Envirotech Vehicles Inc
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
AZIO$0.51-23.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001437749-24-026785
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001437749-24-035310
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 72 previous paragraphs and 78 current paragraphs.
51 unchanged; 18 reworded; 9 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
On October 30, 2024, we entered into the MIPA with 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, we will issue 3,100,000 shares of our common stock to Mr. Maddox (referred to herein as 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 Earnout Period following the closing, Mr. Maddox will be eligible to receive up to six monthly cash payments in an aggregate amount of up to $1 million (each referred to herein as 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 us to Mr. Maddox under the MIPA may not exceed $1 million. The acquisition includes a three-year contract manufacturing agreement to be executed at our expansive 580,000 square-foot facility in Osceola, Arkansas. The Board appointed Jason Maddox our President effective as of October 16, 2024.
Current report
Cost of sales for the three months ended September 30, 2024 and 2023 were $133,931 and $80,283, respectively. Cost of sales for the nine months ended September 30, 2024 and 2023 were $1,245,149 and $1,739,005, respectively. Cost of sales for the three months ended September 30, 2024 consisted primarily of certain service costs related to our vehicles.
Current report
G&A expenses were $1,395,921 and $2,578,727 for the three months ended September 30, 2024 and 2023, respectively. G&A expenses decreased by $1,182,806 primarily due to a decrease of $1,087,112 in stock compensation expense as a result of equity awards that vested immediately during the three months ended September 30, 2023, and lower costs of $95,694 during the three months ended September 30, 2024.
Current report
Goodwill Impairment Charge
Current report
Due to our declining stock price, we conducted an impairment test related to our goodwill. As a result of this test, we recorded an impairment charge of $3,392,129 related to our goodwill for the three and nine months ended September 30, 2023. No impairment charges were recorded for the three and nine months ended September 30, 2024.
Current report
Net cash used in financing activities during the nine months ended September 30, 2023 was $213,161, primarily due to the principal repayments on debt.
Current report
Equity Line of Credit
Current report
On the Effective Date, we entered into the Original SEPA with Yorkville which was amended and restated on October 31, 2024 pursuant to the A&R SEPA (together with the Original SEPA, the “SEPA”). Pursuant to the SEPA, Yorkville will advance to us, subject to the satisfaction of certain conditions as set forth therein, the principal amount of $3 million (the “Pre-Paid Advance”), which will be evidenced by convertible promissory notes (the “Promissory Notes”) in two tranches. 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 Yorkville. 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 our common stock on Nasdaq as reported by Bloomberg L.P. (“VWAP”) 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).
Current report
The first tranche of the Pre-Paid Advance was disbursed on October 31, 2024 in the principal amount of $2 million. The second tranche of the Pre-Paid Advance will be in the principal amount of $1 million and advanced on the second trading day after the effectiveness of the registration statement filed for resale of all shares of common stock that are to be offered and sold to Yorkville pursuant to the SEPA. At the closing of each Pre-Paid Advance, Yorkville will advance to the Company the principal amount of the applicable tranche of the Pre-Paid Advance, less a discount in the amount equal to 5% of the principal amount of such tranche of the Pre-Paid Advance netted from the purchase price due and structured as an original issue discount. SeeNote 5 - Stockholders' Equity and Note 12 - Subsequent Events for additional information related to the SEPA.
Removed paragraphs (3)
Previous report
Cost of sales for the three months ended June 30, 2024 and 2023 were $608,947 and $1,253,886, respectively. Cost of sales for the six months ended June 30, 2024 and 2023 were $1,111,218 and $1,658,722, respectively. These costs consisted of the costs related to the sale of the vehicles sold as described above. The decrease in cost of sales was due to the decrease in sales during the periods in 2024 as compared to 2023.
Previous report
G&A expenses were $1,466,748 and $2,041,146 for the three months ended June 30, 2024 and 2023, respectively. G&A expenses decreased by $574,398 primarily due to a decrease of $70,119 in stock compensation expense as a result of lower fair valuation of equity awards, lower payroll costs of $37,486, lower legal fees of $69,117as a result of lower litigation activities, lower marketing costs of $86,910, lower travel costs of $92,060, lower contract labor costs of $110,053, lower dues and subscription costs of $119,996 and lower investor relations costs of $194,420, most of which were due to our cost savings initiative implemented to conserve spending, partially offset by higher insurance costs of $108,098 due to increased premiums and coverages and an increase in other expenses of $27,546 to support our operations.
Previous report
Net cash used in financing activities during the six months ended June 30, 2023 was $212,119 as a result of our repayment of certain notes payable.
Reworded paragraphs (18)
Previous wording
For the three months ended June 30, 2024 and 2023, we generated sales revenue of $812,770 and $2,132,880, respectively, and our net loss for the three months ended June 30, 2024 and June 30, 2023 was $755,092 and $1,254,029, respectively. Included in our net loss for the three months ended June 30, 2024 is a non-cash unrealized gain on financial instruments of $570,519.
Current wording
For the three months ended September 30, 2024 and 2023, we generated sales revenue of $0 and $100,024, respectively, and our net loss for the three months ended September 30, 2024 and September 30, 2023 was $1,356,782 and $5,988,423, respectively. Included in our net loss for the three months ended September 30, 2024 is a non-cash unrealized gain on financial instruments of $403,625. Included in our net loss for the three months ended September 30, 2023 is a non-cash goodwill impairment charge of $3,392,129.
Previous wording
For the six months ended June 30, 2024 and 2023, we generated sales revenue of $1,623,260 and $2,656,079, respectively, and our net loss for the six months ended June 30, 2024 and June 30, 2023 was $5,287,455 and $3,521,937, respectively. Included in our net loss for the six months ended June 30, 2024 is a non-cash unrealized loss on financial instruments of $999,408.
Current wording
For the nine months ended September 30, 2024 and 2023, we generated sales revenue of $1,623,260 and $2,756,103, respectively, and our net loss for the nine months ended September 30, 2024 and September 30, 2023 was $6,644,237 and $9,510,360, respectively. Included in our net loss for the nine months ended September 30, 2024 is a non-cash unrealized loss on financial instruments of $595,783. Included in our net loss for the nine months ended September 30, 2023 is a non-cash goodwill impairment charge of $3,392,129.
Previous wording
The following discussion compares our results of operations for the three andsix months ended June 30, 2024 to the corresponding periods ended June 30, 2023:
Current wording
The following discussion compares our results of operations for the three andnine months ended September 30, 2024 to the corresponding periods ended September 30, 2023:
Previous wording
Sales for the three months ended June 30, 2024 and 2023 were $812,770 and $2,132,880, respectively. Sales for the three months ended June 30, 2024 consisted primarily of five logistics cargo vans, one cab and chassis truck, one electric sweeper and one passenger van. Sales for the three months ended June 30, 2023 consisted of 19 logistics cargo vans and one cab and chassis truck. 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.
Current wording
Sales for the three months ended September 30, 2024 and 2023 were $0 and $100,024, respectively. Sales for the three months ended September 30, 2023 consisted of logistics cargo vans. The decrease in sales was primarily due to among other things, less favorable market conditions in 2024 as compared to 2023 and our focus during the third quarter of 2024 on building up our facility for future anticipated sales.
Previous wording
Sales for the six months ended June 30, 2024 and 2023 were $1,623,260 and $2,656,079, respectively. Sales for the six months ended June 30, 2024 consisted primarily of 11 logistics cargo van, three cab and chassis trucks, one passenger van, two zippers, one sweeper and one forklift. Sales for the six months ended June 30, 2023 consisted of 25 logistics cargo vans and one cab and chassis truck. 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.
Current wording
Sales for the nine months ended September 30, 2024 and 2023 were $1,623,260 and $2,756,103, respectively. Sales for the nine months ended September 30, 2024 consisted primarily of 11 logistics cargo van, three cab and chassis trucks, one passenger van, two zippers, one sweeper and one forklift. Sales for the nine months ended September 30, 2023 consisted of 25 logistics cargo vans and one cab and chassis truck. 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.
Previous wording
Gross margin percentage were 25% and 41% three months ended June 30, 2024 and 2023, respectively. Gross margin percentage were 32% and 38% six months ended June 30, 2024 and 2023, respectively. The decrease in gross margin percentage was primarily due to less favorable product mix.
Current wording
Gross margin percentage was 20% for the three months ended September 30, 2023. Gross margin percentage was 23% and 37% for the nine months ended September 30, 2024 and 2023, respectively. The decrease in gross margin percentage was primarily due to less favorable product mix.
Previous wording
G&A expenses were $4,660,999 and $4,206,678 for the six months ended June 30, 2024 and 2023, respectively. G&A expenses increased by $454,321 primarily due to an increase of $1,661,118 in stock compensation expense due to equity awarded during the first quarter of 2024 that vested immediately, partially offset by, among other things, lower litigation costs of $198,975, lower marketing costs of $251,687, lower travel costs of $261,687, lower contract labor costs of $269,944, lower payroll costs of $56,054 and lower overall other expenses of $168,450, most of which were due to our cost savings initiative implemented to conserve spending.
Current wording
G&A expenses were $6,056,919 and $6,785,405 for the nine months ended September 30, 2024 and 2023, respectively. G&A expenses decreased by $728,486 primarily due lower legal and litigation costs of $489,484, lower marketing costs of $251,888, lower travel costs of $310,224, lower contract labor costs of $291,235, lower payroll costs of $115,231, lower investor relations costs and lower other expenses of $37,223, most of which were due to our cost savings initiative implemented to conserve spending, partially offset by an increase of $574,007 in stock compensation expense due to equity awarded during the first quarter of 2024 that vested immediately, and higher insurance costs of $192,792 due to higher overall premiums during the nine months ended September 30, 2024.
Previous wording
Consulting expenses were $0 and $46,433 for the three months ended June 30, 2024 and 2023, respectively. Consulting expenses were $0 and $221,242 for thesix months ended June 30, 2024 and 2023, respectively. The decrease in consulting expenses was due to a decrease in search costs for key employees.
Current wording
Consulting expenses were $55,000 and ($13,312) for the three months ended September 30, 2024 and 2023, respectively. Consulting expenses were $55,000 and $207,930 for thenine months ended September 30, 2024 and 2023, respectively. The increase in consulting expenses for the three months ended September 30, 2024 versus the same period in 2023 was due to search and other labor costs for employees in anticipation of future expansion in the Osceola, Arkansas region. The decrease in consulting expenses for the nine months ended September 30, 2024 compared to the same period in 2023 was due to a decrease in search costs for key employees.
Previous wording
R&D expenses were $61,616 and $57,924 for the three months ended June 30, 2024 and 2023, respectively, as the level of activity remained significantly unchanged. R&D expenses were $131,880 and $128,812 for thesix months ended June 30, 2024 and 2023, respectively as the level of activity remained significantly unchanged.
Current wording
R&D expenses were $20,470 and $46,734 for the three months ended September 30, 2024 and 2023, respectively, as the level of activity was significantly reduced. R&D expenses were $152,351 and $175,546 for thenine months ended September 30, 2024 and 2023, respectively as the level of activity was significantly reduced.
Previous wording
We recorded a non-cash unrealized gain of $570,519 and an unrealized loss of $999,408 for the three and six months ended June 30, 2024, respectively, on our financial instruments that we elected to measure at fair value.
Current wording
We recorded a non-cash unrealized gain of $403,625 and an unrealized loss of $595,783 for the three and nine months ended September 30, 2024, respectively, on our financial instruments that we elected to measure at fair value.
Previous wording
The following table summarizes our cash flows from operating, investing, and financing activities for the six months ended June 30, 2024 and 2023:
Current wording
The following table summarizes our cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024 and 2023:
Previous wording
Net cash used in operating activities for the six months ended June 30, 2024 was $1,700,563, primarily due to a net loss of $5,287,455, partially offset by changes in operating assets and liabilities, net of $658,185 and non-cash operating charges of $2,928,519. The changes in operating assets and liabilities, net was due to a decrease in inventory deposits of $443,074, a decrease in prepaid expenses of $187,474, a decrease in inventory of $127,372, a decrease in other assets of $164,467, an increase in accounts payable of $195,786 and an increase in accrued liabilities of $438,089, partially offset by an increase in accounts receivable of $733,998 and a decrease in other liabilities of $164,079.
Current wording
Net cash used in operating activities for the nine months ended September 30, 2024 was $2,848,876, primarily due to a net loss of $6,644,237, partially offset by changes in operating assets and liabilities, net of $1,094,222 and non-cash operating charges of $2,701,139. The changes in operating assets and liabilities, net was due to a decrease in inventory deposits of $443,074, a decrease in inventory of $127,372, a decrease in other assets of $232,102, an increase in accounts payable of $317,456 and an increase in accrued liabilities of $700,014, partially offset by an increase in accounts receivable of $398,297, a decrease in other liabilities of $215,109 and an increase in prepaid expenses of $112,390.
Previous wording
Net cash used in operating activities for the six months ended June 30, 2023 was $3,073,334, primarily due to a net loss of $3,521,937, partially offset by changes in operating assets and liabilities, net of $233,300 and non-cash operating charges of $260,519. The changes in operating assets and liabilities, net was due to a decrease in inventory deposits of $1,771,454, a decrease in prepaid expenses of $356,742 and an increase in accounts payable of $317,469, partially offset by an increase in inventory of $1,266,924, an increase in accounts receivable of $660,028 and a decrease in accrued liabilities of $264,486.
Current wording
Net cash used in operating activities for the nine months ended September 30, 2023 was $4,039,576, primarily due to a net loss of $9,510,360, partially offset by changes in operating assets and liabilities, net of $677,631 and non-cash operating charges of $4,793,153, of which $3,392,192 was related to a non-cash goodwill impairment charge and $1,297,384 was related to non-cash stock-based compensation expense. The changes in operating assets and liabilities, net was due to a decrease in accounts receivable of $449,322 as cash collections outpaced sales, a decrease of $1,696,180 in inventory deposits, a decrease in prepaid expenses of $3,190, an increase in accounts payable of $90,272, partially offset by an increase in inventory of $1,210,921, an increase in other assets of $112,382 and decrease in accrued liabilities of $238,030.
Previous wording
Net cash used in investing activities during the six months ended June 30, 2024 was $135,288, primarily from the purchase of property and equipment that is used in our current operations.
Current wording
Net cash used in investing activities during the nine months ended September 30, 2024 was $229,029, primarily from the purchase of property and equipment used in our current operations.
Previous wording
Net cash provided by investing activities during the six months ended June 30, 2023 was $1,293,268, primarily due to the sale of our marketable securities of $1,329,599, partially offset by $36,331 of capital expenditures.
Current wording
Net cash provided by investing activities during the nine months ended September 30, 2023 was $2,306,312, primarily due to the sale of our marketable securities of $2,342,643, partially offset by $36,331 of capital expenditures.
Previous wording
Net cash provided by in financing activities during the six months ended June 30, 2024 was $1,816,196, primarily due to proceeds from the issuance of our common stock of $949,248, proceeds from the issuance of a convertible note of $901,000, and proceeds from issuance of debt for $232,067, partially offset by the repayment of debt of $266,119. See Note 4 - Debt to our unaudited consolidated financial statements included in this Quarterly Report for additional information regarding these financing activities.
Current wording
Net cash provided by financing activities during the nine months ended September 30, 2024 was $3,303,840, primarily due to proceeds from the issuance of our common stock of $1,799,248, proceeds from the issuance of a convertible note of $901,000, proceeds from the Oldridge loan of $300,000 and proceeds from issuance of debt for $648,937, partially offset by the repayment of debt of $345,345.
Previous wording
As of June 30, 2024, we had cash and cash equivalents of $437,064 and working capital of approximately $7,706,057. We believe that our existing cash and cash equivalents will be sufficient to fund our operations during the next twelve 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.
Current wording
As of September 30, 2024, we had cash and cash equivalents of $682,654 and working capital of approximately $8,666,627. We believe that our existing cash and cash equivalents will be sufficient to fund our operations during the next twelve 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.
Previous wording
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 us to 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. This line was closed during the third quarter of 2023 and there was no principal amount outstanding at the time of closing.
Current wording
Effective August 4, 2022, we secured a line of credit from Centennial Bank. Borrowings under the line of credit bore interest at 2.75% annually. There was no maturity date for the line, but Centennial Bank could at any time, in its sole discretion and without cause, demand us to immediately repay any and all outstanding obligations under the line of credit in whole or in part. The line was secured by the cash and cash equivalents maintained by us in our Centennial Bank accounts. Borrowings under the line could not exceed cash, cash equivalents, and marketable securities balances up to $1,000,000. This line was closed during the third quarter of 2023 and there was no principal amount outstanding at the time of closing.