from products liability, employment-related actions, class-action lawsuits, accidents, acts of God and other actions against us. Additionally, our insurance coverage may be insufficient to cover all existing and future claims against us. We may be compelled to expend significant time and resources defending any such claims, and a loss that is uninsured or which exceeds policy limits may require us to pay substantial amounts, which could adversely affect our financial condition and operating results.
If we are unable to design, develop, market and sell zero-emission electric vehicles and other product offerings that address additional market opportunities, our business, prospects and operating results will suffer.
We will need to address additional markets and expand our customer demographic in order to further grow our business. In particular, we have recently transitioned to target owners of trucks (all classes inclusive of 3-7) and vans between 10,000 pounds GVWR to 19,500 pounds GVWR, commercial fleets, including white fleets of school districts and other fleet users of these vehicles, including government entities. Successfully offering all electric vehicles in this market requires delivering a vehicle with different characteristics than an ICE-powered vehicle at a price that is competitive with other similar vehicles. Because the markets are still growing in their acceptance of our new all-electric products, it is difficult to project increases in market acceptance and our ability to generate sales in volumes as we currently intend. Our failure to address additional market opportunities would harm our business, financial condition, operating results and prospects.
Our growth depends in part on the availability and amounts of government subsidies and incentives and the application of regulations that encourage conversion to electric vehicles. These subsidies and incentives are limited and unpredictable and could expire or change to benefit competing technologies.
We believe that the availability of government subsidies, rebates, and economic incentives is currently a critical factor considered by our customers when purchasing our zero-emission systems or converting their existing vehicles to zero-emission-electric or hybrids, and that our growth depends in large part on the availability and amounts of these subsidies and economic incentives. Any unavailability, reduction, elimination or adverse application of government subsidies, rebates, and economic incentives because of administrative mistakes made by those in charge of the programs, budgetary challenges, expiration, policy changes, the reduced need for such subsidies, rebates, and incentives due to the perceived success of electric or hybrid vehicles or other reasons may result in the diminished price competitiveness of the alternative fuel vehicle industry generally and our zero-emission electric and hybrid vehicles in particular, especially prior to our ability to significantly reduce our costs. For example, in the United States, we and our customers benefit from significant subsidies in connection with the purchase of our vehicles under the California HVIP, CARB, NYTVIP, NYCCTP, NJZIP, Maryland Clean Fuels Incentive Program, local air quality management districts, the electric vehicles Demonstration Project, and state-level Clean Cities programs. Under these programs, purchasers of qualifying vehicles and those who convert their existing vehicles are eligible to receive subsidies or incentives from $55,000 to $385,000 per qualifying vehicle purchased or converted. The elimination of certain regulations and programs that encourage sales of zero-emission electric and hybrid vehicles could adversely impact sales of our commercial zero-emission electric and hybrid vehicles, either currently or at any time in the future. The Trump administration has begun rescinding federal support for zero-emission electric and hybrid vehicles, and key agencies like the EPA and the Department of Energy have indicated future plans to roll back environmental regulations, waiver programs, and federal subsidies that benefit the industry. Further financial support from legislation like the IRA and IIJA may be eliminated or reduced in of Congress’s 2025 reconciliation bill. We currently benefit from certain government and economic incentives supporting the development and adoption of zero-emission electric vehicles. If government subsidies and economic incentives to produce and purchase zero-emission electric vehicles were no longer available to us or our customers, or the amounts of such subsidies and incentives were reduced or eliminated, it would have a negative impact on demand for our vehicles and our business, prospects, financial condition and operating results would be materially and adversely affected.
In addition, we anticipate that in the future there may be new opportunities for us to apply for grants, loans and other incentives from federal, state, local and foreign governments on our own behalf and on behalf of our customers. Our ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of our applications to participate in such programs.
The application process for these funds and other incentives is and will continue to be highly competitive, and there is no guarantee that we will obtain such funds or incentives
Our service model may be costly for us to operate and may not address the service requirements of our prospective customers.
Our business plan is not to develop company owned and operated service and warranty centers but to leverage existing third-party bus and truck facilities to sell and to service our new vehicles through our FAR network. This business plan, while it has been effective thus far, may not prove to be workable in the future, and we may be forced to establish our own facilities at some point, resulting in substantial capital expenditures and increased operating costs. Zero-emission electric commercial vehicles incorporate new and evolving technologies and require specialized service. These special service arrangements now and in the future may continue to be costly and we may not be able to recoup the costs of providing these services to our customers. In addition, a number of potential customers may choose not to purchase our commercial zero-emission electric vehicles because of the lack of a more widespread service network. If we are unable to satisfactorily service vehicles that utilize our technology, our ability to generate customer loyalty, grow our business and sell additional vehicles could be impaired. There can be no assurance that these service arrangements or our limited experience servicing vehicles that utilize our technology will adequately address the service requirements of our customers to their satisfaction, or that we will have sufficient resources to meet these service requirements in a timely manner as the volume of vehicles we are able to deliver annually increases. If we do not adequately address our customers’ service needs, our brand and reputation may be adversely affected, which, in turn, could have an adverse effect on our business, prospects, financial condition and operating results.
Traditional providers do not necessarily provide maintenance and repair services directly. Customers must instead service their vehicles through franchised dealerships or through third party maintenance service providers. We are pursuing agreements to provide third party service for us. However, it is unclear when or even whether such third-party service providers will be able to acquire the expertise to service our zero-emission electric commercial vehicles. As vehicles that utilize our technology are placed in more locations, we may encounter negative reactions from our customers who are frustrated that they cannot use local service locations to the same extent as they have with their conventional commercial vehicles and this frustration may result in negative publicity and reduced sales, thereby harming our business and prospects.
Our decentralized assembly, sales and service model presents numerous challenges and we may not be able to execute on our plan to establish sales, service and assembly facilities in the urban areas we have targeted and our facilities in any of those markets may underperform relative to our expectations.
Our strategy of establishing sales, service, and assembly facilities in selected urban areas in the United States is substantially different from the prevailing centralized manufacturing and franchised distribution and service model used currently by our zero-emission manufacturing competitors. For example, we may not be able to utilize long established sales channels developed through a traditional franchise system to increase our sales volume, which may harm our business, prospects, financial condition and operating results. Moreover, we will be competing with companies with well established distribution channels. If we determine that our decentralized model is inadequate, opening our own sales, service and assembly facility in any market generally will be capital intensive and require, among other things, establishing a local order volume that is sufficient to support the facility, finding a suitable and available location, negotiating a satisfactory lease agreement for the facility, obtaining permits and approvals from local and state authorities (which, in the case of facilities to be opened in foreign countries, may require obtaining approvals from national governments), building out the facility to our specifications and hiring and training employees to assemble, sell and service our zero-emission electric vehicles and converting existing vehicles to zero-emission electric vehicles. If we decide we must open our own facilities, we plan to seek state and local government incentives to defray the costs of opening facilities in the markets we have selected, but we may not be successful in this effort, or the incentives may not be as significant as we would like. As with any development project, the development and build-out of a facility will subject us to the risk of cost overruns and delays, which may be significant. Once our sales, service and assembly facilities are open for business, we will need to ensure that they maintain a high level of quality in order to satisfy customers and enhance the brand. Even if we are able to address all of the challenges discussed above, we have little experience in sales, service or assembly and our sales, service and assembly facilities in one or more markets may not adequately address customer service needs or be profitable and we may lose sales and our entire investment in such facilities, and therefore, damaging our reputation in the process. If we are unable to establish the local order volume we require in order to open new sales, service and assembly facilities or are unable to successfully assemble, sell, and service our zero-emission electric commercial vehicles adequately for customers and profitably operate these new facilities in our target markets, our business, prospects, financial condition and operating results may be adversely affected. If we do not adequately address our customers’ service needs, our brand and reputation will be adversely affected, which in turn could have a material and adverse impact on our business, financial condition, operating results and prospects.
In many of our zero-emission electric vehicles we use battery packs composed of lithium-ion battery cells, which, if not appropriately managed and controlled, on rare occasions have been observed to catch fire or vent smoke and flames. If any such events occur in our commercial electric vehicles, we could face liability for damage or injury, adverse publicity and a potential safety recall.
The battery packs in our manufactured vehicles use lithium-ion cells, which have been used for years in laptop computers, cell phones and electric vehicles. On rare occasions, if not appropriately managed and controlled, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. Highly publicized incidents of laptop computers, cell phones, and Tesla, Inc.’s electric vehicles bursting into flames have focused consumer attention on the safety of these cells. In addition, a limited number of side-impact tests carried out by NHTSA on non-commercial passenger vehicles containing lithium-ion batteries and thermal management systems containing liquid coolant have resulted in post-collision fires under certain conditions. Any failure of a competitor’s electric vehicle may cause indirect adverse publicity for us and our electric vehicles. These events have raised questions about the suitability of lithium-ion cells for automotive applications. A field failure of our battery packs may occur, particularly if one of our manufactured or converted vehicles is involved in a collision, which could damage the vehicle or lead to personal injury or death and may subject us to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Furthermore, there is some risk of electrocution if individuals who attempt to repair battery packs on our manufactured or converted vehicles do not follow applicable maintenance and repair protocols. Any such damage or injury would likely lead to adverse publicity and potentially a safety recall. Any such adverse publicity or negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells such as a vehicle or other fire, even if such incident does not involve vehicles that utilize our technology, could seriously harm our business, prospects, financial condition and operating results.
Risks Relating to the Legal and Regulatory Matters
We are subject to substantial regulation, which is evolving, and unfavorable changes or any failure by us to comply with these regulations could substantially harm our business and operating results.
Our commercial zero-emission electric vehicles, the sale of motor vehicles in general and the electronic components used in vehicles are subject to substantial regulation under international, federal, state and local laws. We may incur in the future increased costs in complying with these regulations. Regulations related to the electric vehicle industry and alternative and renewable energy currently are evolving and we face risks associated with changes to these regulations or new regulations. These risks include the following:
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changes to the regulations governing the assembly, transportation and disposal of lithium-ion batteries;
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revisions in motor carrier safety laws in the United States to further enhance motor vehicle safety generally and to ensure that electric vehicles achieve levels of safety commensurate with other cars, trucks, and buses could increase the costs associated with the component parts and the manufacture, assembly, and conversion of our drivetrain systems;
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revisions in consumer protection laws to ensure that consumers are fully informed of the particular operational characteristics of vehicles could increase our costs associated with warning labels or other related customer information dissemination; and
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dissolution of incentive structures for electric vehicle adoption resulting from the changes in federal policy with the introduction of a new presidential administration.
To the extent the laws governing our business and vehicles change, some or all of our zero-emission electric products may not comply with applicable international, federal, state or local laws, and certain of the competitive advantages of our products may be reduced or eliminated, which could have an adverse effect on our business. Furthermore, compliance with changing regulations could be burdensome, time consuming, and expensive. To the extent compliance with changes in regulations or new regulations is cost prohibitive, our business, prospects, financial condition and operating results will be adversely affected.
Vehicle dealer and distribution laws could adversely affect our ability to sell our commercial zero-emission electric vehicles.
Sales of our zero-emission electric vehicles are and/or may be subject to international, state and local vehicle dealer and distribution laws. To the extent such laws prevent us from selling our vehicles to customers located in a particular jurisdiction or require us to retain a local dealer or distributor or establish and maintain a physical presence in a jurisdiction in order to sell vehicles in that jurisdiction, our business, prospects, financial condition and operating results could be adversely affected. We intend to contract with vehicle dealers to sell and/or service our vehicles, but we have no assurance at this time that we will successfully contract with vehicle dealers and distributors to sell and/or service our vehicles.
We are subject to various environmental laws and regulations that could impose substantial costs upon us and cause delays in opening our sales, service and assembly facilities.
We and our operations are subject to federal, state and/or local environmental laws and regulations, including laws relating to the use, handling, storage, transportation, disposal and human exposure to hazardous substances and wastes. Environmental and health and safety laws and regulations can be complex, and we expect that our business and operations may be affected by future amendments to such laws or other new environmental and health and safety laws which may require us to change our operations. These laws can give rise to liability for investigatory costs, administrative oversight costs, cleanup costs, property damage, bodily injury and fines and penalties. Capital and operating expenses needed to comply with environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third party damages, responsibilities to investigate and take corrective or remedial actions, suspension of production or a cessation of our operations.
Contamination at our facilities may result in liability for us under environmental laws and regulations, including, but not limited to the Comprehensive Environmental Response, Compensation and Liability Act, which can impose liability for the full amount of remediation-related costs without regard to fault, for the investigation and cleanup of contaminated soil and ground water, for building contamination and impacts to human health and for damages to natural resources. The costs of complying with environmental laws and regulations and any claims concerning noncompliance, or liability with respect to contamination in the future, could have a material adverse effect on our financial condition or operating results. We may face unexpected delays in obtaining the necessary permits and approvals required by environmental laws and regulations in connection with any planned manufacturing or operational facilities that could require significant time and financial resources and delay our ability to operate these facilities, which would adversely impact our business prospects and operating results.
We may be involved in legal and administrative proceedings that could result in substantial liabilities.
We may be involved in legal proceedings, administrative proceedings, claims, and other litigation that arise in the ordinary course of business, such as title, royalty or contractual disputes, regulatory compliance matters and personal injury or property damage matters. In addition, we may become involved in securities class action litigation or shareholder litigation in connection with prior offerings of our common stock. Such proceedings are inherently uncertain, and their results cannot be predicted. Regardless of the outcome, such proceedings could have an adverse impact on us because of legal costs, diversion of management and other personnel and other factors. In addition, it is possible that a resolution of one or more such proceedings could result in liability, penalties or sanctions, as well as judgments, consent decrees or orders requiring a change in our business practices, which could materially and adversely affect our business, operating results and financial condition. Accruals for such liability, penalties or sanctions may be insufficient, and judgments and estimates to determine accruals or range of losses related to legal and other proceedings could change from one period to the next, and such changes could be material.
Our management determined that our disclosure controls were not effective as of December 31, 2024. If we are unable to maintain effective internal control over financial reporting and effective disclosure controls and procedures, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively affected.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles un the U.S. ("GAAP") Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on the internal control over financial reporting. Once we are no longer either a “smaller reporting company,” such report must be attested to by our independent registered public accounting firm.
Based on the evaluation required by Section 404 of the Sarbanes-Oxley Act, our management determined that our internal control over financial reporting was not effective as of December 31, 2024, primarily due to certain staff reductions and voluntary resignations we experienced beginning in the fourth quarter of 2020, through the closing of our acquisition of Envirotech Drive Systems, Inc. (“EVT") in March 2021 into 2024, during which we increased our reliance on outsourced accounting help. As a result of such changes, our management concluded that we were unable to maintain the levels of segregation of duties during such periods at the levels of prior periods, and that such changes to our disclosure controls and procedures significantly affected our internal control over financial reporting during the years ended December 31, 2021, 2022, 2023 and 2024.
Although we have yet to fully resolve such deficiencies as of the date of this Annual Report, we have engaged, and continue to seek the assistance of additional, experienced accounting professionals with relevant expertise to supplement our efforts and mitigate the negative effects of the above-described deficiencies in the effectiveness of our disclosure controls and procedures.
If we fail to detect errors on a timely basis, our financial statements may be materially misstated and if we are unable to comply with the requirements of Section 404 of the Sarbanes Oxley Act, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, if and when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
Risks Related to Intellectual Property
Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology.
Our success and ability to compete depend in part upon our intellectual property. We primarily rely on intellectual property laws, including trade secret, copyright, trademark and patent laws in the United States and abroad, and use contracts, confidentiality procedures, non-disclosure agreements, employee disclosure and invention assignment agreements and other contractual rights to protect our intellectual property. However, the steps we take to protect our intellectual property rights may be inadequate or we may be unable to secure intellectual property protection for all of our products and services.
If we are unable to protect our intellectual property, our competitors could use our intellectual property to market products, services or products and services similar to ours and our ability to compete effectively would be impaired. Moreover, others may independently develop technologies that are competitive to ours or infringe our intellectual property. Any of our intellectual property rights may be challenged by others or invalidated through administrative processes or litigation. The enforcement of our intellectual property rights depends on our legal actions against these infringers being successful, but these actions may not be successful, even when our rights have been infringed. In addition, we might be required to spend significant resources to monitor and protect our intellectual property rights, and our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Litigation to protect and enforce our intellectual property rights could be costly, time-consuming and distracting to management, whether or not it is resolved in our favor, and could ultimately result in the impairment or loss of portions of our intellectual property. Any patents issued in the future may not provide us with competitive advantages or may be successfully challenged by third parties.
Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Effective protection of our intellectual property may not be available to us in every country in which our products and services are available. The laws of some foreign countries may not be as protective of intellectual property rights as those in the U.S., and mechanisms for enforcement of intellectual property rights may be inadequate. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.
We could incur substantial costs as a result of any claim of infringement of another party’s intellectual property rights.
Companies, organizations or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that could prevent, limit or interfere with our ability to produce, use, develop or sell our zero-emission electric or hybrid vehicles or components, which could make it more difficult for us to operate our business. Companies in our industry are increasingly bringing and becoming subject to suits alleging infringement of proprietary rights, particularly patent rights, and our competitors may hold patents or have pending patent applications, which could be related to our business. These risks have been amplified by the increase in third parties, or non-practicing entities, whose sole primary business is to assert such claims. We have not received in the past, but may receive in the future, notices that claim we or our customers using our products and services have misappropriated or misused other parties’ intellectual property rights. In those cases, we intend to investigate the validity of these claims and, if we believe these claims have merit, to respond through licensing or other appropriate actions. If we are sued by a third party that claims that our technology infringes its rights, the litigation could be expensive and could divert our management resources. We do not currently have an extensive patent portfolio of our own, which may limit the defenses available to us in any such litigation.
In addition, in many instances, we have agreed to indemnify our customers against certain claims that our products and services infringe the intellectual property rights of third parties. The results of any intellectual property litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more of the following:
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cease offering or using technologies or producing, using, developing or selling vehicles or conversions that incorporate the challenged intellectual property;
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make substantial payments for legal fees, settlement payments or other costs or damages;
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obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or
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redesign technology or vehicles that utilize our technology to avoid infringement.
If we are required to make substantial payments or undertake any of the other actions noted above as a result of any intellectual property infringement claims against us or any obligation to indemnify our customers for such claims, such payments or costs could have a material adverse effect upon our business and financial results. Furthermore, our business could be adversely affected by any significant disputes between us and our customers as to the applicability or scope of our indemnification obligation.
Risks Related to our Financial Condition
We will require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all. If we cannot raise additional capital when needed, our operations and prospects will be negatively affected.
Our business is capital-intensive. We need to raise additional capital in the short- and long-term to operate our business and scale our manufacturing, among other activities. We need to raise additional capital especially if we begin manufacturing our vehicles in the United States. We intend to continue to make investments to support our business growth and will require additional funds as we scale our operations and respond to the potential future business challenges, such as keeping pace with technological developments in order to remain competitive in our evolving industry, improving our operating infrastructure or acquiring complementary businesses and technologies.
While we believe that our existing cash and cash equivalents will be sufficient to fund our operations during the next twelve months, we will need to engage in additional equity or debt financing to secure additional funds. We do not expect to be able to satisfy our cash requirements solely through product sales in the near future, therefore we expect to rely on the net proceeds from our previous offerings and available debt financing to fund our operations. We intend to employ various strategies to obtain the required funding for future operations, such as continuing to access capital through the A&R SEPA (as defined in Part II, Item 7 (Management's Discussion and Analysis of Financial Conditions and Results of Operations), of this Annual Report, pursuant to which approximately $22.0 was available as of December 31, 2024. However, we will not be able to access funds under the A&R SEPA until the outstanding convertible promissory notes thereunder have been paid in full. Our access to advances under the A&R SEPA is also dependent on the market price of our common stock and the registration of sufficient shares to be sold under the A&R SEPA. As a result, the A&R SEPA cannot be included as a source of liquidity for our ASC 205-40 analysis.
If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders will suffer dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing secured by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. In addition, we may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when and if we require it, our ability to continue to support our business growth, and to respond to business challenges would be significantly impaired and, we would have to significantly reduce our spending, delay or cancel our planned business activities or substantially change our corporate structure. As a result, we may be forced to curtail or discontinue our operations, which could materially and adversely affect our financial condition, results of operations, business and prospects. In addition, sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur, including pursuant to the A&R SEPA, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
We are currently out of compliance with the Nasdaq’s continuing listing requirements and if we fail to satisfy all such requirements, our common stock may be delisted from Nasdaq, which could have an adverse impact on the liquidity and market price of our common stock.
Our common stock is currently listed on the Nasdaq Capital Market, which has qualitative and quantitative continued listing requirements, including corporate governance requirements, public float requirements and a $1.00 minimum closing bid price requirement. Our common stock price has been and may in the future be below the minimum bid price for continued listing on Nasdaq. On March 6, 2025, we received notice from Nasdaq indicating that the closing bid price for our common stock had fallen below the minimum bid price for continued listing for 30 consecutive trading days and was no longer in compliance with the minimum bid requirement. In order to regain compliance, the closing bid price of our common stock must be equal to or above the minimum bid price for a period of 10 consecutive trading days prior to September 2, 2025. In the event we fail to meet this requirement by such date, we may be eligible for an additional grace period of another 180 days, so long as we meet the applicable market value of publicly held shares requirement and other applicable listing standards for the Nasdaq Capital Market, other than the minimum bid price requirement, on the trading date prior to the deadline, and inform Nasdaq of our intent to cure this deficiency. If we fail to meet these requirements or fail to satisfy any other continued listing requirements, Nasdaq may take steps to delist our common stock. Delisting would likely have an adverse effect on the liquidity of our common stock, decrease the market price of our common stock, result in the potential loss of confidence by investors, suppliers, customers, and employees, and fewer business development opportunities, and adversely affect our ability to obtain financing for our continuing operations.
We may not be able to utilize a significant portion of our net operating loss or research and development tax credit carryforwards, which could adversely affect our profitability.
As of December 31, 2024, we had federal and state net operating loss carryforwards (“NOLs”) due to prior period losses. Federal and state NOLs generated prior to 2018 have a 20-year carryforward and, if not utilized, will begin to expire in 2032. Similarly, state NOLs generated for tax years 2018 and after will also have a 20-year carryforward and, if not utilized, will begin to expire in 2038. These NOLs may go unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability.
Federal NOLs generated for tax years beginning with 2018 will carryforward indefinitely due to changes in the Coronavirus Aid, Relief and Economic Security ("CARES") Act of 2020. California tax law has not changed to conform to the new federal law on carryforward of NOLs generated in tax years beginning with 2018.
In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, our ability to utilize NOL carryforwards or other tax attributes in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. As discussed elsewhere in this report, the acquisition of EVT resulted in their shareholders owning approximately 56% of the Company’s outstanding shares at the closing date of the acquisition, which is an ownership change under Section 382. As a result, the future utilization of the ADOMANI, Inc. NOL carryforwards will be limited to a number of factors, which cannot be calculated at this time.
Following the completion of the our acquisition of EVT, we assessed our ability to use certain deferred tax benefits from net operating losses that were recorded by EVT in certain prior periods and determined that, in light of the uncertainty of generating future taxable income against which those losses can be offset in order to realize such benefits, recording a valuation allowance to reduce the deferred income tax assets to the amount that is more likely than not to be realized is appropriate. In making such determination, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. The Company recognized a full valuation allowance for all deferred tax assets for the years ended December 31, 2024 and December 31, 2023.
In addition, future issuances of our stock could cause an “ownership change.” It is possible that any future ownership change could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.
Our reported financial results may be adversely affected by changes in GAAP.
GAAP is subject to interpretation by the Financial Accounting Standards Board, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before the announcement of a change.
Risks Related to the Ownership of Our Securities
The price of our common stock is and is likely to continue to be volatile and fluctuate substantially, which could result in substantial losses for our stockholders and may prevent you from reselling your shares at or above the price you paid for your shares.
The market price of our common stock is and is likely to remain volatile and may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
•
overall performance of the equity markets;
•
the development and sustainability of an active trading market for our common stock;
•
our operating performance and the performance of other similar companies;
•
changes in the estimates of our operating results that we provide to the public, our failure to meet these projections or changes in recommendations by securities analysts that elect to follow our common stock;
•
press releases or other public announcements by us or others, including our filings with the SEC;
•
changes in the market perception of all-electric and hybrid products and services generally or in the effectiveness of our products and services in particular;
•
announcements of technological innovations, new applications, features, functionality or enhancements to products, services or products and services by us or by our competitors;
•
announcements of acquisitions, strategic alliances or significant agreements by us or by our competitors;
•
announcements of customer additions and customer cancellations or delays in customer purchases;
•
announcements regarding litigation involving us;
•
recruitment or departure of key personnel;
•
changes in our capital structure, such as future issuances of debt or equity securities;
•
our entry into new markets;
•
regulatory developments in the United States or foreign countries;
•
the economy as a whole, market conditions in our industry, and the industries of our customers;
•
the expiration of market standoff or contractual lock-up agreements;
•
the size of our market float;
•
resales of our common stock under the A&R SEPA; and
•
any other factors discussed in this report.
The market price and volume of our common stock could fluctuate, and in the past has fluctuated, relative to our limited public float. In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. These factors and fluctuations could have a material adverse effect on the market price of our common stock.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, the trading price for our common stock would be negatively affected. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline.
We may fail to meet our publicly announced guidance or other expectations about our business, which would cause our stock price to decline.
We may provide guidance regarding our expected financial and business performance, such as projections regarding sales and production, as well as anticipated future revenues, gross margins, profitability and cash flows. Correctly identifying key factors affecting business conditions and predicting future events is inherently an uncertain process and our guidance may not ultimately be accurate. Our guidance is based on certain assumptions such as those relating to anticipated production and sales volumes and average sales prices, supplier and commodity costs, and planned cost reductions. If our guidance is not accurate or varies from actual results due to our inability to meet our assumptions or the impact on our financial performance that could occur as a result of various risks and uncertainties, the market value of our common stock could decline significantly.
We do not intend to pay dividends for the foreseeable future.
We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. Consequently, stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.
Provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:
•
authorize the issuance of “blank check” preferred stock that could be issued by our Board to defend against a takeover attempt;
•
establish a classified Board, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;
•
require that directors only be removed from office for cause and only upon a supermajority stockholder vote;
•
provide that vacancies on the Board, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders;
•
prevent stockholders from calling special meetings; and
•
prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders.
In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder becomes an “interested” stockholder. These provisions, alone or together, could have the effect of deterring or delaying changes in incumbent management, proxy contests or changes in control.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. UNRESOLVED STAFF COMMENTS
Not applicable.

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ITEM 2. PROPERTIES
Item 2. PROPERTIES
In February 2022, we announced the planned acquisition of a manufacturing facility located in Osceola, Arkansas. The facility, comprising approximately 580,000 square feet, currently serves as our operational base and is intended to become our primary manufacturing site. While we commenced investment in the facility and operations are active under a lease structure, the underlying property transaction remains subject to final closing. We continue to work collaboratively with the City of Osceola to finalize terms related to site development, easements, and purchase conditions.
In the first quarter of 2025, we announced the relocation of our corporate headquarters to Houston, Texas. The Osceola facility remains a central asset in our manufacturing strategy. Our previously leased warehouse and production facility in Corona, California was assigned to our former sub-lease tenant effective April 1, 2022. We also lease other office and storage space on a month-to-month basis or under agreements with terms expiring within one year.
In March 2023, the Company entered into an agreement with Berthaphil, Inc. to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines. The term of the lease is two years and two months with a turnover date of July 1, 2023 and a rental commencement of September 1, 2023. While the Company intended to use the leased space as a production facility, an executive decision was made to close this warehouse at December 31, 2024.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. LEGAL PROCEEDINGS
The information set forth under Note 13 to our consolidated financial statements contained in Item 8, Part II of this Annual Report is incorporated herein by reference.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. MINE SAFETY DISCLOSURES
Not applicable
Part II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock trades on the Nasdaq Capital Market under the symbol “EVTV.”
Holders
As of April 10, 2025, we had approximately 158 shareholders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. The number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Dividend Policy
We have never declared or paid any dividends on our common stock and do not anticipate that we will pay any dividends to holders of our common stock in the foreseeable future. Instead, we currently plan to retain any earnings to finance the growth of our business. Any future determination relating to dividend policy will be made at the discretion of our Board and will depend on our financial condition, results of operations and capital requirements as well as other factors deemed relevant by our Board.
Recent Sales of Unregistered Securities
None
Repurchases of Equity Securities
We did not purchase any of our equity securities during the period covered by this Annual Report.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6.
[Reserved]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our consolidated financial statements and related notes included in Part II, Item 8 of this Annual Report. This discussion contains forward-looking statements that reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, those discussed in Item 1 (Business) and Item 1A (Risk Factors) of Part I of this Annual Report.
Overview
We are a provider of purpose-built zero-emission electric vehicles focused on reducing the total cost of vehicle ownership and helping fleet operators unlock the benefits of green technology. We serve commercial and last-mile fleets, school districts, public and private transportation service companies, colleges and universities to meet the increasing demand for light to heavy-duty electric vehicles. Our vehicles address the challenges of traditional fuel price instability and local, state and federal regulatory compliance.
For the years ended December 31, 2024 and 2023, respectively, we generated sales revenue of approximately $1.9 million and $2.9 million, respectively, and our net losses were $8.8 million and $12.7 million, respectively. The 2024 loss includes approximately $2.4 million of non-cash expenses. The 2023 loss includes approximately $6.6 million of non-cash expenses, including a goodwill impairment charge of approximately $5.1 million.
Maddox Acquisition
On October 30, 2024, we entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Maddox Industries, LLC, a Puerto Rico limited liability company (“Maddox Industries”), and Jason Maddox, the sole member of Maddox Industries (the “Seller”), pursuant to which, subject to the terms and conditions of the Purchase Agreement, we purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) in Maddox Industries (the “Maddox Acquisition”). In connection with the Maddox Acquisition, our Board also appointed Jason Maddox as our President in October 2024.
As consideration for the Purchased Interests, at the Closing, we issued the Stock Consideration to the Seller. In addition, during the Earnout Period, the Seller was eligible to receive up to six Earnout Payments, with the Earnout Payment for each calendar month being equal to the aggregate amount of gross revenue received by Maddox Industries in respect of any closing receivable, as specified in the Purchase Agreement, during such calendar month, subject to an aggregate limit of $1 million with respect to all Earnout Payments payable under the Purchase Agreement.
On December 18, 2024 (the “Closing Date”), we consummated the Maddox Acquisition. This strategic partnership is set to enhance our capabilities in U.S. manufacturing and logistics, delivering a multimillion-dollar revenue stream from government contracts over the next three years while creating U.S. based manufacturing jobs.
Factors Affecting Our Performance
We believe that the growth and future success of our business depend on various opportunities, challenges and other factors, including the following:
•
Availability of government subsidies, rebates and economic incentives. We believe that the availability of government subsidies, rebates, and economic incentives is currently a critical factor considered by our customers when purchasing our zero-emission vehicles, and that our growth depends in large part on the availability and amounts of these subsidies and economic incentives. As an alternative to being dependent on such funding, however, we are exploring the possibility of leasing our vehicles to our customers as well.
•
New Customers. We are competing with other companies and technologies to help fleet managers and their districts/companies more efficiently and cost-effectively manage their fleet operations. Once these fleet managers have decided they want to buy from us, we still face challenges helping them obtain financing options to reduce the cost barriers to purchasing. We may also encounter customers with inadequate electrical services at their facilities that may delay their ability to purchase from us.
•
Dependence on external sources of financing of our operations. We have historically depended on external sources for capital to finance our operations. Accordingly, our future performance will depend in part upon our ability to achieve independence from external sources for the financing of our operations.
•
Investment in Growth. We plan to continue to invest for long-term growth. We anticipate that our operating expenses will increase in the foreseeable future as we invest in research and development to enhance our zero-emission electric vehicles; design, develop and manufacture our commercial fleet vehicles and their components; increase our sales and marketing to acquire new customers; and increase our general and administrative functions to support our growing operations. We believe that these investments will contribute to our long-term growth, although they will adversely affect our results of operations in the near term. In addition, the timing of these investments can result in fluctuations in our annual and quarterly operating results.
•
Zero-emission electric experience. Our dealer and service network are not currently completely established, although we do have certain agreements in place. One issue they may have, and we may encounter, is finding appropriately trained technicians with zero-emission electric fleet vehicle experience. Our performance will depend on having a robust dealer and service network, which will require appropriately trained technicians to be successful. Because vehicles that utilize our technology are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in zero-emission electric vehicles may not be available to hire, and we may need to expend significant time and expense training the employees we do hire. If we are not able to attract, assimilate, train or retain additional highly qualified personnel in the future, or do so cost-effectively, our performance would be significantly and adversely affected.
•
Market Growth. We believe the market for all-electric solutions for alternative fuel technology, specifically all-electric vehicles, will continue to grow as more purchases of new zero-emission vehicles and as more conversions of existing fleet vehicles to zero-emission vehicles are made. However, unless the costs to produce such vehicles decrease dramatically, purchases of our products will continue to depend in large part on financing subsidies from government agencies. We cannot be assured of the continued availability, the amounts of such assistance to our customers, or our ability to access such funds.
•
Sales revenue growth from additional products. We seek to add to our product offerings additional zero-emission vehicles of all sizes to be marketed, sold, warrantied and serviced through our developing distribution and service network, as well as add other ancillary products discussed elsewhere in this report.
•
Third-party contractors, suppliers and manufacturers. We rely upon third parties to supply us with raw materials, parts, components and services in adequate quantity in a timely manner and at reasonable prices, quality levels, and volumes acceptable to us.
Components of Results of Operations
Sales
Sales are recognized from the sales of new, purpose-built zero-emission electric vehicles and from providing vehicle maintenance and safety inspection services. Sales are recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606, as discussed in Note 2 to our consolidated financial statements included in this Annual Report.
Cost of Sales
Cost of sales includes those costs related to the development, manufacture, and distribution of our products. Specifically, we include in cost of sales each of the following: material costs (including commodity costs); freight costs; labor and other costs related to the development and manufacture of our products; and other associated costs. Cost of sales also includes costs related to the valuation of inventory due to impairment, obsolescence, or shrinkage.
General and Administrative Expenses
General and administrative expenses include all corporate and administrative functions that support our company, including personnel-related expense and stock-based compensation costs; costs related to investor relations activities; warranty costs, including product recall and customer satisfaction program costs; consulting costs; marketing-related expenses; and other expenses that cannot be included in cost of sales.
Consulting and Research and Development Costs
These expenses are substantially related to our external consulting and research and development activity.
Goodwill Impairment Charge
In accordance with ASC 350-20 "Intangibles-Goodwill and Other - Goodwill", an impairment test is required at least annually or when a triggering event occurs. An impairment charge is recorded when our fair value is less than the carrying value of our net assets.
Other Income/Expenses, Net
Other income/expenses include non-operating income and expenses, including unrealized loss on financial instruments at fair value, interest income and expense.
Provision for Income Taxes
We account for income taxes in accordance with Financial Accounting Standards Board (“FASB”) ASC 740 “Income Taxes,” which requires the recognition of deferred income tax assets and liabilities for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that we will not realize tax assets through future operations. Because we have incurred only losses to this point, no provision for income taxes has been made in 2024 and 2023.
Results of Operations
The following discussion compares operating data for the year ended December 31, 2024 to the data for the year ended December 31, 2023:
Sales
Year Ended December 31,
$ Change
% Change
Sales
$ 1,870,060
$ 2,862,853
$ (992,793 )
%
Sales were approximately $1.9 million for the year ended December 31, 2024, compared to $2.9 million for the year ended December 31, 2023. Sales for the year ended December 31, 2024, consisted primarily of 13 logistics cargo vans, three cab and chassis trucks, one passenger van, two zippers, one sweeper and one forklift. Sales for the year ended December 31, 2023 consisted of 24 logistic cargo vans sold primarily to customers in New Jersey and California through the states’ incentives programs and 2 cab and chassis trucks sold to other customers. The decrease in sales was primarily due to among other things, lower number of units sold, unfavorable product mix and less favorable market conditions in 2024 as compared to 2023.
Cost of Goods Sold
Year Ended December 31,
$ Change
% Change
Cost of goods sold
$ 1,381,257
$ 1,857,273
$ (476,016 )
%
Cost of sales related to the sales revenue described above were approximately $1.4 million for the year ended December 31, 2024, which resulted in gross profit of $0.49 million and a gross margin percentage of 26%, compared to approximately $1.9 million for the year ended December 31, 2023, which resulted in gross profit of $1.01 million and a gross margin percentage of 35%. The decrease in gross margin percentage was primarily due to less favorable product mix.
Operating Expenses
Year Ended December 31,
$ Change
% Change
General and administrative
$ 8,146,275
$ 8,171,344
$ (25,069 )
(0 )%
Consulting
70,000
213,930
(143,930 )
%
Research and Development
192,885
236,181
(43,296 )
%
Goodwill impairment charge
-
5,098,784
(5,098,784 )
%
Total operating expenses, net
$ 8,409,160
$ 13,720,239
$ (5,311,079 )
%
1 Includes stock-based compensation expense as follows:
Year Ended December 31,
$ Change
% Change
Stock-based compensation expense
$ 1,889,353
$ 1,322,577
$ 566,776
%
General and Administrative Expenses
General and administrative expenses for the year ended December 31, 2024 were $8.1 million, compared to $8.2 million for general and administrative expenses for the year ended December 31, 2023. General and administrative expenses decreased slightly by $0.1 million primarily due to a decrease in legal and professional costs of $0.1 million as a result of lower litigation activities, a decrease in advertising and marketing costs of $0.3 million and travel costs of $0.1 million as part of our cost savings initiatives, lower contract labor costs of $0.2 million due to lower activity levels and an initiative to utilize employees, lower investor relation costs of $0.3 million due to lower activity and lower overall expenses, partially offset by slightly higher payroll costs, higher rent of $0.3 million, higher insurance premiums of $0.1 million and higher stock compensation expense of $0.6 million.
Consulting
Consulting expenses were $70,000 for the year ended December 31, 2024, as compared to $0.2 million for the year ended December 31, 2023. The decrease in consulting expenses was primarily due to a decrease in search costs for key employees in 2024 as compared to 2023.
Research and Development
Research and development expenses were relatively flat at $0.2 million for the years ended December 31, 2024, and 2023.
Goodwill Impairment Charge
Based on the annual impairment test, we recorded a non-cash goodwill impairment charge of $5.1 million as of December 31, 2023.
Other Income (Expense)
Year Ended December 31,
$ Change
% Change
Interest income
$ 7,669
$ 34,835
$ (27,166 )
(78 )%
Unrealized loss on financial instruments at fair value
$ (633,981 )
-
(633,981 )
N/A
Other (expense) income, net
(302,306 )
(4,155 )
(298,151 )
%
Total other (expense) income, net
$ (928,618 )
$ 30,680
$ (959,298 )
(3127 )%
Interest income, net consists primarily of interest earned on short-term investments. Interest income, net decreased by $27,166 in 2024 compared to 2023, primarily due to lower balances on our short-term investments during 2024.
We recorded a non-cash unrealized loss of $0.6 million for the year ended December 31, 2024, on our financial instruments that we measured at fair value.
Other (expense) income, net consists of interest expense and other miscellaneous non-operating items. Interest expense increased due to higher debt levels on short-term borrowings. We also recorded commissions of approximately $0.1 million related to debt borrowings during the fourth quarter of 2024.
Liquidity and Capital Resources
As of December 31, 2024, we had cash and cash equivalents of $0.2 million and working capital of $5.9 million. We believe that our existing cash, cash equivalents and short-term investments will be sufficient to fund our present operations during the next 12 months and beyond. However, we may not successfully execute our business plan, and if we do not, we may need additional capital to continue our operations and support the increased working capital requirements associated with the fulfillment of purchase orders.
In February 2022, we moved into an approximately 580,000 square foot facility in Osceola, Arkansas. This facility is the site of our state-of-the-art manufacturing facility and new corporate offices. However, additional debt and/or equity capital will be required in order to purchase related equipment and set up production lines and is expected to require significant additional investment through 2027. Investments and employee hiring requirements over the next 10 years may provide an opportunity for us to obtain local tax incentives granted to the Company, provided that the qualifying expenditures are made. We are not currently contractually obligated to make the expenditures and may not do so in the near future.
On February 12, 2025, we announced the relocation of our corporate headquarters and the establishment of a new 86,000 square foot facility in Houston, Texas. This strategic move reinforces our commitment to expanding U.S. manufacturing, strengthening fleet services, and supporting the growing demand for commercial electric vehicles. We plan to open its new corporate headquarters and manufacturing facility in 2025. As a result of this relocation, we may incur additional capital expenditure and one-time relocation costs, which at the time of filing, are being estimated.
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities for the years ended December 31, 2024 and 2023:
Year Ended December 31,
Cash flows used in operating activities
$ (3,504,673 )
$ (4,712,174 )
Cash flows (used in) provided by investing activities
(4,706,374 )
2,306,833
Cash flows provided by financing activities
9,695,509
36,593
Net change in cash, restricted cash and cash equivalents
$ 1,484,462
$ (2,368,748 )
Operating Activities
Net cash used in operating activities for the year ended December 31, 2024 was $3.5 million, primarily due to a net loss of $8.8 million, partially offset by changes in operating assets and liabilities, net of $2.6 million and non-cash operating charges of $2.7 million, of which $1.9 million was related to non-cash stock-based compensation expense and $0.6 million was related to non-cash unrealized loss on financial instruments. The changes in operating assets and liabilities, net was due to a decrease in inventory of $0.4 million, a decrease in other current assets of $0.1 million, a decrease in other non-current assets of $0.4 million, an increase in accounts payable of $0.7 million, and an increase in accrued liabilities and deferred revenue of $4.7 million, partially offset by an increase in accounts receivable of $0.3 million, an increase in inventory deposits of $2.7 million, an increase in prepaid expenses of $0.5 million and a decrease in other non-current liabilities of $0.2 million
Net cash used in operating activities for the year ended December 31, 2023 was $4.7 million, primarily due to a net loss of $12.7 million, partially offset by changes in operating assets and liabilities, net of $1.4 million and non-cash operating charges of $6.6 million, of which $5.1 million was related to a non-cash goodwill impairment charge and $1.3 million was related to non-cash stock-based compensation expense. The changes in operating assets and liabilities, net was due to an increase in accounts receivable of $1.4 million as cash collections outpaced sales, a decrease of $1.5 million in inventory deposits, an increase in prepaid expenses of $0.2 million, and an increase in accounts payable of $0.1 million, partially offset by an increase in inventory of $1.2 million as we ramp up for future growth in sales and a decrease in accrued liabilities and deferred revenue of $0.2 million.
We expect cash used in operating activities to fluctuate significantly in future periods as a result of a number of factors, some of which are outside of our control, including, among others: the success we achieve in generating revenue; the success we have in helping our customers obtain financing to subsidize their purchases of our products; our ability to efficiently develop a dealer and service network; the costs of batteries and other materials utilized to make our products; the extent to which we need to invest additional funds in research and development; and the amount of expenses we incur to satisfy future warranty claims.
Investing Activities
Net cash used in investing activities during the year ended December 31, 2024 was $4.7 million, primarily from the Maddox Acquisition and the purchase of property and equipment used in our current operations.
Net cash provided by investing activities during the year ended December 31, 2023 was $2.3 million primarily due to the sale of our marketable securities of $2.3 million, partially offset by $35,810 of capital expenditures.
Financing Activities
Net cash provided by financing activities during the year ended December 31, 2024 was $9.7 million, primarily due to proceeds from our equity line of credit under the A&R SEPA of $2.6 million, proceeds from the issuance of our common stock of $1.8 million, proceeds from the issuance of a convertible note of $0.9 million, proceeds issuance of common stock for the Maddox Acquisition of $4.3 million and proceeds from issuance of debt for $0.6 million, partially offset by the repayment of debt of $0.6 million.
Net cash provided by financing activities during the year ended December 31, 2023 was $36,593 as a result of net borrowings of certain notes payable.
Amended and Restated Standby Equity Purchase Agreement
On October 31, 2024, the Company entered into an amended and restated standby equity purchase agreement (the “A&R SEPA”) with YA II PN, Ltd., a Cayman Islands exempt limited company (the “Investor”). The A&R SEPA amends and restates in its entirety the standby equity purchase agreement, dated September 23, 2024 (the "Original SEPA"), by and between the Company and the Investor.
Pursuant to the A&R SEPA, except for so long as there is a balance outstanding under the Promissory Notes (as defined below), we have the right, from time to time, until November 1, 2027, to require the Investor to purchase up to $25 million of shares of common stock, subject to certain limitations and conditions set forth in the A&R SEPA, by delivering written notice to the Investor. Pursuant to the A&R SEPA, the Investor advanced to the Company the principal amount of $3 million (the “Pre-Paid Advance”) in exchange for the Company’s issuance to the Investor of convertible promissory notes (the “Promissory Notes”) in two tranches, resulting in net proceeds (net of discounts and fees) to the Company of $2,635,500. The Company received the first tranche of the Pre-Paid Advance in the principal amount of $2 million on October 31, 2024 in exchange for the Promissory Note dated October 31, 2024, and the second tranche of the Pre-Paid Advance in the principal amount of $1 million on December 17, 2024 in exchange for the Promissory Note dated December 17, 2024. The Promissory Notes will accrue interest on the outstanding principal balance at an annual rate equal to 0%, which will increase to an annual rate of 18% upon the occurrence of an Event of Default (as defined in the Promissory Notes) or a Registration Event (as defined in the Promissory Notes) for so long as such event remains uncured. The Promissory Notes will mature on November 13, 2025, which may be extended at the option of the Investor. The Promissory Notes are convertible at a conversion price equal to the lower of (i) $2.1480 per share or (ii) 93% of the lowest daily volume weighted average price of the Common Stock on Nasdaq as reported by Bloomberg L.P. during the five consecutive trading days immediately preceding the conversion date (but no lower than the “floor price” then in effect, which is $0.3580 per share, subject to adjustment from time to time in accordance with the terms contained in the Promissory Notes). Pursuant to the terms of the Original SEPA, the Company issued 64,103 shares of common stock to the Investor as a commitment fee.
Line of Credit
Effective August 4, 2022, we secured a line of credit from Centennial Bank. Borrowings under the line of credit bear interest at 2.75% annually. There is no maturity date for the line, but Centennial Bank may at any time, in its sole discretion and without cause, demand that we immediately repay any and all outstanding obligations under the line of credit in whole or in part. The line is secured by the cash and cash equivalents maintained by us in our Centennial Bank accounts. Borrowings under the line may not exceed cash, cash equivalents, and marketable securities balances up to $1,000,000. There was no principal amount outstanding on December 31, 2024 and the line of credit was closed in 2023.
Capital Expenditures
We do not have any contractual obligations for ongoing capital expenditures at this time. We do, however, purchase equipment necessary to conduct our operations on an as needed basis and will begin increasing those expenditures as we transfer assembly and corporate functions to the Osceola Arkansas facility.
Contractual Obligations
Other than as disclosed in the consolidated financial statements in Item 8 of this Annual Report, we have no contractual obligations.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Indemnification Agreements
As we have generated sales, we have provided customers with indemnification of varying scope against claims of intellectual property infringement by third parties arising from the use of our products. We do not estimate the costs related to these indemnification provisions to be significant and are unable to determine the maximum potential impact of these indemnification provisions on our future results of operations. In addition, we have directors and officers liability coverage to further mitigate our indemnification exposure. No demands have been made upon us to provide indemnification and there are no claims that we are aware of that could have a material effect on our consolidated balance sheet, consolidated statement of operations, or consolidated cash flows.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
We define our critical accounting policies as those accounting principles generally accepted in the United States of America that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. No critical accounting policies existed at December 31, 2024.
Smaller Reporting Company Status
We are a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our shares held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our shares held by non-affiliates is less than $700 million as of the last business day of our most recently completed second fiscal quarter. We may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies, including reduced disclosure about our executive compensation arrangements.
Recent Accounting Pronouncements
For information with respect to new accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 1 to our consolidated financial statements contained in Item 8, Part II of this Annual Report.
Recent Accounting Pronouncements-Currently Adopted
ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure”
On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which requires public entities to disclose information about their reportable segments' significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as existing segment disclosures and reconciliation required under Accounting Standard Codification (“ASC”) 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for the interim periods beginning after December 15, 2024, with early adoption permitted. The Company has adopted this guidance within the Company’s Annual Report on Form 10-K for the year ending December 31, 2024. There is no material impact on the Company's consolidated financial statements.
Recently issued accounting pronouncements not yet adopted
ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures"
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the reconciliation of the effective tax rate, as well as disclosure of income taxes paid, disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09 and will adopt the guidance when it becomes effective on a prospective basis.
ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
On November 4, 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses," that improves financial reporting by requiring public companies to disclose additional information about certain expenses in the notes to the financial statements. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2023-07 and intends to adopt and report on this topic as required by this ASU.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks in the ordinary course of our business. We do not currently face material market risks such as interest rate fluctuation risk and foreign currency exchange risk. Our cash and cash equivalents include cash in readily available checking and money market accounts. These investments are not dependent on interest rate fluctuations that may cause the principal amount of these investments to fluctuate, and we do not expect such fluctuation will have a material impact on our financial conditions. If we issue additional debt in the future, we will be subject to interest rate risk. The majority of our expenses are denominated in the U.S. dollar.
We may face risks associated with the costs of raw materials, primarily batteries, as we go into production. To the extent these and other risks materialize, they could have a material effect on our operating results or financial condition. We currently anticipate that our international selling, marketing and administrative costs related to foreign sales will be largely denominated in the same foreign currency, which may mitigate our foreign currency exchange risk exposure.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm Barton CPA PLLC (PCAOB Firm ID 6968)
Consolidated Balance Sheets as of December 31, 2024 and 2023
Consolidated Statements of Operations for the years ended December 31, 2024 and 2023
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024 and 2023
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Certified Public Accountants and Advisors
A PCAOB Registered Firm
713-489-5635 bartoncpafirm.com Cypress, Texas
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
Envirotech Vehicles, Inc. and its Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Envirotech Vehicles, Inc. and its Subsidiaries (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the period ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Maddox Acquisition
The Company’s acquisition of Maddox Industries, LLC on December 18, 2024, involved significant judgment in the valuation of net assets and intangible assets. The Company engaged a third-party valuation firm to assist with the purchase price allocation. Auditing this matter involved evaluating the competence of the valuation specialists, reviewing the purchase agreements, assessing the purchase price allocation, and testing the reasonableness of the estimated useful lives of identified intangible assets.
We have served as the Company’s auditor since 2023.
Cypress, Texas
April 15, 2025
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
December 31,
ASSETS
Current assets:
Cash and cash equivalents
$ 1,941,181 $ 456,719
Accounts receivable, net of allowance of $15,306 and $20,929, respectively,
1,016,666 692,102
Receivable from related party, net of allowance of $6,700
993,300 -
Inventory, net
6,416,377 6,830,593
Inventory deposits
6,036,809 3,300,388
Prepaid expenses
1,130,027 614,238
Other current assets
101,794 162,119
Total current assets
17,636,154 12,056,159
Property and equipment, net
592,171 320,687
Right-of-use asset
108,508 538,932
Goodwill
10,103,048 9,583,836
Intangible assets, net
3,968,301 -
Other non-current assets
263,120 153,555
Total assets
$ 32,671,302 $ 22,653,169
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable
$ 1,470,102 $ 760,802
Deferred revenue
4,240,666 -
Accrued liabilities
2,069,061 452,236
Operating lease liability - short-term
235,625 291,263
Options liability, at fair value
132,412 -
Debt - current
3,596,805 269,245
Total current liabilities
11,744,671 1,773,546
Long-term liabilities
Operating lease liability - long-term
- 235,625
Debt - long-term
4,168 10,420
Total liabilities
11,748,839 2,019,591
Stockholders’ equity:
Preferred stock, 5,000,000 authorized, $0.00001 par value per share, none issued and outstanding as of December 31, 2024 and 2023
- -
Common stock, 350,000,000 authorized, $0.00001 par value per share, 19,872,612 and 15,171,748 issued and outstanding as of December 31, 2024 and 2023, respectively
201 152
Additional paid-in capital
94,383,736 85,245,925
Accumulated deficit
(73,461,474 ) (64,612,499 )
Total stockholders’ equity
20,922,463 20,633,578
Total liabilities and stockholders’ equity
$ 32,671,302 $ 22,653,169
See accompanying notes to consolidated financial statements.
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
Sales
$ 1,870,060 $ 2,862,853
Cost of sales
1,381,257 1,857,273
Gross profit
488,803 1,005,580
Operating expenses:
General and administrative
8,146,275 8,171,344
Consulting
70,000 213,930
Research and development
192,885 236,181
Goodwill impairment charge
- 5,098,784
Total operating expenses, net
8,409,160 13,720,239
Loss from operations
(7,920,357 ) (12,714,659 )
Other income (expense):
Interest income
7,669 34,835
Unrealized loss on financial instruments at fair value
(633,981 ) -
Other expense
(302,306 ) (4,155 )
Total other income
(928,618 ) 30,680
Loss before income taxes
(8,848,975 ) (12,683,979 )
Income tax expense
- -
Net loss
$ (8,848,975 ) $ (12,683,979 )
Net loss per share to common stockholders:
Basic and diluted
$ (0.55 ) $ (0.84 )
Weighted shares used in the computation of net loss per share:
Basic and diluted
16,209,111 15,061,945
See accompanying notes to consolidated financial statements.
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Additional
Common Stock
Paid-In
Accumulated
Stockholders’
Shares
Amount
Capital
Deficit
Equity
Balance, December 31, 2022
15,021,088 $ 150 $ 83,923,350 $ (51,928,520 ) $ 31,994,980
Common stock issued for cash
150,660 2 99,998 - 100,000
Common stock issued for litigation settlements accrued in 2021
- - (100,000 ) - (100,000 )
Stock based compensation
- - 1,322,577 - 1,322,577
Net loss
- - - (12,683,979 ) (12,683,979 )
Balance, December 31, 2023
15,171,748 $ 152 $ 85,245,925 $ (64,612,499 ) $ 20,633,578
Common stock issued for cash
1,031,710 12 1,799,236 - 1,799,248
Conversion of short-term note to common stock
505,051 5 1,046,254 - 1,046,259
Common stock issued - commitment fee (equity line of credit)
64,103 1 124,999 - 125,000
Common stock issued as consideration for acquisition (Note 3)
3,100,000 31 4,277,969 - 4,278,000
Stock based compensation
- - 1,889,353 - 1,889,353
Net loss
- - - (8,848,975 ) (8,848,975 )
Balance, December 31, 2024
19,872,612 $ 201 $ 94,383,736 $ (73,461,474 ) $ 20,922,463
See accompanying notes to consolidated financial statements.
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
Cash flows from operating activities:
Net loss
$ (8,848,975 ) $ (12,683,979 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
190,549 128,801
Provision for bad debt
10,085 20,929
Stock based compensation expense
1,889,353 1,322,577
Goodwill impairment charge
- 5,098,784
Unrealized loss on financial instruments
633,981 -
Other
28,108 9,904
Changes in assets and liabilities:
Accounts receivable
(327,949 ) 1,360,660
Inventory
414,217 (1,159,267 )
Inventory deposits
(2,736,421 ) 1,529,545
Prepaid expenses
(515,789 ) (168,276 )
Other current assets
101,575 (21,806 )
Other non-current assets
404,609 (72,230 )
Accounts payable
709,300 111,838
Accrued liabilities and deferred revenue
4,757,823 (189,654 )
Other non-current liabilities
(215,139 ) -
Net cash used in operating activities
(3,504,673 ) (4,712,174 )
Cash flows from investing activities:
Purchase of property and equipment, net
(430,333 ) (35,810 )
Acquisition of Maddox Industries, net of cash
(4,276,041 ) -
Proceeds from sales and maturities of marketable securities
- 2,342,643
Net cash (used in) provided by investing activities
(4,706,374 ) 2,306,833
Cash flows from financing activities:
Proceeds from issuance of common stock
1,799,248 -
Common stock issued - Maddox acquisition
4,278,000 -
Proceeds from convertible notes
2,635,500 -
Proceeds from related party loan
300,000 -
Repayment of related party loan
(300,000 ) -
Proceeds from the issuance of convertible
901,000 -
Proceeds from debt
648,937 467,074
Principal repayments on debt
(567,176 ) (430,481 )
Net cash provided by financing activities
9,695,509 36,593
Net change in cash, restricted cash and cash equivalents
1,484,462 (2,368,748 )
Cash, restricted cash and cash equivalents at the beginning of the period
456,719 2,825,467
Cash, restricted cash and cash equivalents at the end of the period
$ 1,941,181 $ 456,719
Supplemental cash flow disclosures:
Cash paid for interest expense
$ 26,169 $ 14,997
Non-cash investing and financing activities:
Common stock issued for services rendered
$ - $ 2
See accompanying notes to consolidated financial statements.
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Operations
Envirotech Vehicles, Inc. (“we,” “us,” “our” or the “Company”) is a provider of purpose-built zero-emission electric vehicles focused on reducing the total cost of vehicle ownership and helping fleet operators unlock the benefits of green technology. The Company serves commercial and last-mile fleets, school districts, public and private transportation service companies and colleges and universities to meet the increasing demand for light to heavy-duty electric vehicles. The Company’s vehicles address the challenges of traditional fuel price cost instability and local, state and federal regulatory compliance.
2. Summary of Significant Accounting Policies
Basis of Presentation-The accounting and reporting policies of the Company conform with generally accepted accounting principles in the United States (“GAAP”).
Principles of Consolidation-The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Use of Estimates-The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments-The carrying values of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. Accounting Standards Codification (“ASC”) 820, Fair Value Measurement ("ASC 820") defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs that are supported by little or no market data and that require the reporting entity to develop its own assumptions.
The Company has an option liability that is measured at fair value on a recurring basis. See Note 7 - Notes Payable for additional disclosures.
Revenue Recognition-The Company recognizes revenue from the sales of zero-emission electric vehicles and vehicle maintenance and inspection services. The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"), which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For the year ended December 31, 2024, eight customers accounted for approximately all of the annual revenue recorded. At December 31, 2023, three customers accounted for approximately 70% of the annual revenue recorded. The Company had accounts receivable, net of $1,009,966 and $692,102 on December 31, 2024 and December 31, 2023, respectively.
In applying ASC 606, the Company is required to:
(1)
identify any contracts with customers;
(2)
determine if multiple performance obligations exist;
(3)
determine the transaction price;
(4)
allocate the transaction price to the respective obligation; and
(5)
recognize the revenue as the obligation is satisfied.
Product revenue includes the sale of electric trucks and cargo vans. These sales represent a single performance obligation and revenue is recognized when the vehicle is delivered and the customer has accepted the vehicle and signed the appropriate documentation acknowledging receipt of the vehicle. At this time, the title of the vehicle is transferred to the customer.
During the fourth quarter of 2024, the Company recorded $4,240,666 of payments received through a grant from the Environmental Protection Agency ("EPA") to produce electric school buses as deferred revenue. No revenue was recognized in 2024 as the performance obligation has not been met. The balance of deferred revenue at December 31, 2024 and December 31, 2023 is $4,240,666 and $0, respectively.
Other revenue for the years ended December 31, 2024 and December 31, 2023 were $52,303 and $29,605 respectively, and primarily included safety inspection and document fees for compliance with United States Department of Transportation guidelines. These sales represent a single performance obligation with revenue recognition occurring at the time services are invoiced. The Company has therefore not provided any additional disaggregation information, as all other revenue relates to the sale of vehicles as discussed above.
Cash and Cash Equivalents-The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The recorded value of our cash and cash equivalents approximates their fair value.
Short-term Investments-The Company may, from time to time, invest in short-term, highly liquid, marketable securities, such as U.S. Treasury notes, U.S. Treasury bonds, and other government-backed securities. The Company may also, from time to time, invest in bank certificates of deposit. The Company classifies these short-term investments as held-to-maturity, as the intent is not to liquidate them prior to the respective stated maturity date. The balances for these short-term investments at December 31, 2024 and December 31, 2023, were $0 and $0, respectively.
Accounts Receivable and Allowance for Doubtful Accounts-The Company establishes an allowance for doubtful accounts through a review of several factors including historical collection experience, current aging status of the customer accounts, and financial condition of its customers. The Company does not generally require collateral for its accounts receivable. A significant portion of the Company’s sales are made to customers who qualify for state-sponsored grant programs which can cover a significant portion, up to most of, a vehicle’s purchase price. Grant monies are paid directly to vehicle dealers like the Company after the customer and the dealer meet state requirements related to the transaction; reimbursements to the dealer may take two to nine months from the date of request before being received. The Company estimates its allowance for doubtful accounts using an aging schedule, including a review of customers who may have a likelihood of default. A percentage is applied to the respective portfolio of customers which are grouped by how long their balance has been outstanding. This percentage represents an estimate of credit losses for the remaining estimated life of the accounts receivable balances and is estimated using historical experience, current conditions and reasonable and supportable forecasts that generally applies to accounts receivables, which are measured at amortized costs. The Company had trade accounts receivable of $1,031,972 and an allowance for doubtful accounts of $15,306 at December 31, 2024. The Company had trade accounts receivable of $713,031 and an allowance for doubtful accounts of $20,929 as of December 31, 2023. The Company did have a concentration of customers: five customers’ balances account for approximately 96% of the outstanding accounts receivable for the year ended December 31, 2024. If the Company is unable to collect from these customers, the Company's write-offs will significantly increase and the write-offs may have a material adverse impact on the Company's financial condition. However, the Company does not believe the receivables balance from these customers represents a significant risk based on past collection experience. At December 31, 2023, three customers’ balances account for approximately 37% of the outstanding accounts receivable; for the year ended December 31, 2023
Inventory and Inventory Valuation Allowance-The Company records inventory at the lower of cost or net realizable value, uses a First In, First Out (“FIFO”) accounting valuation methodology and establishes an inventory valuation allowance for vehicles that it does not intend to sell in the future. The Company had finished goods inventory on hand of $6,428,806 as of December 31, 2024 and recorded an inventory valuation allowance of $12,429 related to three vehicles that the Company does not intend to support in the future, resulting in a net inventory balance of $6,416,377 at December 31, 2024. The Company had finished goods inventory on hand of $6,843,022 as of December 31, 2023 and recorded an inventory valuation allowance of $12,429 resulting in a net inventory balance of $6,830,593 as of December 31, 2023.
Inventory Deposits-Certain of our vendors require the Company to pay upfront deposits before they will commence manufacturing our vehicles, and then require progress deposits through the production cycle and before the finished vehicles are shipped. These deposits are classified as inventory deposits in the Consolidated Balance Sheets. Upon completion of production, acceptance by the Company, and passage of title to the Company, deposits are reclassified to inventory. The Company had inventory deposits of $6,036,809 and $3,300,388 as of December 31, 2024 and December 31, 2023, respectively. Deposits paid to one vendor accounted for 99% of the deposits outstanding at December 31, 2024. Deposits paid to one vendor accounted for 99% of the deposits outstanding at December 31, 2023.
Income Taxes-The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.
The Company previously recorded deferred tax benefits from net operating losses in current and prior periods. The Company, in light of the uncertainty of generating future taxable income against which those losses can be offset in order to realize such benefits, has determined that recording a valuation allowance to reduce the deferred income tax assets to the amount that is more likely than not to be realized is appropriate. In making such determinations, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. A full valuation allowance is recorded at December 31, 2024 and December 31, 2023.
Accounting for Uncertainty in Income Taxes-The Company evaluates its uncertain tax positions and will recognize a loss contingency when it is probable that a liability has been incurred as of the date of the financial statements and the amount of the loss can be reasonably estimated. The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount recognized. At December 31, 2024 and 2023, respectively, management did not identify any uncertain tax positions.
Net Loss Per Share-Basic net loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period.
Diluted net loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the diluted weighted average number of shares of common stock outstanding during the period. The diluted weighted average number of shares of common stock outstanding is the basic weighted number of shares of common stock adjusted for any potentially dilutive debt or equity securities. As of December 31, 2024, 5,641,252 shares of the Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 1,901,631 shares of the Company’s common stock were subject to issuance upon the exercise of warrants then outstanding. As of December 31, 2023, 1,207,888 shares of the Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 1,389,584 shares of the Company’s common stock were subject to issuance upon the exercise of warrants then outstanding. Stock options and warrants were not included in the diluted weighted average number of shares outstanding for the years ended December 31, 2024 and 2023, as the effect would be anti-dilutive.
Concentration of Credit Risk-The Company has credit risks related to cash and cash equivalents on deposit with a federally insured bank, as at times it exceeds the $250,000 maximum amount insured by the Federal Deposit Insurance Corporation (“FDIC”). Between FDIC and the Securities Investor Protection Corporation (“SIPC”) coverage, funds up to $750,000, which may include cash up to $500,000, are insured.
Impairment of Long-Lived Assets-Long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company evaluates these assets to determine potential impairment by comparing the carrying amount to the undiscounted estimated future cash flows of the related assets. If the estimated undiscounted cash flows are less than the carrying value of the assets, the assets are written down to their fair value. There was no impairment of long-lived assets, or property and equipment, as of December 31, 2024 and December 31, 2023, respectively.
Goodwill-Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it can conclude the assessment. If the Company concludes otherwise, the Company is required to perform a quantitative analysis to determine the amount of impairment. A quantitative analysis is performed at the reporting unit level by comparing the estimated fair value of a reporting unit with its respective carrying value to determine the amount of impairment, if any. The Company has determined that it has one reporting unit. In 2024, the Company conducted its annual impairment test. Based on the impairment test, which predominantly utilized the Company's quoted market price and the number of outstanding shares at the end of the period as inputs, the Company recorded no non-cash goodwill impairment charge as of December 31, 2024 and a non-cash goodwill impairment charge of $5,098,784 as of December 31, 2023. See Note 4 - Goodwill for additional disclosures
Other Intangible Assets-Other Intangible assets (excluding indefinite-lived intangible assets) consist of customer lists and relationships. These other intangible assets were acquired at fair value as a result of the Maddox Acquisition disclosed in Note 1 - Organization and Business Operations and are amortized on a straight-line basis over their estimated lives. The Company assesses useful lives based on the period over which the asset is expected to contribute to cash flows.
Research and Development ("R&D")-Costs incurred in connection with the development of new products and manufacturing methods are charged to operating expenses as incurred. R&D expenses were $192,885 and $236,181 for the years ended December 31, 2024 and December 31, 2023, respectively.
Stock-Based Compensation-The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC 718, Compensation-Stock Compensation ("ASC 718"), which requires all share-based payments to employees, including grants of employee stock options and restricted shares and stock options to external consultants, to be recognized in the financial statements based on their grant date fair values using the Black-Scholes option pricing model for stock options and the closing market price on the date of the award for restricted shares and are recognized as compensation expense ratably over the requisite service period, which is generally the awards' vesting period. The Company recorded non-cash stock-based compensation expense of $1,889,353, and $1,322,577 for the years ended December 31, 2024 and December 31, 2023, respectively.
Property and Equipment-Property and equipment are stated at cost, less accumulated depreciation and amortization. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years, except leasehold improvements, which are being amortized over the shorter of its useful life or the lease term. Major repairs and replacements, which extend the useful lives of equipment, are capitalized and depreciated over the estimated useful lives of the property. All other maintenance and repairs are expensed as incurred.
Leases-The Company accounts for leases in accordance with ASC 842, Leases (“ASC 842”). At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement. Right-of-use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent their obligation to make lease payments arising from the lease. See Note 14 - Leases.
As most of the Company’s leases do not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.
The lease asset also reflects any prepaid rent, initial direct costs incurred and lease incentives received. The Company’s lease terms may include optional extension periods when it is reasonably certain that those options will be exercised.
Leases with an initial expected term of 12 months or less are not recorded in the Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term. For certain classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed non-lease components.
Recent Accounting Pronouncements-Currently Adopted
ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure”
On November 27, 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose information about their reportable segments' significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as existing segment disclosures and reconciliation required under Accounting Standard Codification (“ASC”) 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for the interim periods beginning after December 15, 2024, with early adoption permitted. The Company has adopted this guidance within the Company’s Annual Report on Form 10-K for the year ending December 31, 2024. There anticipates no material impact on the Company's consolidated financial statements.
Recently issued accounting pronouncements not yet adopted
ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures"
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires public entities, on an annual basis, to provide disclosure of specific categories in the reconciliation of the effective tax rate, as well as disclosure of income taxes paid, disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09 and will adopt the guidance when it becomes effective on a prospective basis.
ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
On November 4, 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), that improves financial reporting by requiring public companies to disclose additional information about certain expenses in the notes to the financial statements. The amendments in the ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2023-07 and intends to adopt and report on this topic as required by this ASU.
3. Acquisition
On October 30, 2024, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Maddox Industries, LLC, a Puerto Rico limited liability company (“Maddox Industries”), and Jason Maddox, the sole member of Maddox Industries (the “Seller”), pursuant to which, subject to the terms and conditions of the Purchase Agreement, the Company purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) in Maddox Industries (the “Maddox Acquisition”).
As consideration for the Purchased Interests, at the closing of the Maddox Acquisition on December 18, 2024 (the “Closing”), the Company issued 3,100,000 shares of common stock to the Seller (the “Stock Consideration”). In addition, during the six-month period following the Closing (the “Earnout Period”), the Seller was eligible to receive up to six monthly cash payments in an aggregate amount of up to $1 million (each such monthly payment, an “Earnout Payment”), which the Earnout Payment for each calendar month being equal to the aggregate amount of gross revenue received by Maddox Industries in respect of any closing receivable, as specified in the Purchase Agreement, during such calendar month, subject to an aggregate limit of $1 million with respect to all Earnout Payments payable under the Purchase Agreement. The Maddox Acquisition was consummated on December 18, 2024.
The final purchase price of $4,276,041, net of cash acquired of $1,959, has been allocated to the fair values of assets and liabilities acquired as of December 18, 2024.
The following table summarizes the consideration paid, the fair values of the assets acquired, and the liabilities assumed as of the date of Maddox Acquisition:
Fair Values at December 18, 2024
Receivable from related party
$ 1,000,000
Customer relationships
2,100,000
Trade names and trademarks
1,900,000
Goodwill
519,212
Fair value of assets acquired
5,519,212
Less fair value of liabilities acquired
(1,243,171 )
Purchase price, net of cash acquired
$ 4,276,041
Goodwill represents value the Company expects to be created by combining the operations of the acquired business with the Company's operations, including the expansion of customer relationships, access to new customers, and potential cost savings and synergies. Goodwill related to the acquisition is not expected to be deductible for tax purposes.
Unaudited Supplemental Pro Forma Information
The following unaudited pro forma financial information presents the combined results of operations for the Company and gives effect to the Maddox Acquisition discussed above as if it had occurred on January 1, 2023. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations for the year ended December 31, 2024 and December 31, 2023, respectively, that would have been realized if the Maddox Acquisition had occurred on January 1, 2023, nor does it purport to project the results of the combined entity in future periods. The pro forma financial information does not give effect to any anticipated integration costs related to the combined entities.
For the years ended December 31,
Sales
$ 4,867,581 $ 3,300,183
Net loss
$ (6,294,107 ) $ (13,212,266 )
4. Goodwill and Intangible Assets
The Company conducted an impairment test in 2024 at year-end during its annual impairment test in accordance with ASC 350-20, Goodwill. The Company also conducted its annual impairment test in 2023 as a result of a triggering event that occurred during the first quarter of 2023. As a result of these tests, the Company recorded no goodwill impairment charge in December 31, 2024 and a goodwill impairment charge of $5,098,784 for the year ended December 31, 2023.
The following table presents a reconciliation of the carrying amount of goodwill for the year ended December 2024.
Goodwill:
Total
Goodwill as of December 31, 2022
$ 14,682,620
Impairment charge
(5,098,784 )
Goodwill as of December 31, 2023
9,583,836
Increase due to acquisitions
519,212
Goodwill as of December 31, 2024
$ 10,103,048
The following table presents the carrying amount of intangible assets for the year ended December 31, 2024:
As of December 31, 2024
Weighted average amortization period (in years)
Gross carrying amount
Accumulated amortization
Net amount
Intangible assets:
Customer relationships
$ 2,100,000 $ (24,932 ) $ 2,075,068 2.96
Trade names and trademarks
1,900,000 (6,767 ) $ 1,893,233 9.96
Intangible assets, net
$ 4,000,000 $ (31,699 ) $ 3,968,301
Amortization for the year ended December 31, 2024 was $31,699.
The estimated amortization expense for the next five years and thereafter is as follows:
Amortization expense
$ 890,000
$ 890,000
$ 865,068
$ 190,000
2029 and beyond
$ 1,133,233
5. Property and equipment, net
Components of property and equipment, net consist of the following as of December 31, 2024 and 2023:
December 31, 2024
December 31, 2023
Furniture and fixtures
$ 90,641 $ 56,646
Leasehold improvements
359,529 136,847
Machinery & equipment
272,774 172,527
Vehicles
371,350 297,940
Test/Demo vehicles
30,685 30,685
Total property and equipment
1,124,979 694,645
Less accumulated depreciation
(532,808 ) (373,958 )
Net property and equipment
$ 592,171 $ 320,687
Depreciation expense was $158,850 and $128,801 for the years ended December 31, 2024 and 2023, respectively.
6. Income Taxes
The cumulative estimated net operating loss (“NOL”) carry-forward is $49,785,163 and $44,188,133 at December 31, 2024 and 2023, respectively. Of this amount as of December 31, 2024, $35,407,824 of this NOL may be carried forward indefinitely while $14,377,339 is subject to expiration over a 20-year period. Due to the enactment of the Tax Cuts and Jobs Act of 2017, the corporate tax rate for those tax years beginning with 2018 has been reduced to 21%. Therefore, the cumulative tax effect of the NOL carryforward at the expected rate of 21% comprising the Company’s net deferred tax amount is as follows:
December 31,
Tax effected net operating loss
$ 1,244,216 $ 1,361,609
Deferred tax asset attributable to:
Net operating loss carryover
9,210,668 7,917,898
Research and development tax credit carryforward
274,891 274,891
Sub-total
10,729,775 9,554,398
Valuation allowance
(10,729,775 ) (9,554,398 )
Net deferred tax asset
$ - $ -
Cumulative NOL
$ 49,785,163 $ 44,188,133
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryover for federal income tax reporting purposes are subject to annual limitations. The net operating loss carry-forward includes the years 2012 through 2022 for the Envirotech Vehicles, Inc losses, and includes the years 2014 through 2020 for EVT, as the 2021 EVT loss is included in the consolidated Envirotech Vehicles, Inc. loss. Because a change in ownership occurred as a result of the Company’s acquisition of EVT pursuant to a merger of a wholly owned subsidiary of the Company with and into EVT, with EVT surviving the Merger as a wholly-owned subsidiary of the Company, net operating loss carryover will be limited as to use in future years. Federal tax returns for tax years since 2021 are still open for examination by the Internal Revenue Service.
7. Debt
Notes Payable
On July 15, 2022, the Company entered into an equipment financing agreement with Wells Fargo Bank, N.A. in connection with the purchase of facility grounds equipment. The $25,007 loan is payable over 36 months, beginning in August 2022, with monthly payments of $521. The balance of this note is $10,420 of which $6,252 is classified as Notes Payable - current and $4,168 is classified as Notes Payable - long term on the Company's consolidated balance sheets as of December 31, 2024.
Effective August 20, 2023, the Company entered into a premium financing agreement with First Insurance Funding to finance insurance coverages other than its directors' and officers' insurance coverages. The $467,074 loan is payable over nine months, beginning in September 2023, and bears interest at 8.2% with monthly payments of $53,675. There was no balance under this note as of December 31, 2024.
Effective June 15, 2024, the Company entered into a premium financing agreement with First Insurance Funding to finance its directors' and officers' insurance coverages. The $232,067 loan is payable over nine months, beginning in July 2024, and bears interest at 8.25% with monthly payments of $24,093. The balance of this note, including accrued interest, is $94,739 as of December 31, 2024.
Effective August 20, 2024, the Company entered into a premium financing agreement with AFCO Insurance Premium Finance to finance insurance coverages other than its directors' and officers' insurance coverages. The $417,050 loan is payable over eleven months, beginning in September 2024, and bears interest at 8.24% with monthly payments of $39,493. The balance of this note, including accrued interest, is $269,015 as of December 31, 2024.
Convertible Note
On January 18, 2024, the Company entered into a convertible promissory note agreement ("Note") for $1,000,000 with an unrelated third-party investor (the "Holder"). The origination fee of the Note was $99,000 and the maturity date of the Note was September 30, 2024. The Holder was entitled to convert the Note into common stock at the greater of $1.50 per share or at 90% of the share price of the Company's common stock on the maturity date. The Holder also had a security interest in the assets of the Company in the event of non-payment of the Note. In addition, the Holder received options to purchase 800,000 share of the Company's common stock at $1.50 per share. These options expire two years from the date of the Note. On May 6, 2024, the Note was cancelled and replaced with a short-term note. During the third quarter of 2024, the short-term note was converted into 505,051 shares of common stock.
The Company has elected to measure the Note and options at fair value. In estimating the fair value of the Note, a Monte Carlo simulation model is applied. The required inputs include the current stock price, the risk-free rate and volatility of the common stock. The Note's fair value is classified as Level 2 under the fair value hierarchy as provided by ASC 820. In estimating the fair value of the options, the Black-Scholes Merton Model is used. The required inputs include the current stock price, the exercise price, the term of the options, the risk-free rate and the volatility of the common stock. The options' fair value is classified a Level 2 under the air value hierarchy as provided by ASC 820. The fair valuation of the Note and options uses inputs other than quoted prices that are observable either directly or indirectly.
The net proceeds of $901,000 received by the Company from the issuance of the Note are bifurcated between the Note and the options. The amount allocated to the options is $431,405 which is the fair value on the date of the Note. The remaining proceeds received are allocated to the Note. Under the fair valuation election, both the Note and options are remeasured to their respective fair values at the reporting date. Changes in fair values for the Note and options are recorded as an unrealized gain or loss on convertible note fair value in Other (Expense)/Income in the Company's consolidated statements of operations for the year ended December 31, 2024. As a result of this election, the Company recorded an unrealized loss $556,174 for the year ended December 31, 2024 for the Note and an unrealized gain of $298,993 for the year ended December 31, 2024 for the options, respectively.
Related Party Loan
On August 13, 2024, the Company entered into a long-term loan arrangement (the "Oldridge Loan") with Phillip W. Oldridge ("Mr. Oldridge") whereby Mr. Oldridge loaned $300,000 to the Company. The Oldridge Loan carried an interest rate of 8% and matures on January 1, 2026. The Oldridge Loan was paid off in full on December 31, 2024. The amount paid to satisfy the Oldridge Loan was $309,000 of which $9,000 represented accrued interest on the loan.
Amended and Restated Standby Equity Purchase Agreement ("A&R SEPA")
On October 31, 2024, the Company entered into A&R SEPA with YA II PN, Ltd. (the "Investor"). The A&R SEPA amends and restates in its entirety the Original SEPA.
Pursuant to the A&R SEPA, except for so long as there is a balance outstanding under the Promissory Notes, the Company has the right, from time to time, until November 1, 2027, to require the Investor to purchase up to $25 million of shares of common stock, subject to certain limitations and conditions set forth in the A&R SEPA, by delivering written notice to the Investor. Pursuant to the A&R SEPA, the Investor advanced to the Company the Pre-Paid Advance of $3 million in exchange for the Company’s issuance to the Investor of the Promissory Notes in two tranches, resulting in net proceeds (net of discounts and fees) to the Company of $2,635,500. The Company received the first tranche of the Pre-Paid Advance in the principal amount of $2 million on October 31, 2024 in exchange for the Promissory Note dated October 31, 2024, and the second tranche of the Pre-Paid Advance in the principal amount of $1 million on December 17, 2024 in exchange for the Promissory Note dated December 17, 2024. The Promissory Notes accrue interest on the outstanding principal balance at an annual rate equal to 0%, which will increase to an annual rate of 18% upon the occurrence of an Event of Default (as defined in the Promissory Notes) or a Registration Event (as defined in the Promissory Notes) for so long as such event remains uncured. The Promissory Notes mature on November 13, 2025, which may be extended at the option of the Investor. The Promissory Notes are convertible at a conversion price equal to the lower of (i) $2.1480 per share or (ii) 93% of the lowest daily volume weighted average price of the Common Stock on Nasdaq as reported by Bloomberg L.P. during the five consecutive trading days immediately preceding the conversion date (but no lower than the “floor price” then in effect, which is $0.3580 per share, subject to adjustment from time to time in accordance with the terms contained in the Promissory Notes). Pursuant to the terms of the Original SEPA, the Company issued 64,103 shares of common stock to the Investor as a commitment fee.
The Company has elected to measure the Promissory Notes at fair value. In estimating the fair value of the Note, a lattice model is applied. The required inputs include the current stock price, the term, the conversion price, the risk-free rate and volatility of the common stock. The Promissory Notes' fair values are classified as Level 2 under the fair value hierarchy as provided by ASC 820. As a result of this election, the Company recorded an unrealized loss of $251,200 for the $2,000,000 Promissory Note and $125,600 for the $1,000,000 Promissory Note.
The following table depicts the future annual minimum payments of the Company's outstanding debt as of December 31, 2024:
Amount
$ 3,379,079
4,168
Total payments
$ 3,383,247
8. Stockholders' Equity
The Company has 5,000,000 authorized preferred stock with $0.00001 par value per share on December 31, 2024 and December 31, 2023. There was no outstanding preferred stock on December 31, 2024 and December 31, 2023.
The Company has 350,000,000 authorized common stock of which 19,872,612 and 15,171,748 shares of the Company's common stock were outstanding on December 31, 2024 and December 31, 2023, respectively. The par value of the Company's common stock is $0.00001.
During the first quarter of 2024, the Company entered into securities purchase agreements with five private investors with respect to the private placement of an aggregate of 348,889 shares of the Company’s common stock at a price of $1.68 per share. The Company received aggregate gross cash proceeds from this private placement of $585,499.
On May 3, 2024, the Company entered into securities purchase agreements with a private investor with respect to the private placement of an aggregate of 170,774 shares of the Company’s common stock at a price of $2.13 per share. The Company received aggregate gross cash proceeds from this private placement of $363,749.
On September 12, 2024, the Company entered into securities purchase agreements with four private investors with respect to the private placement of an aggregate of 512,047 shares of the Company’s common stock at a price of $1.66 per share and warrants to purchase up to an aggregate of 512,047 shares of Common Stock. The Company received aggregate gross cash proceeds from this private placement (exclusive of proceeds from any future exercise of the warrants) of $850,000. The warrants have a term of two years and are exercisable at any time after September 16, 2024, at an exercise price of $1.66 per share. The warrants expire on September 11, 2026. See Note 9 - Stock Warrants.
As disclosed in Note 7 - Debt, the Company entered into the Note with the Holder. During the third quarter of 2024, the Note was converted into 505,051 shares of common stock. See further disclosures under the heading, "Convertible Note," in Note 7 - Debt.
As disclosed in Note 3 - Acquisition, the Company acquired Maddox Industries, a provider of government contracting solutions based in Puerto Rico. As consideration for the Purchased Interests, at the Closing, the Company issued the Stock Consideration to the Seller. In addition, during the Earnout Period, the Seller was eligible to receive up to six Earnout Payments, with the Earnout Payment for each calendar month being equal to the aggregate amount of gross revenue received by Maddox Industries in respect of any closing receivable, as specified in the Purchase Agreement, during such calendar month, subject to an aggregate limit of $1 million with respect to all Earnout Payments payable under the Purchase Agreement.
9. Stock Warrants
The Company’s outstanding warrants as of December 31, 2024 are summarized as follows, and all were exercisable at that date:
Number of Shares
Weighted Average Exercise Price
Weighted Average Remaining Contractual Life (years)
Outstanding warrants expiring January 28, 2025
431,250 $ 10.00 0.08
Outstanding warrants expiring May 7, 2026
958,334 $ 20.00 1.35
Outstanding warrants expiring September 11, 2026
512,047 $ 1.66 1.71
Outstanding warrants on December 31, 2024
1,901,631 $ 12.79 1.16
December 2020 Warrants
The warrants issued pursuant to that certain Securities Purchase Agreement, dated as of December 24, 2020, that the Company entered into with certain institutional and accredited investors and pursuant to which, among other things, the Company sold and issued, and the investors purchased, shares of the Company’s common stock and related warrants to purchase additional shares of the Company’s common stock in a series of two closings, contain a call provision whereby the Company, after the 13-month anniversary of the issuance date, and if the volume weighted average price of the common stock for such date exceeds four times the exercise price of the warrants for 20 consecutive trading days, may call the warrants that have not previously been exercised, and the warrant holders have ten trading days within which to exercise before the warrants may be cancelled. From among these warrants, warrants for 12,833 shares of common stock expired in 2023, warrants for 431,250 shares of common stock will expire on January 28, 2025, and warrants for 958,334 shares of common stock will expire on May 7, 2026.
September 2024 Warrants
See Note 8 - Stockholders' Equity for disclosures related to the warrants issued in conjunction with the private placements on September 12, 2024.
As of December 31, 2024 and 2023, the outstanding warrants have no intrinsic value.
10. Stock Options and Restricted Shares
Stock Options
The following is a summary of stock option activity under the Company’s 2017 Equity Incentive Plan for the year ended December 31, 2024:
Number of Shares
Weighted Average Exercise Price
Weighted Average Remaining Contractual Life (years)
Outstanding at December 31, 2022
608,266 $ 5.30 8.52
Options Granted during 2023:
Options Granted at $2.65 Exercise Price
15,000 $ 2.65
Options Granted at $2.10 Exercise Price
588,495 $ 2.10
Options Expired at $9.00 Exercise Price
(1,111 ) $ 9.00
Options Expired at $3.62 Exercise Price
(2,762 ) $ 3.62
Outstanding at December 31, 2023
1,207,888
Outstanding Options at $2.00 Exercise Price
250,000 $ 2.00 8.02
Outstanding Options at $2.40 Exercise Price
90,893 $ 2.40 9.05
Outstanding Options at $9.00 Exercise Price
256,750 $ 9.00 7.96
Outstanding Options at $26.20 Exercise Price
6,750 $ 26.20 5.3
Outstanding Options at $2.65 Exercise Price
15,000 $ 2.65 9.29
Outstanding Options at $2.10 Exercise Price
588,495 $ 2.10 9.53
Outstanding at December 31, 2023
1,207,888 $ 3.71 8.53
Options Granted during 2024:
Options expired during 2024
(2,778 ) $ 2.65
Options Granted at $2.11 Exercise Price
1,378,364 $ 2.11
Options Granted at $2.66 Exercise Price
25,000 $ 2.66
Options Granted at $2.44 Exercise Price
100,000 $ 2.44
Options Granted at $1.50 Exercise Price
800,000 $ 1.50
Options Granted at $2.75 Exercise Price
2,000,000 $ 2.75
Options forfeited at $2.65 Exercise Price
(7,222 ) $ 2.65
Options Granted at $1.76 Exercise Price
100,000 $ 1.76
Options Granted at $1.49 Exercise Price
20,000 $ 1.49
Options Granted at $2.20 Exercise Price
20,000 $ 2.20
Outstanding at December 31, 2024
5,641,252
Outstanding Options at $2.00 Exercise Price
250,000 $ 2.00 7.02
Outstanding Options at $2.40 Exercise Price
90,893 $ 2.40 7.02
Outstanding Options at $9.00 Exercise Price
256,750 $ 9.00 5.98
Outstanding Options at $26.20 Exercise Price
6,750 $ 26.20 3.32
Outstanding options at $2.65 Exercise Price
5,000 $ 2.65 8.30
Outstanding Options at $2.10 Exercise Price
588,495 $ 2.10 8.53
Outstanding Options at $2.11 Exercise Price
1,378,364 $ 2.11 9.22
Outstanding Options at $2.66 Exercise Price
25,000 $ 2.66 9.12
Outstanding Options at $2.44 Exercise Price
100,000 $ 2.44 9.15
Outstanding Options at $1.50 Exercise Price
800,000 $ 1.50 2.05
Outstanding Options at $2.75 Exercise Price
2,000,000 $ 2.75 2.1
Outstanding Option at $1.76 Exercise Price
100,000 $ 1.76 9.49
Outstanding Options at $1.49 Exercise Price
20,000 $ 1.49 9.49
Outstanding Options at $2.20 Exercise Price
20,000 $ 2.20 9.48
Outstanding at December 31, 2024
5,641,252 $ 2.59 5.33
On December 31, 2024, stock options for 3,505,418 shares of common stock were exercisable.
On January 18, 2024, in conjunction with the Note disclosed in Note 7 - Debt, the Company issued 800,000 options to purchase 800,000 shares of the Company's common stock with an exercise price of $1.50 to the Holder. See Note 4 - Debt, for additional disclosures related to this issuance.
On February 14, 2024, the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors (the "Board") granted an employee options to purchase 25,000 shares of the Company's common stock at an exercise price of $2.66 per share. The options vest ratably over 36 months and expire on the tenth anniversary of the grant date.
On February 23, 2024, the Compensation Committee granted to Franklin Lim, the Company’s Chief Financial Officer, options to purchase 100,000 shares of the Company's common stock at an exercise price of $2.44 per share. The options vested immediately upon grant and expire on the tenth anniversary of the grant date.
On March 19, 2024, the Compensation Committee granted the non-employee directors and certain executives and consultants options to purchase 1,378,364 shares of common stock at an exercise price of $2.11 per share. The options vested immediately and expire on the tenth anniversary of the grant date.
On April 17, 2024, the Compensation Committee granted to an employee option to purchase 20,000 shares of the Company's common stock at an exercise price of $2.20 per share. The options vest ratably over 36 months and expire on the tenth anniversary of the grant date.
On June 3, 2024, the Compensation Committee granted to an employee option to purchase 20,000 shares of the Company's common stock at an exercise price of $1.49 per share. The options vest ratably over 36 months and expire on the tenth anniversary of the grant date.
On June 17, 2024, the Compensation Committee granted to an employee option to purchase 100,000 shares of the Company's common stock at an exercise price of $1.76 per share. The options vest ratably over 36 months and expire on the tenth anniversary of the grant date.
On February 28, 2024, the Company issued options to an external party to purchase 2,000,000 shares of the Company's common stock at an exercise price of $2.75 per share, contingent upon achieving certain sales targets. On September 30, 2024, the sales targets were not met and therefore, no compensation expense was recorded. These options expire on February 5, 2027.
The options granted during 2024 were valued using the Black-Scholes option pricing model, resulting in a weighted average fair market value of approximately $4.71 per option for the years ended December 31, 2024. The weighted average assumptions used in the valuation of the options are summarized in the following table:
Risk-free interest rate
4.30 %
Expected volatility
74.1 %
Expected option term (years)
4.1
Expected dividend yield
0 %
As of December 31, 2024, the outstanding options had no intrinsic value.
Restricted Shares
In November 2023, the Company awarded 65,660 restricted shares to a vendor that vested over a six-month period in exchange for marketing services to be provided over the same period. As a result, the Company recorded stock compensation expense of $58,671 during the year ended December 31, 2024.
The Company recorded total stock compensation expense of $1,889,353 and $1,095,199 for the years ended December 31, 2024 and December 31, 2023, respectively.
11. Related Party Transactions
The Company has entered into lease agreements with SRI Professional Services, Incorporated (“SRI”), pursuant to which the Company leases equipment used in connection with the operation of its business (the “SRI Equipment Leases”). Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, serves as an executive officer and a member of the board of directors of SRI. The SRI Equipment Leases provide for the leasing of two vehicles that commenced on January 1, 2020 and the combined rent under such leases is $3,880 per month, and a separate SRI Equipment Lease provides for a trailer lease that commenced on December 1, 2019, under which the rent is $3,891 per month. The total monthly payment obligation of the Company under the SRI Equipment Leases is $7,771. As a result of the SRI Equipment Leases, the Company recorded rent expense of $93,248 for the year ended December 31, 2024, respectively.
The Company has entered into a commercial lease agreement (the “ABCI Office Lease”) with Alpha Bravo Charlie, Inc. (“ABCI”) that commenced on April 1, 2020, for the lease of office space in Porterville, California. The monthly rent for this facility is approximately $5,000. Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board is a director of ABCI. The Company recorded rent expense of $60,000 for the year ended December 31, 2024, respectively, in connection with the ABCI Office Lease.
As disclosed in Note 3 - Acquisition, the Company recorded a $1,000,000 receivable that was due from Maddox Defense, an entity of which Jason Maddox, the President of the Company, is the sole stockholder.
During 2023, the Company reimbursed Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, $81,269 for use of the CEO's personal airplane for certain business-related activities.
The Company incurred $150,000 of costs related to engineering consulting services from 42Motorsports LTD, the owner of which is a sibling of the Company's Chief Executive Officer and Chairman of the Board for the year ended December 31, 2024, respectively.
See Note 7 - Debt for disclosures related to the Oldridge Loan, a related party loan that was transacted during the third quarter of 2024 and paid off in the fourth quarter of 2024.
12. Commitments
Other Agreements
On December 31, 2021, the Company entered into employment agreements with Phillip W. Oldridge (the “Oldridge Agreement”), its Chief Executive Officer, and with Susan M. Emry (the “Emry Agreement”), its then Executive Vice President. According to the Oldridge Agreement, effective as of March 1, 2021, Mr. Oldridge will receive an annual base salary of $300,000, payable in semi-monthly installments consistent with the Company’s payroll practices. Mr. Oldridge will also receive participation in medical insurance, dental insurance, and the Company’s other benefit plans. Under the Oldridge Agreement, Mr. Oldridge will also receive an amount equal to 5% of the net income of the Company on an annual basis and will be eligible for a bonus at the sole discretion of the Board. The Oldridge Agreement also provides for an automobile monthly allowance of $1,500. Mr. Oldridge’s employment shall continue until terminated in accordance with the Oldridge Agreement. If Mr. Oldridge is terminated without cause or if he terminates his employment for good reason, Mr. Oldridge will be entitled to receive (i) one-year of base salary, (ii) reimbursement of reimbursable expenses in accordance with the Oldridge Agreement, (iii) any bonus that would have been payable within the twelve months following the date of termination, and (iv) the value of any accrued and unused paid time off as of the date of termination. There are no future minimum payments under the terms of the Oldridge Agreement as Mr. Oldridge has the right to terminate the Oldridge Agreement without any contractual payments other than what has been stated in the Oldridge Agreement. According to the Emry Agreement, effective on January 1, 2022, Mrs. Emry would receive an annual base salary of $200,000 and was eligible for a bonus at the sole discretion of the Board. Mrs. Emry would also receive participation in medical insurance, dental insurance, and the Company’s other benefit plans. The Emry Agreement provided that Mrs. Emry’s employment would continue until terminated in accordance with the Emry Agreement. If Mrs. Emry was terminated without cause or if she terminated her employment for good reason, Mrs. Emry was entitled to receive (i) one-year of base salary, (ii) reimbursement of reimbursable expenses in accordance with the Emry Agreement, and (iii) the value of any accrued and unused paid time off as of the date of termination. Ms. Emry terminated her employment with the Company on October 15, 2024.
On March 28, 2023, the Company entered into an agreement with Berthaphil, Inc. ("Berthaphil") to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines (the "Berthaphil Sublease"). The term of the lease is two years and two months with a turnover date of July 1, 2023 and a rental commencement of September 1, 2023. The Company had originally intended to use the leased space as a production facility as it seeks to expand its business presence in that region and the United States. However, in December 2024, the Company decided not to use the leased space for its original purpose. See Note 14 - Leases for further information.
On March 18, 2024, the Company entered into a Sale and Purchase Agreement (the "PlugD Agreement") with PlugD Commercial Electric Leasing and Rentals Inc. ("PlugD"), a Texas-based commercial electric vehicles leasing company. Under the terms of the PlugD Agreement, the Company will deliver 200 electric high roof vans and trucks to PlugD for a total of approximately $16.2 million. The sale is expected to take place over the next 13 months.
13. Contingencies
Except as set forth below, we know of no material, existing or pending, legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder of more than 5% of our common stock, or any associate of any of the foregoing persons, is an adverse party or has a material interest adverse to our interest.
GreenPower Litigation
On December 17, 2019, GreenPower Motor Company Inc., a public company incorporated under the laws of British Columbia (“GreenPower”), of which Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, previously served as a senior officer and a member of its board of directors, filed a notice of civil claim, captioned GreenPower Motor Company Inc. v. Phillip Oldridge et al., Action No. S-1914285, in the Supreme Court of British Columbia, against Phillip Oldridge, his trust, Envirotech Drive Systems, Inc. and certain other companies affiliated therewith. On February 2, 2020, the Company and the other companies affiliated therewith named in the notice of civil claim filed a response to the civil claim in which they denied certain of the allegations. Fact discovery, through document disclosure and examinations for discoveries, in this matter remains ongoing. The Company believes it has meritorious defenses against GreenPower's claims and intends to vigorously defend itself against those claims.
On or about July 18, 2021, GreenPower and GP GreenPower Industries Inc. (collectively “the GreenPower entities”), filed a counterclaim against David Oldridge, Phillip Oldridge, the Company and other companies in Supreme Court of British Columbia Action No. S207532. The pleadings in this lawsuit have not closed and the Company intends to vigorously defend itself against the counterclaim.
On February 8, 2022, GreenPower Motor Company, Inc., a Delaware corporation, and GreenPower Motor Company Inc., a Canadian corporation, filed a complaint captioned GreenPower Motor Company, Inc. v. Phillip Oldridge, et al., Case No. 5:22-cv-00252 in the United States District Court for the Central District of California. The complaint’s allegations are centered around the same assertions in the pending Canadian litigation.
On May 10, 2022, the Company, together with other defendants, filed a Motion to Dismiss and/or Stay the lawsuit in the United States District Court for the Central District of California pending the outcome of the Canadian litigation. The Court issued stay of this case pending resolution of parallel litigation in Canada between similar parties. GreenPower and defendants have agreed that the U.S. GreenPower case will not proceed while Canadian litigation is pending. The Company believes that it has meritorious defenses against the Greenpower entities' claims and intends to vigorously defend itself against such claims.
14. Leases
Operating leases
The Company has active operating lease arrangements for office space and warehouse facilities. The Company is typically required to make fixed minimum rent payments relating to its right to use the underlying leased assets. Although these leases have terms that are either month-to-month or terms that are one year or less (with renewal options), the Company concluded in the fourth quarter of 2023 that the term renewal options are reasonably certain to be exercised. As a result of changes in certain circumstances related to some of the Company's short-term leases, the Company was required to classify such leases as operating leases in accordance with the provisions of ASC 842. Therefore, the Company recognized operating lease liabilities with corresponding Right-of-Use ("ROU") assets based on the present value of the minimum rental payments of such leases.
On March 28, 2023, the Company entered into the Berthaphil Sublease with Berthaphil to sublease approximately 3,600 square yards of a warehouse building based in the Clark Freeport Zone in the Philippines. The term of the Berthaphil Sublease is two years and two months with a turnover date of July 1, 2023 (the "turnover date") and a rental commencement of September 1, 2023. However, the warehouse building was not available for use to the Company until the early part of the fourth quarter of 2023. Therefore, the commencement date was deferred until the fourth quarter of 2023, which is when the Company was given access to use the warehouse building. There was a grace period of two months for rental payments starting from the turnover date. The monthly rent for the first year is $15,000, escalating to $15,750 for the second year and $16,530 for the remaining term. In addition to the monthly rent, the Company is required to pay an additional 5% of the monthly rent as common area maintenance costs. The Berthaphil Sublease may be renewed for an additional period that is mutually agreed upon subject to certain terms and conditions. The Company intended to use the leased space as a production facility as it seeked to expand its business presence in the region and the United States. The Company accounted for this lease as an operating lease under ASC 842 and recorded an operating lease liability and a corresponding ROU asset for this lease. As disclosed in Note 12 - Commitments, the Company decided to not use this facility for its original intended purpose. As a result, the Company recorded an impairment of $129,062 with respect the corresponding ROU asset.
On July 1, 2024, the Company entered into a month-to-month lease contract with Southern Management Corporation to lease a residence in Osceola, Arkansas for the purpose of housing certain of the Company's employees. The monthly lease cost is $3,000. This lease is treated as a short-term lease expense.
On August 26, 2024, the Company entered into a one-year lease contract with 120 Park SD, LLC to lease a location in Manalapan, New Jersey with the purpose of servicing the Company's New Jersey customers. The monthly lease cost is $2,900 and at the end of the one-year lease term, the lease converts into a month-to-month arrangement. This lease is treated as a short-term lease expense.
The Company's lease agreements do not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate incremental borrowing rate. The Company benchmarked itself against other companies of similar credit ratings and comparable credit quality and derived an incremental borrowing rate to discount each of its lease liabilities based on the remaining lease terms.
ROU assets at December 31, 2024 and December 31, 2023 were $108,508 and $538,932, respectively. Short-term operating lease liabilities were $235,625 and $291,263 at December 31, 2024 and December 31, 2023, respectively. Long-term operating lease liabilities were $0 and $235,625 at December 31, 2024 and December 31, 2023, respectively.
Quantitative information regarding the Company’s leases is as follows:
Year Ended December 31,
Lease expenses
Operating lease expenses
$ 486,133 $ 89,268
Short-term lease expenses
$ 103,482 $ 188,921
Total lease cost
$ 589,615 $ 278,189
Other information
Cash paid for the amounts included in the measurement of lease liabilities for operating leases:
Operating cash flows
$ 346,972 $ 101,312
Weighted-average remaining lease term (in years):
Operating leases
0.75 1.70
Weighted-average discount rate:
Operating leases
14 % 14 %
As of December 31, 2023, future minimum lease payments required under operating leases are as follows:
$ 248,873
Total payments
$ 248,873
15. Subsequent Events
The Company evaluates subsequent events through April 15, 2025, which is the date the financial statements were issued or available to be issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.
On February 12, 2025, the Company announced the relocation of its corporate headquarters and the establishment of a new 86,000 square foot facility in Houston, Texas. This strategic move reinforces the Company's commitment to expanding U.S. manufacturing, strengthening fleet services, and supporting the growing demand for commercial electric vehicles. The Company plans to open its new corporate headquarters and manufacturing facility in 2025. As a result of this relocation, the Company may incur additional capital expenditure and one-time relocation costs, which at the time of filing, are being estimated.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as amended (Exchange Act)) as of the end of the period covered by this Annual Report. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were not effective to ensure that information that we are required to disclose in reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (b) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Section 404 of the Sarbanes- Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on the internal control over financial reporting. Once we are no longer a smaller reporting company, such report must be attested to by our independent registered public accounting firm.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2023 using the framework established by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013 framework). Based on such evaluation, our management concluded that, as of December 31, 2023, our internal control over financial reporting was not effective as of December 31, 2023. Deficiencies existed in the design or operation of our internal control over financial reporting that adversely affect our internal controls. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
In making such conclusion, our management determined that such deficiencies were determined to be material weaknesses that are primarily due to certain staff reductions and voluntary resignations we experienced beginning in the fourth quarter of 2020 and continuing through the date of this filing. During such periods and for all periods thereafter through the date of such determination, we increased our reliance on outsourced accounting help. As a result of such changes, our management concluded that we were unable to maintain the levels of segregation of duties during such periods at the levels of prior periods, and that such changes to our disclosure controls and procedures significantly affected our internal control over financial reporting during the year ended December 31, 2024.
Although we have yet to fully resolve such deficiencies as of the date of this Annual Report, we have engaged, and continue to seek the assistance of additional, experienced accounting professionals with relevant expertise to supplement our efforts and mitigate the negative effects of the above-described material weaknesses.
If we fail to detect errors on a timely basis, our financial statements may be materially misstated and if we are unable to comply with the requirements of Section 404 of the Sarbanes Oxley Act, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, if and when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
Other than the material weaknesses and remediation efforts described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter covered by this Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Changes in Internal Control over Financial Reporting
Other than the material weakness described above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. OTHER INFORMATION
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the quarter ended December 31, 2024, none of our officers or directors adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as each such term is defined in Item 408 of Regulation S-K).

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
MANAGEMENT
The following table sets forth information regarding our executive officers and directors at the date of this report:
Name
Age
Position
Executive Officers
Phillip W. Oldridge
Chief Executive Officer, Chairman of the Board and Director
Jason Maddox
President
Elgin Tracy
Chief Operating Officer
Merrick Alpert
Chief Communication Officer
Directors
Melissa Barcellos(1)(2)(3)
Director
Michael Di Pietro(1)(2)(3)
Director
Terri White Elk(1)(2)(3)
Director
(1)
Member of our Audit Committee.
(2)
Member of our Compensation Committee.
(3)
Member of our Nominating and Corporate Governance Committee.
Executive Officers
Phillip W. Oldridge, Chief Executive Officer, Chairman of the Board, and Director
Phillip W. Oldridge has served as our Chief Executive Officer since September 2020 and as our Chairman of the Board and a director since March 2021. Prior to joining us, Mr. Oldridge was the founder and the Chief Executive Officer of GreenPower Motor Company, Inc., a publicly traded designer and manufacturer of passenger transit and shuttle buses, from November 2011 until June 2019, where he also served as a member of the board of directors from December 2012 until June 2019. From November 2006 until January 2010, Mr. Oldridge served as the Chief Executive Officer of Bus and Coach International, a manufacturer of buses and coaches. Before that, Mr. Oldridge was the Chief Executive Officer of Nevada Charter Inc., a bus and coach charter company, from October 1994 until December 2001. Mr. Oldridge holds a Master of Business Administration from Richmond, the American University in London, from which he also received a Bachelor of Science degree. The Board believes that Mr. Oldridge’s extensive senior executive management and board experience in private and public companies qualifies him to serve on the Board of Directors.
Jason Maddox, President and Interim Chief Financial Officer
Jason Maddox has served as our President since October 2024 and as Interim Chief Financial Officer since January 2025. Mr. Maddox has served as the Chief Executive Officer of Maddox Defense, Inc. (“Maddox Defense”) since October 2012 and as Chief Executive Officer of Maddox Industries LLC (“Maddox Industries”) from January 2021 until the acquisition of Maddox Industries by the Company in December 2024. He brings years of executive leadership experience, having built Maddox Defense into one of the leading companies in government contracting. Mr. Maddox graduated from the University of Colorado with a Bachelor of Science degree with majors in Mechanical Engineering and Journalism and Mass Communication. He also completed the Goldman Sachs 10,000 Small Businesses entrepreneurship program at Babson College and holds a post-graduate certificate in entrepreneurship from Harvard Business School.
Elgin Tracy, Chief Operating Officer
Elgin Tracy has served as our Chief Operating Officer since October 2024. Mr. Tracy has also served as Chief Operating Officer of Maddox Defense since August 2021. Prior to this position, Mr. Tracy previously served as Head of Operations of Maddox Defense from August 2020 to August 2021. Before joining Maddox Defense, Mr. Tracy held the position of a manufacturer at PPE Manufacturer from 2019 to 2021 and was a managing partner for Foreman Electric Company from 2017 to 2018. Renowned for his over 20 years of expertise in operating and running successful businesses in the defense and oil & gas sectors, Mr. Tracy brings a wealth of operational and logistical experience, having overseen and successfully delivered over $2.5 billion in contracts and purchase orders in the past five years. In his most recent role as Chief Operating Officer of Maddox Defense, Mr. Tracy played a pivotal role in delivering over 100 million COVID test kits and 126 million isolation gowns to the U.S. government. He holds a Bachelor of Arts degree in construction management from Texas State University.
Merrick Alpert, Chief Communications Officer
Merrick Alpert has served as our Chief Communications Officer since February 2025. Prior to such time, he served as a consultant and then as the Company’s Communications Manager from October 2024 to January 2025. Before joining the Company, Mr. Alpert served as a division director at Sheet Pile LLC from May 2023 to December 2023, as President of EonCoat LLC from January 2014 to August 2022, as Executive Vice President of R&D Altanova from May 2013 to December 2013, and as a consultant and then Executive Vice President of Colt's Manufacturing Company LLC from May 2010 to October 2012. Mr. Alpert has a long history of experience in business development and government relations, having served in the Army and Air National Guard for approximately 10 years including as a US peacekeeper in Bosnia. He holds a Juris Doctorate from Georgetown University Law Center and a Bachelor of Arts degree in political science from Trinity College.
Non-Employee Directors
Melissa Barcellos, Director
Melissa Barcellos has served as a director since March 2021. Ms. Barcellos is employed in the mining industry and currently works on Environmental, Social and Governance ("ESG") initiatives that focus on community and indigenous business development including involvement in supply chain and construction. She has experience in the clean technology industry, including international government relations and held economic development positions for over 14 years. Her governance experience includes Chairman of the Board and Director positions on multiple non-profit organizations and being a member of governance, finance, audit and human resources executive committees. She currently sits on the Board of Directors of the Prince George Airport Authority. Ms. Barcellos received a Bachelor of Commerce in Marketing and General Business from the University of Northern British Columbia and obtained a Post Graduate Certificate in Economic Development from the University of Waterloo. Based on these qualifications, the Board believes that Ms. Barcellos is qualified to serve on the Board of Directors.
Michael Di Pietro, Director
Michael Di Pietro has served as a director since March 2021. Mr. Di Pietro is the President of Michael DiPietro, CPA, Inc., a full-service public accounting firm he founded in 1991. Since July 2018, Mr. Di Pietro has served on the board of directors of Cathedral High School, a private, college preparatory Catholic all-boys school located in Los Angeles, California, where he is currently the chair of the finance committee. Mr. Di Pietro also previously served as a Director of Chino Commercial Bank, a community bank located in Chino, California, from April 2012 until April 2019. Mr. Di Pietro holds a Bachelor of Arts degree in Accounting from the University of South Florida, a Master of Arts in Church History from the University of Notre Dame, and a Master of Divinity and Biblical Studies from Fuller Theological Seminary. Based on these qualifications, the Board believes that Mr. Di Pietro is qualified to serve on the Board of Directors. As of July 2023, Mr. Di Pietro is on the Board of Trustees for the Dan Murphy Foundation and he serves as the Audit Chairman and is a member of the Investment Committee.
Terri White Elk, Director
Terri White Elk has served as a director since March 2021. Ms. White Elk is a member of the Real Estate Investment Sales team at Keller Williams Realty SW in Las Vegas, Nevada, a position she has held since July 2003. Ms. White Elk also served as Operations Manager of Innovative Real Estate Strategies, a real estate and investment firm based in Las Vegas, Nevada, from July 2009 until May 2018, and was a Sales Executive at Legacy Partners Inc., a real estate development firm, from March 2005 until September 2008. Ms. White Elk received a Bachelor of Arts degree in Political Science from Arizona State University. Based on these qualifications, the Board believes that Ms. White Elk is qualified to serve on the Board of Directors.
Audit Committee
Our Audit Committee currently consists of Mr. Di Pietro (Chairperson) and Mmes. Barcellos and White Elk. The Audit Committee operates under a written charter, which is available on our website at www.evtvusa.com. Our website and the information contained on or connected to our website are not incorporated by reference herein, and our web address is included as an inactive textual reference only. In addition to meeting the independence requirements generally applicable to directors, our Board has determined that each of Mr. Di Pietro, Ms. Barcellos and Ms. White Elk also satisfy the independence requirements of Rule 5605(c)(2) of the Nasdaq Stock Market listing rules and SEC Rule 10A-3. Our board of directors has determined that Mr. Di Pietro is an “audit committee financial expert” as defined by the regulations promulgated by the SEC and within the meaning of the NASDAQ Listing Rules.
Our Audit Committee is responsible for, among other things:
•
appointing, compensating, retaining and overseeing our independent registered public accounting firm;
•
approving the audit and non-audit services to be performed by our independent registered public accounting firm;
•
reviewing, with our independent registered public accounting firm, all critical accounting policies and procedures;
•
reviewing with management the adequacy and effectiveness of our internal control structure and procedures for financial reports;
•
reviewing and discussing with management and our independent registered public accounting firm our annual audited financial statements and any certification, report, opinion or review rendered by our independent registered public accounting firm;
•
reviewing and investigating conduct alleged to be in violation of our code of business conduct and ethics;
•
reviewing and approving related party transactions;
•
preparing the Audit Committee report required in our annual proxy statement; and
•
reviewing and evaluating, at least annually, its own performance and the adequacy of the committee charter.
Family Relationships and Certain Legal Proceedings
There are no family relationships between any of our directors or executive officers. There are no legal proceedings related to any of the directors or executive officers that must be disclosed pursuant to Item 401(f) of Regulation S-K.
Stockholder Nominees for Director
There have been no material changes to the procedures by which stockholders may recommend nominees to the Board of Directors
Code of Business Conduct and Ethics
We have adopted a written code of business conduct and ethics, which outlines the principles of legal and ethical business conduct under which we do business. The code is applicable to all of our directors, officers and employees and is available on our website at www.evtvusa.com. Our website and the information contained on or connected to our website are not incorporated by reference herein, and our web address is included as an inactive textual reference only. We intend to disclose any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website or in filings under the Exchange Act, to the extent required by applicable rules and exchange requirements.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the SEC reports of beneficial ownership and reports of changes in beneficial ownership in the Company’s securities. Based solely upon a review of Forms 3, 4 and 5, and amendments thereto, filed electronically with the SEC during the year ended December 31, 2024, the Company believes that all Section 16(a) filings applicable to its directors, officers, and 10% stockholders were filed on a timely basis during the year ended December 31, 2024, except those listed below:
January 2, 2024: Melissa Barcellos filed one Form 5 late with respect to one transaction.
October 28, 2024: Each of Jason Maddox and Elgin Tracy filed on Form 3 late.
November 22, 2024: Brock J. Pierce filed one Form 3 late.
January 3, 2025: Jason Maddox reported one Form 4 late with respect to one transaction.
Insider Trading Policy
We have adopted an insider trading policy, which governs the purchase, sale, and other dispositions of our securities by our directors, executive officers, other employees and consultants, as well as members of their immediate families and households. We believe that our insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable listing standards. The foregoing summary of our insider trading policy does not purport to be complete and is qualified in its entirety by reference to the full text of our insider trading policy, a copy of which is filed as Exhibit 19.1 to this Annual Report on Form 10-K. In addition, with regard to the Company’s trading in its own securities, it is our policy to comply with the federal securities laws and the applicable listing standards.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Overview
We have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act. The following tables and accompanying narrative disclosure set forth information about the compensation provided to certain of our executive officers during the years ended December 31, 2024 and 2023. These executive officers, determined in accordance with SEC rules, for the year ended December 31, 2024, were:
•
Phillip W. Oldridge, our Chief Executive Officer;
•
Susan Emry, former Executive Vice President; (resigned October 15, 2024)
•
Franklin Lim, former Chief Financial Officer (resigned December 31, 2024)
We refer to these individuals in this section as our “Named Executive Officers.”
Summary Compensation Table
The following table presents summary information regarding the total compensation that was awarded to, earned by or paid to our Named Executive Officers for services rendered during the years ended December 31, 2024 and 2023:
Option
All Other
Salary
Bonus
Awards
Compensation
Total
Name and Principal Position
Year
($)
($)
($)(1)
($)
($)
Phillip W. Oldridge
87,500
-
1,070,871
5,250
1,163,621
Chief Executive Officer
300,000
-
322,073
18,000 (3)
640,073
Susan M. Emry(2)
191,859
-
388,165
-
580,024
Former Executive Vice President
200,000
-
144,605
-
344,605
Franklin Lim(4)
185,313
-
117,250
-
302,563
Former Chief Financial Officer and Treasurer
145,000
5,000
21,167
-
171,167
(1)
The amounts shown in this column represent the aggregate grant date fair value of option awards granted in the year computed in accordance with FASB ASC Topic 718. The grant date fair values have been determined based on the assumptions and methodologies set forth in Note 9 to our financial statements included in Item 8 of this Annual Report on Form 10-K for the fiscal year ended December 31, 2024. These amounts reflect our accounting expense for these awards and do not correspond to the actual value that may be recognized by our Named Executive Officers.
(2)
Ms. Emry resigned effective October 15, 2024.
(3)
All other compensation for Mr. Oldridge represents the value of a $1,500 monthly auto allowance paid per the terms of his employment agreement. However, Mr. Oldridge decided not to take any compensation starting in the second quarter of 2024.
(4)
Mr. Lim was appointed Chief Financial Officer effective February 24, 2024. He resigned effective December 31, 2024 and returned as an independent contractor in the financial reporting capacity in March 2025.
Outstanding Equity Awards at 2024 Fiscal Year-End
The following table sets forth information regarding outstanding stock options held by our Named Executive Officers as of December 31, 2024. Our Named Executive Officers did not hold any restricted stock or other equity awards as of December 31, 2024:
Number of
Number of
Securities
Securities
Underlying
Underlying
Unexercised
Unexercised
Option
Options (1)
Options
Exercise
Option
(#)
(#)
Price
Expiration
Name
Exercisable
Unexercisable
($)
Date
Phillip W. Oldridge
250,000
-
9.00
1/7/2031
Chief Executive Officer
150,000
-
2.00
1/7/2032
50,000
-
2.40
1/7/2032
174,257
-
2.10
7/11/2033
913,321
-
2.11
3/19/2034
Susan M. Emry
100,000
-
2.00
1/7/2032
Former Executive Vice President
40,893
-
2.40
1/7/2032
78,238
-
2.10
7/11/2033
331,057
-
2.11
3/19/2034
Franklin Lim
2,778
2.65
4/17/2033
Former Chief Financial Officer
100,000
-
2.44
2/24/2034
13,770
-
2.11
3/19/2034
(1)
The options were granted to Mr. Lim on April 19, 2023, and vest ratably at 1/36th per month over three years from the grant date. The options to Mr. Oldridge and Mrs. Emry were fully vested upon grant.
Compensation Arrangements with Named Executive Officers
Phillip W. Oldridge
Mr. Oldridge is our Chief Executive Officer and chairman of our board of directors. We entered into an employment agreement with Mr. Oldridge, dated as of December 31, 2021 (the “Oldridge Agreement”). Mr. Oldridge’s base salary is $300,000. The auto allowance of $1,500 per month contained in his contract commenced being paid in 2022. Under the Oldridge Agreement, Mr. Oldridge will also receive an amount equal to five percent of the net income of the Company on an annual basis and will be eligible for a bonus at the sole discretion of the Company’s Board of Directors. Mr. Oldridge’s employment shall continue until terminated in accordance with the Oldridge Agreement. If Mr. Oldridge is terminated without cause or if he terminates his employment for good reason, Mr. Oldridge will be entitled to receive (i) one-year of base salary payable in equal installments over 12 months in accordance with the Company’s regular payroll practices, (ii) reimbursement of reimbursable expenses in accordance with the Oldridge Agreement, (iii) any bonus that would have been payable within the twelve months following the date of termination, and (iv) the value of any accrued and unused paid time off as of the date of termination. The foregoing benefits are subject to Mr. Oldridge executing and delivering an effective and irrevocable general release of claims in favor of the Company. In addition, upon a termination of Mr. Oldridge’s employment with the Company due to death or disability, all outstanding, unvested options will accelerate and vest in full.
For purposes of the Oldridge Agreement “cause” generally means Mr. Oldridge’s (i) conviction of a felony, or a misdemeanor where imprisonment is imposed; (ii) commission of any act of theft, fraud, or falsification of any employment or Company records in any material way; (iii) failure or inability to perform any material reasonably assigned duties after written notice from the Company of, and a reasonable opportunity to cure, such failure or inability; or (iv) a material breach of the Oldridge Agreement that remains uncured for 10 days.
For purposes of the Oldridge Agreement “good reason” generally means the occurrence of any of the following: (i) a material reduction in Mr. Oldridge’s base salary, other than where a same or similar reduction affects other executives of the Company; (ii) any material breach by the Company under any material provision of the Oldridge Agreement; (iii) the Company’s failure to have the Oldridge Agreement assumed by a successor (with limited exceptions); or (iv) the dissolution of Company, involuntary or voluntary liquidation of Company, the appointment of a receiver for Company, or the assignment of the Oldridge Agreement for the benefit of creditors.
Susan M. Emry
Mrs. Emry has been our Executive Vice President since December 1, 2021. She was appointed as a member of our board of directors on January 7, 2022. We entered into an employment agreement, dated as of December 31, 2021 (the “Emry Agreement”), with Mrs. Emry, whose base salary is $200,000 per year. Mrs. Emry’s employment shall continue until terminated in accordance with the Emry Agreement. Ms. Emry terminated her employment effective October 15, 2024.
Severance and Change in Control Payments and Benefits
Our Named Executive Officers are not entitled to any severance or change in control payments or benefits, other than as provided in the section entitled “Compensation Arrangements with Named Executive Officers” above and in award agreements that set forth the terms and conditions of the stock options granted to such individuals pursuant to the 2017 Plan. Each such award agreement provides that, in the event of a “transfer of control,” any unvested portion of such option may vest immediately, subject to the Compensation Committee deciding that. For such purposes, a “transfer of control” includes the direct or indirect sale or exchange by our stockholders of all or substantially all of our capital stock, (a) where our stockholders before such sale or exchange do not retain, directly or indirectly, at least a majority of the beneficial interest in our voting stock after such sale or exchange; (b) a merger in which we are not the surviving corporation; (c) a merger in which we are the surviving corporation and our stockholders before such merger do not retain, directly or indirectly, at least a majority of the beneficial interest in the our voting stock after such merger; (d) the sale, exchange, or transfer of all or substantially all of our assets; or (e) our liquidation or dissolution.
Employee Benefit and Equity Incentive Plans
We currently maintain the 2017 Plan. The Compensation Committee typically grants equity awards to NEOs during its regularly scheduled meeting early in the fiscal year. However, the timing of this approval may be changed in the event of extraordinary circumstances, including in connection with mid-year promotions and new-hires. The Compensation Committee does not take material nonpublic information into account when determining the timing and terms of equity awards. The Compensation Committee does not time the release of material nonpublic information to affect the value of executive compensation.
Non-Employee Director Compensation
Directors who are also our employees receive no additional compensation for their service as a director. During the year ended December 31, 2024, our directors who also served as employees were Mr. Oldridge, our Chief Executive Officer, and Mrs. Emry, our Executive Vice President. Their compensation is addressed above under “Executive Compensation."
We have a formal policy pursuant to which our non-employee directors are eligible to receive equity awards and annual cash retainers as compensation for service on our Board and committees of our Board. In 2023 the Compensation Committee worked with a third party consulting firm in evaluating compensation programs among peers to inform the development of compensation for the Board of Directors. The results of this compensation review led the Committee to approve the following annual compensation for Directors and committee Chairs:
Board Retainer: $31,000
Audit Committee Chair: $12,300
Compensation Committee Chair: $9,600
Nominating and Corporate Governance Committee Chair: $8,000
Reimbursement for all directors reasonable expenses incurred during the course of their performance.
The table below sets forth the compensation earned by each of our non-employee directors during the fiscal year December 31, 2024:
2024 Director Compensation Table
Fees earned or
paid in cash
Name
($)
Terri White Elk
40,600
Michael A. DiPietro
43,300
Melissa Barcellos
39,000
Brock J. Pierce
-
In addition, each non-employee director received 26,302 options (grant date fair value of $30,839) each on March 19, 2024. These options vested immediately.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information as of December 31, 2024, with respect to our equity compensation plans under which our equity securities are authorized for issuance.
Plan Category
Number of securities to be issued upon exercise of outstanding options, warrants and rights
Weighted-average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(a)
(b)
(c)
Equity compensation plans approved by security holders
5,641,222(1)
$2.59
31,412,112(2)
Equity compensation plans not approved by security holders
None
N/A
None
Total
5,641,222
$2.59
31,412,112
(1)
Represents 5,641,222 options under our 2017 Plan.
(2)
Represents 31,412,112 shares available for grant under the 2017 Plan. [Our 2012 Stock Option Plan was terminated on June 9, 2017 with respect to future awards].
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to us regarding the beneficial ownership of our common stock as of April 15, 2025, for:
•
each person, or group of affiliated persons, known to us to beneficially own more than 5% of our common stock;
•
each of our directors;
•
each of our named executive officers included in the Summary Compensation Table included in this Annual Report; and
•
all of our directors and executive officers as a group.
Beneficial ownership of shares is determined under the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as indicated by footnote, and subject to applicable community property laws, we believe each person identified in the table has sole voting and investment power with respect to all shares of our common stock beneficially owned by them. The information does not necessarily indicate beneficial ownership for any other purpose, including for purposes of Section 13(d) and Section 13(g) of the Securities Act.
Applicable percentage ownership in the following table is based on 23,106,392 shares of our common stock outstanding as of April 15, 2025. Shares of our common stock subject to options, warrants or other convertible securities that are currently exercisable or exercisable within 60 days after March 14, 2025 are deemed to be outstanding and to be beneficially owned by the person or entity holding such option, warrant or convertible security for the purpose of computing the number and percentage ownership of outstanding shares of that person or entity. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person or entity. Consequently, the denominator for calculating beneficial ownership percentages may be different for each beneficial owner. Except as otherwise noted, the address of each person or entity in the following table is c/o Envirotech Vehicles, Inc., 7510 Ardmore Street, Houston, TX 77054.
Number of
Percent of
Name of Beneficial Owner(1)
Shares
Shares
Directors and Executive Officers:
Phillip W. Oldridge(2)
3,046,187
11.9 %
Susan M. Emry(3)
655,288
2.8 %
Franklin Lim
116,548
*
Jason Maddox(4)
4,102,387
17.8 %
Elgin Tracy(5)
1,000,000
4.3 %
Merrick Alpert(6)
400,000
1.7 %
Melissa Barcellos(7)
333,404
1.4 %
Michael A. Di Pietro(8)
247,132
1.1 %
Terri White Elk(9)
238,302
1.0 %
All directors and executive officers as a group (9 persons)
10,139,248
5% Stockholders:
Gerald Douglas Conrod(10)
1,964,857
8.5%
*
Represents beneficial ownership of less than 1%.
(1)
Unless otherwise indicated, all shares are owned directly by the beneficial owner.
(2)
Consists of (i) 22,000 shares of our Common Stock held of record by Phillip W. Oldridge, (ii) 486,609 shares owned indirectly through a family relationship and (iii) 2,537,578 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 14, 2025.
(3)
Consists of (i) 105,000 shares of our Common Stock held of record by Susan M. Emry and (ii) 550,188 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 14, 2025.
(4)
Consists of (i) 3,102,385 shares of our Common Stock held of record by Jason Maddox and (ii) 1,000,000 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 14, 2025.
(5)
Consists of 1,000,000 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 14, 2025.
(6)
Consists of 400,000 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 14, 2025.
(7)
Represents (i) 94,293 shares of our Common Stock held of record by Provident Trust Group FBO Cornelia P. Doherty ROTH IRA, over which Ms. Barcellos has voting and investment control pursuant to a Voting Trust Agreement dated March 20, 2017, (ii) 809 shares of our Common Stock held of record by Melissa Barcellos and (iii) 238,302 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 14, 2025.
(8)
Consists of (i) 8,830 shares of our Common Stock held of record by Michael A. Di Pietro and (ii) 238,302 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 14, 2025.
(9)
Consists of 238,302 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 14, 2025.
(10)
The information reported is based in part on, and in reliance upon, and without independent investigation of, information provided by Gerald Douglas Conrod in a Schedule 13G filed with the SEC on March 26, 2021. As reported in such Schedule 13G, Gerald Douglas Conrod is the beneficial owner of 1,088,192 shares of our common stock and has sole voting and dispositive power over such shares. Mr. Conrod serves as co-trustee of 162315 Family Trust and, in such capacity, shares voting and dispositive power over the 578,556 shares held of record by the trust. Mr. Conrod disclaims beneficial ownership of the shares held by the trust. In addition to the information reported in such Schedule 13G, the information set forth above includes: (i) 505,051 shares of our common stock as a result of a conversion of a convertible note issued during the first quarter of 2024, (ii) 800,000 detachable options to purchase our common stock that were issued in conjunction with a convertible note, and (iii) an additional 81,250 shares of common stock underlying warrants issued to 162315 Family Trust at the second closing of our private investment in public equity, or PIPE, financing consummated on May 7, 2021, pursuant to that certain Securities Purchase Agreement, dated as of December 24, 2020, that are exercisable. The address of Gerald Douglas Conrod is 1961 Douglas Street, Victoria, British Columbia, V8T 4K7, Canada.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Director Independence
Our board of directors has undertaken a review of the independence of each director. For purposes of determining director independence, we have applied the definitions set out in Nasdaq Rule 5605(a)(2). Based on information provided by each director concerning his or her background, employment and affiliations, our board of directors has determined that Mr. Di Pietro and Mmes. Barcellos and White Elk do not have a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or responsibilities and that each of these directors is “independent” as that term is defined under the Nasdaq Listing Rules.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other than compensation arrangements for our directors and Named Executive Officers, which are described in the sections titled “Management” and “Executive Compensation,” below we describe transactions since January 1, 2022 to which we were a party or will be a party, in which:
•
the amounts involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets as of December 31, 2024 and 2023; and
•
any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.
As more fully discussed in the audited consolidated financial statements of included in Item 8, Part II of this Annual Report, the Company has entered into lease agreements with SRI Professional Services, Incorporated (“SRI”), pursuant to which the Company leases equipment used in connection with the operation of its business (the “SRI Equipment Leases”). Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, and a member of its board of directors, serves as an executive officer and a member of the board of directors of SRI. The SRI Equipment Leases provide for the leasing of two vehicles that commenced on January 1, 2020 and the combined rent under such leases is $3,880 per month, and a separate SRI Equipment Lease provides for a trailer lease that commenced on December 1, 2019, under which the rent is $3,891 per month. The total monthly payment obligation of the Company under the SRI Equipment Leases is $7,771.
The Company has also entered into a commercial lease agreement (the “ABCI Office Lease”) with Alpha Bravo Charlie, Inc. (“ABCI”) that commenced on April 1, 2020, for the lease of office space in Porterville, California. Mr. Oldridge is a director of ABCI.
The Company from time to time engages 42Motorsports LTD, the owner of which is a sibling of Phillip W. Oldridge, the Company’s Chief Executive Officer and Chairman of the Board, for engineering consulting services.
On August 13, 2024, the Company entered into a long-term loan arrangement (the "Oldridge Loan") with Phillip W. Oldridge whereby Mr. Oldridge loaned $300,000 to the Company. The Oldridge Loan carried an interest rate of 8% and matures on January 1, 2026. The Oldridge Loan was paid off in full on December 31, 2024. The amount paid to satisfy the Oldridge Loan was $309,000 of which $9,000 represented accrued interest on the loan.
On October 30, 2024, the Company entered into a membership interest purchase agreement (the “MIPA”) with Maddox Industries, LLC (“Maddox Industries”), a provider of government contracting solutions based in Puerto Rico, and Jason Maddox, the sole member of Maddox Industries, to acquire all of the outstanding membership interests in Maddox Industries from Mr. Maddox. As consideration for the acquisition of Maddox Industries, at the closing, the Company will issue 3,100,000 shares of the Company’s common stock to Mr. Maddox (the “Stock Consideration”), provided that the number of shares of common stock constituting the Stock Consideration will be reduced by any number of whole shares of common stock exceeding 19.99% of the outstanding shares of common stock as of immediately prior to the closing. As additional consideration for the acquisition, during the six-month period following the closing (the “Earnout Period”), Mr. Maddox will be eligible to receive up to six monthly cash payments in an aggregate amount of up to $1 million (each such monthly payment, an “Earnout Payment”) in accordance with the terms of the MIPA. The Earnout Payment payable to Mr. Maddox for each calendar month during the Earnout Period, if any, will be equal to the aggregate amount of gross revenue received by Maddox Industries in respect of any accounts receivable from any existing customer outstanding as of the closing during such calendar month, provided that all Earnout Payments payable by the Company to Mr. Maddox under the MIPA may not exceed $1 million. The acquisition includes a three-year contract manufacturing agreement to be executed at the Company’s expansive 580,000 square-foot facility in Osceola, Arkansas. The Board appointed Jason Maddox the President of the Company effective as of October 16, 2024.
The following table summarizes these related party transactions for the years ending December 31, 2024 and 2023:
Year Ended December 31,
SRI Equipment Leases
$ 93,248
$ 93,247
SRI Office Lease
-
26,390
Total SRI
93,248
119,637
ABCI Office leases
60,000
33,600
Total
$ 153,248
$ 153,237
Policies and Procedures for Related Person Transactions
All future transactions, if any, between us and our officers, directors and principal stockholders and their affiliates, as well as any transactions between us and any entity with which our officers, directors or principal stockholders are affiliated will be reviewed and approved or ratified in accordance with policies and procedures adopted by our board of directors. Such policies and procedures require that related person transactions be approved by the Audit Committee or our board of directors or otherwise in accordance with the then applicable SEC rules and regulations governing the approval of such transactions. The Audit Committee and the board of directors have adopted policies and procedures for review of, and standards for approval of related party transactions. These policies and procedures have not been and will not be applied to the related party transactions described above.
All future affiliated transactions will be made or entered into on terms that are no less favorable to us than those that can be obtained from any unaffiliated third party. A majority of the independent, disinterested members of our board of directors will approve future affiliated transactions, and we will maintain at least two independent directors on our board of directors to review all material transactions with affiliates.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
Barton CPA, PLLC served as our independent registered public accounting firm for the fiscal years ended December 31, 2024 and 2023.
Independent Registered Public Accounting Firm Fees
The following table shows the fees that were billed for audit and other services during the fiscal years endedDecember 31, 2024 and 2023:
For the Fiscal Year Ended
December 31,
Audit Fees(1)
$ 192,000
$ 245,000
Audit-Related Fees(2)
-
-
Tax Fees(3)
-
-
All Other Fees(4)
-
-
Total
$ 192,000
$ 245,000
(1)
Audit Fees consist of professional services rendered in connection with the audit of our annual financial statements, including the audited financial statements presented in our 2024 Annual Report, and the review of our financial statements included in 2024 quarterly reports, along with services that are normally provided by the independent registered accountants in connection with statutory and regulatory filings or engagements for those fiscal years and timely review of our quarterly consolidated financial statements.
(2)
Audit-related fees consist of fees for professional services rendered for assurance and related services that were reasonably related to the performance of the audit or review of our consolidated financial statements that are not reported under “Audit Fees.” There were no separate charges in either period related to such services.
(3)
Tax Fees consist of fees for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state, and international tax compliance. No tax services were provided in either period.
(4)
All other fees consist of fees billed for products and services provided other than the services reported for the other categories; there were no such fees in either period.
Pre-Approval Policies and Procedures of the Audit Committee
Consistent with the rules and regulations promulgated by the SEC, the Audit Committee approves the engagement of our independent registered public accounting firm and is also required to pre-approve all audit and non-audit expenses. All of the services described above were approved by the Audit Committee in accordance with its procedure.
Part IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this Annual Report:
(1)
Financial Statements.
The financial statements filed as part of this Annual Report are listed in the “Index to Consolidated Financial Statements” under Part II, Item 8 of this Annual Report.
(2)
Financial Statement Schedules.
Schedules are omitted because the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is given in the consolidated financial statements or the notes thereto.
(3)
Exhibits.
The following exhibits are filed (or incorporated by reference herein) as part of this Annual Report:
Exhibit Index
Incorporated by Reference
Exhibit
Exhibit
Filed
Number
Description of Exhibit
Form
File No.
Date
No.
Herewith
2.1*
Membership Interest Purchase Agreement, dated as of October 30, 2024, by and among Maddox Industries, LLC, Jason Maddox, and Envirotech Vehicles, Inc.
8-K
001-38078
11/5/2024
2.1
3.1
Amended and Restated Certificate of Incorporation of the Company
1-A POS
024-10656
6/15/2017
2.7
3.2
Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company
8-K
001-38078
6/11/2018
3.1
3.3
Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on May 26, 2021
8-K
001-38078
6/2/2021
3.1
3.4
Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of Delaware on June 24, 2022
8-K
001-38078
6/28/2022
3.1
3.5
Amended and Restated Bylaws of the Company
1-A POS
024-10656
6/15/2017
2.8
4.1
Specimen Common Stock Certificate
S-1/A
333-220983
12/15/2017
4.1
4.2
Form of Secured Promissory Note
1-A
024-10656
12/21/2016
3.1
4.3
Common Stock Purchase Warrant, dated June 26, 2017, issued to Boustead Securities, LLC
10-Q
001-38078
8/14/2017
4.1
4.4
Common Stock Purchase Warrant, dated June 19, 2017, issued to Redwood Group International Limited
10-Q
001-38078
8/14/2017
4.2
4.5
Form of Placement Agent Warrant, dated January 5, 2018
8-K
001-38078
1/8/2018
4.2
4.6
Form of Unit Certificate
S-1/A
333-220983
1/4/2018
4.7
4.7
Form of Warrant
8-K
001-38078
12/28/2020
4.1
4.8
Description of Registrant’s Securities
10-K
001-38078
3/31/2021
4.8
9.1
Voting Trust Agreement, by and among Provident Trust Group FBO Cornelia P. Doherty ROTH IRA, Connie Doherty Living Trust Dated May 1, 1996, Gary Nettles as Voting Trustee, and the Company, dated March 20, 2017
1-A/A
024-10656
4/7/2017
5.1
10.2+
Form of Indemnity Agreement
1-A
024-10656
12/21/2016
6.8
10.3
Patent License-Use and Manufacturing Agreement, by and between Silicon Turbine Systems, Inc. and the Company, dated November 7, 2014
1-A
024-10656
12/21/2016
6.9
10.4+
Employment Agreement, by and between Michael K. Menerey and the Company, dated January 1, 2017
1-A/A
024-10656
1/17/2017
6.15
10.5+
2017 Equity Incentive Plan
1-A/A
024-10656
4/7/2017
6.17
10.6+
Form of Stock Option Agreement for 2017 Equity Incentive Plan
1-A/A
024-10656
4/7/2017
6.18
10.7+
Form of Notice of Grant of Stock Option for 2017 Equity Incentive Plan
1-A/A
024-10656
4/7/2017
6.19
Incorporated by Reference
Exhibit
Exhibit
Filed
Number
Description of Exhibit
Form
File No.
Date
No.
Herewith
10.8
Securities Purchase Agreement, dated January 5, 2018, by and among the Company and certain investors set forth therein
8-K
001-38078
1/8/2018
10.1
10.9
Form of Subscription Agreement
1-A/A
024-10656
2/13/2017
4.1
10.10
Form of Escrow Deposit Agreement
1-A/A
024-10656
2/13/2017
8.1
10.12
Paycheck Protection Program Promissory Note and Agreement, dated May 3, 2020, between ADOMANI, Inc. and Wells Fargo Bank, NA
10-Q
001-38078
8/14/2020
10.1
10.13
Loan Authorization and Agreement, dated May 17, 2020, between ADOMANI, Inc. and the U.S. Small Business Administration
10-Q
001-38078
8/14/2020
10.2
10.14
Promissory Note, dated May 17, 2020, issued by ADOMANI, Inc. to the U.S. Small Business Administration
10-Q
001-38078
8/14/2020
10.3
10.15
Security Agreement, dated May 17, 2020, executed by ADOMANI, Inc. in favor of the U.S. Small Business Administration
10-Q
001-38078
8/14/2020
10.4
10.16
Balloon Payment Promissory Note, dated as of October 28, 2020, between ADOMANI, Inc. and Envirotech Drive Systems Incorporated / SRI Professional Services, Incorporated
10-Q
001-38078
11/13/2020
10.1
10.17+
Separation Agreement and General Release, dated as of October 30, 2020, between ADOMANI, Inc. and James L. Reynolds
10-Q
001-38078
11/13/2020
10.2
10.18
Form of Exchange Agreement.
8-K
001-38078
12/03/2020
10.1
10.19
Form of Securities Purchase Agreement, dated December 24, 2020, by and between ADOMANI, Inc. and the parties thereto
8-K
001-38078
12/28/2020
10.1
10.20
Form of Registration Rights Agreement
8-K
001-38078
12/28/2020
10.2
10.21
Agreement and Plan of Merger, dated February 16, 2021, by and among ADOMANI, Inc., EVT Acquisition Company, Inc., and Envirotech Drive Systems, Inc.
8-K
001-38078
2/17/2021
2.1
10.22+
Employment Agreement, dated as of December 31, 2021, by and between the registrant and Phillip W. Oldridge.
8-K
001-38078
1/7/2022
10.1
10.23+
Employment Agreement, dated as of December 31, 2021, by and between the registrant and Susan M. Emry.
8-K
001-38078
1/7/2022
10.2
10.24
Amended and Restated Standby Equity Purchase Agreement, dated October 31, 2024, by and between Envirotech Vehicles, Inc. and YA II PN, LTD.
S-1
333-282961
11/1/2024
10.22
10.25
Convertible Promissory Note, dated October 31, 2024, issued to YA II PN, Ltd
S-1
333-282961
11/1/2024
10.23
16.1
Letter of MaloneBailey, LLP, date August 11, 2023.
8-K
001-38078
8/11/2023
16.1
Incorporated by Reference
Exhibit
Exhibit
Filed
Number
Description of Exhibit
Form
File No.
Date
No.
Herewith
19.1
Insider Trading Policy
X
21.1
Subsidiaries of the Company
X
23.1
Consent of Barton CPA, PLLC, independent registered public accounting firm
X
24.1
Power of Attorney (included on signature page)
X
31.1
Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer
X
31.2
Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer
X
32.1#
18 U.S.C. Section 1350 Certification of Chief Executive Officer and Chief Financial Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
97.1
Incentive Compensation Recovery Policy
10-K
001-38078
3/28/2024
97.1
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).*
X
101.SCH
Inline XBRL Taxonomy Extension Schema Document*
X
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document*
X
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document*
X
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document*
X
101.DEF
Inline XBRL Taxonomy Extension Definitions Linkbase Document*
X
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
+
Indicates a management contract or compensatory plan.
#
The information in Exhibit 32.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Act, or the Exchange Act (including this Annual Report), unless the Registrant specifically incorporates the foregoing information into those documents by reference.
*
In accordance with Rule 402 of Regulation S-T, this interactive data file is deemed not filed or part of this Annual Report for purposes of Sections 11 or 12 of the Securities Act or Section 18 of the Exchange Act and otherwise is not subject to liability under these sections.