Azio Ai Holdings, Inc 10-K for FY2025
Azio Ai Holdings, Inc. (AZIO)
About this 10-K
Azio Ai Holdings, Inc filed this 10-K on April 13, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $5.94M
- up 217.6% from $1.87M a year earlier
- Net loss
- $39.13M
- compared with a net loss of $8.85M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
ENVIROTECH VEHICLES, INC.
(Name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
Registrant’s telephone number including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | ☒ | Smaller reporting company | |
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of the common stock held by non-affiliates of the registrant, based on the closing price reported by the Nasdaq Stock Market LLC. on June 30, 2025, was approximately $
As of April 8, 2026,
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Certain Relationships and Related Transactions, and Director Independence |
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (this “Annual Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or our future financial performance or condition and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “contemplate,” “plan,” “project,” “forecast,” “potential,” “possible,” “proposed,” “should,” “develop,” “opportunity,” “target,” “outlook,” “optimistic,” “poised,” “positioned,” “maintain,” “continue,” “aim,” “goal,” “will” and “would” or the negatives of these terms or other comparable terminology intended to identify statements about the future.
You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Annual Report, including in “Risk Factors” and elsewhere, identify important factors, which you should consider in evaluating our forward-looking statements. These factors could cause actual results and events to differ materially from those expressed or implied in any forward-looking statement and include, among other things:
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our ability to generate demand for our products in order to generate revenue; |
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our dependence upon external sources for the financing of our operations; |
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our ability to effectively execute our business plan; |
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our ability to successfully integrate and realize the benefits of strategic acquisitions; |
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our ability and our suppliers’ ability to scale our manufacturing and assembling processes effectively and quickly; |
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our ability to manage our expansion, growth and operating expenses and reduce and adequately control the costs and expenses associated with operating our business; |
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the potential impact of product recalls and product liability claims relating to the products we distribute and other litigation; |
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our ability and our manufacturing partners’ ability to navigate disruptions to the global supply chain and procure the raw materials, parts, and components necessary to produce our products on terms acceptable to us and our customers; |
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our ability to obtain, retain and grow our customers; |
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our ability to enter into, sustain and renew strategic relationships on favorable terms; |
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our dependency on, and retention of, key personnel; |
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our ability to achieve and sustain profitability; |
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the impact of legislation and/or government regulation on our business and industry, including, without limitation the status of government subsidies, rebates and economic incentives that support the development and demand of our products and services within our electric vehicle ("EV") segment and our ability to obtain required governmental authorizations for the sale and distribution of our drones; |
| • | our compliance with foreign laws and regulations related to the international expansion of our drone division; | |
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our ability to evaluate and measure our current business and future prospects; |
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our ability to compete and succeed in highly competitive and evolving industries; |
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our ability to respond and adapt to changes in technology; |
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the cost and adequacy of insurance coverage and increases in the number of severity of insurance and claims expenses; |
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our ability to protect our intellectual property and to develop, maintain and enhance strong brands; |
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disruptions in our information technology systems, including, but not limited to, systems failures, cyber-attacks, unauthorized physical or electronic access, or other natural or man-made incidents or disasters; and |
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| • | our ability to maintain compliance with the listing requirements of Nasdaq and the impact of any steps taken to maintain such compliance, on our operations, stock price and future access to capital. | |
You should read this Annual Report and the documents that we reference elsewhere in this Annual Report completely and with the understanding that our actual results may differ materially from what we expect as expressed or implied by our forward-looking statements. Forward-looking statements are subject to a number of known and unknown risks, uncertainties, assumptions and other important factors, including, but not limited to, those discussed in the sections entitled “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Annual Report. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. In light of the significant risks and uncertainties to which our forward-looking statements are subject, you should not place undue reliance on such forward-looking statements or regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all. These forward-looking statements represent our estimates and assumptions only as of the date of this Annual Report regardless of the time of delivery of this Annual Report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Annual Report.
Unless expressly indicated or the context requires otherwise, references in this Annual Report to “Envirotech,” the "Company,” “we,” “our,” and “us” refer to Envirotech Vehicles, Inc., a Delaware corporation, and our consolidated subsidiaries, unless the context indicates otherwise.
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BUSINESS |
Overview
We are a diversified, power-backed hardware technology company focused on the development, integration, and deployment of electrified and energy-intensive systems across multiple end markets. Our operating and development initiatives are organized around a common foundation of power management, electrification, and integrated hardware know-how, with current focus areas including commercial EVs, electric drone platforms, and medical supplies.
We are also exploring opportunities to develop and deploy energy-integrated artificial intelligence (“AI”) compute infrastructure. EVTV’s intended role would be to design, integrate, and deploy modular AI compute systems that combine power generation, power management, and high-performance computing hardware.
EVTV would not develop proprietary AI software models. Rather, the Company’s focus would be on the physical infrastructure layer — including power systems integration, modular compute enclosures, cooling systems, and related electrical balance-of-system components — designed to support third-party AI workloads.
Revenue, if pursued, would be generated through equipment sales, system integration services, infrastructure leasing arrangements, and/or joint ventures with energy and technology partners. As of the date of this Annual Report, we are in the testing and validation phase of our modular AI infrastructure platform.
Our EV segment serves commercial and last-mile fleets, school districts, public and private transportation service companies and colleges and universities to meet their demand for light to heavy-duty EVs. We currently offer Class 2 through 4 logistics vans, Class 4 through 5 urban trucks, school buses, electric forklifts, street sweepers, neighborhood EVs and right-hand drive vans and urban trucks. Our EVs are manufactured by original equipment manufacturers (“OEMs”) located in China, Taiwan, and Malaysia and can be marketed, sold, warrantied and serviced through our developing distribution and service network.
Our medical supplies segment operates through our wholly owned subsidiary, Maddox Industries, LLC (“Maddox Industries”), and manufactures medical supplies for distribution by Maddox Medical Corp. (“Maddox Medical”), of which Jason Maddox, our President and Interim Chief Financial Officer, is the founder and a stockholder, and Elgin Tracy, our Chief Operating Officer, is also a stockholder, to government agencies, healthcare systems, and institutional customers requiring domestically manufactured medical products. This segment was established upon our acquisition of Maddox Industries in late 2024, to support U.S.-based manufacturing, supply chain resiliency, and government procurement requirements.
We utilize semi-automated manufacturing systems to produce medical supplies, including protective apparel and related products, in compliance with applicable regulatory and contractual standards. Products manufactured by this segment are intended for use in healthcare, emergency response, and government stockpile applications.
The medical supplies segment supports our broader manufacturing strategy by generating revenue, validating domestic manufacturing capabilities, and demonstrating our ability to execute regulated production at scale. While this segment is not our primary long-term growth focus, it provides operational experience and past-performance manufacturing credentials for the federal government that support other business initiatives.
Our drone segment is focused on the development of heavy-lift, industrial-grade drone platforms designed for agricultural, fire suppression, and forestry applications. This segment targets commercial agricultural operators, farming cooperatives, forestry managers, and public-sector customers seeking aerial solutions for large-area spraying, monitoring, and emergency response.
We are developing a high-payload agricultural drone capable of carrying significantly greater payloads than typical commercial drones, with a focus on durability, operational efficiency, and suitability for large-scale land management. The platform is intended to support precision agriculture, including crop spraying and treatment across extensive acreage, as well as fire suppression and forestry use cases involving water or fire-retardant delivery. As of the date of this Annual Report, we are in the design phase of our drone product offerings.
Our drone products are intended to be manufactured in the United States (the “U.S.”), subject to completion of product development, regulatory approvals, and manufacturing readiness. We are also evaluating the integration of advanced technologies, including geospatial mapping, coordinated multi-drone operations, and artificial intelligence-enabled sensing and analytics. Commercial manufacturing and sales of drone products have not yet commenced.
In the first quarter of 2025, we acquired a 52% equity interest in AG Drone Inc. (“AG Drone”). The remaining equity interest in AG Drone is owned equally by Phillip Oldridge, the Chairman of our Board of Directors (the “Board”) and our Chief Executive Officer, Jason Maddox, our President and Interim Chief Financial Officer, and Elgin Tracy, our Chief Operating Officer. There were no transactions conducted by AG Drone during 2025. All transactions conducted by the Company within the drone segment were transacted directly by the Company.
Recent Developments
Business Strategy
Within our EV segment, we have historically operated as a provider of zero-emission EVs to commercial and institutional customers. However, the EV sector experienced significant disruption as a result of changes in U.S. federal and state policies, reduced availability of federal and state incentive programs for EVs, and increased uncertainty surrounding long-term EV adoption. These developments contributed to widespread contraction across the commercial EV market, with many competitors reducing operations or exiting the sector altogether.
At the same time, substantial increases in import tariffs on certain components, including tariffs exceeding 100% on selected parts and subassemblies sourced from Asia, materially impacted the economic feasibility of domesticating certain manufacturing processes for our EVs. These cost pressures reduced margin predictability and constrained our ability to shift specific elements of our EV production to the U.S., particularly battery-related components, to the extent previously anticipated. In response, we have adjusted our operational strategy to prioritize existing inventory, selectively source domestically available components, and focus on vehicle classes for which we maintain sufficient parts availability and customer demand.
While we continue to support and deliver our existing commercial EV offerings, the combination of policy-driven market contraction, elevated input costs, and tariff-related volatility prompted a broader strategic reassessment during 2025. As a result, we began positioning our company as a platform for expanding into additional power-backed hardware technology verticals that are adjacent to our core competencies and offer the potential for higher-margin and recurring revenue characteristics, including electric drone technologies. Beginning in 2026, we also began exploring opportunities in power-intensive AI data compute infrastructure. Both of these verticals rely on our experience in electrification, power systems integration, and hardware deployment.
In connection with this strategic evolution, our acquisition of Maddox Industries in late 2024, the underpinnings of our medical supplies segment, has provided operational validation of our ability to design, deploy, and operate semi-automated, domestic manufacturing systems in regulated environments. Through Maddox Industries, we have established U.S.-based production capabilities focused on fulfilling our subcontract with Maddox Medical for medical supplies for government use, thereby supporting our domestic supply chain objectives and establishing past-performance manufacturing credentials with the federal government. We believe that this experience further reinforces our broader strategy of deploying power-backed hardware systems across multiple end markets while maintaining disciplined execution and operational control.
Goba Capital Financing
In the third quarter of 2025, we terminated our purchase order discounting facility for up to $10 million with GOBA Capital.
For the years ended December 31, 2025 and 2024, our net losses were $39.1 million and $8.8 million, respectively. Included in the net loss for 2025 were non-cash charges of approximately $26.4 million.
Market Overview
U.S. Electric Vehicle Market Conditions and Policy Environment
During 2025, the U.S. EV market was impacted by changes in federal policy direction, uncertainty surrounding the continuation of federal and state incentive programs, and evolving U.S. tariffs and trade policy. These factors collectively altered the growth expectations for portions of the EV sector, particularly for incentive-dependent commercial and fleet applications such as our EV portfolio.
In January 2025, the U.S. presidential administration issued Executive Order 14154, which directed federal agencies to pause and review certain funding programs established under the Inflation Reduction Act (“IRA”) and the Infrastructure Investment and Jobs Act (“IIJA”), including programs supporting EV charging infrastructure and related electrification initiatives. As a result, the timing and availability of certain federal EV incentives became uncertain, contributing to delayed purchasing decisions among fleet operators and institutional customers that historically relied on grant and rebate programs to support EV project economics. While some state-level incentive programs remain active, the overall federal and state policy environment for EV adoption in the U.S. became less predictable during 2025.
At the same time, U.S. trade policy developments materially affected the cost structure of our EV manufacturing and assembly. In September 2024, the Office of the U.S. Trade Representative finalized modifications to Section 301 tariffs on Chinese goods that increased tariff rates on Chinese-origin EVs to 100% and on certain lithium-ion EV batteries to 25%. Additional trade actions and retaliatory measures during 2025 contributed to further volatility in our component costs and supply chain planning. These tariffs increased our input costs, constrained our ability to pass through pricing to customers, and reduced our margin predictability.
Drone and Unmanned Aerial Vehicles (“UAVs”) Demand Trends
In contrast to the policy-sensitive EV market, the drone market demonstrated more durable demand characteristics during 2025. Increased focus on supply-chain security and national security considerations supported interest in domestically manufactured drone and UAV systems. Recent federal regulatory actions discussed under “Government Regulation” below and procurement preferences limiting the use of foreign-manufactured drones in federal government and government-adjacent applications have contributed to demand for U.S.-based alternatives in select markets. According to a market analysis prepared by Grand View Research, the global drone market size was valued at $73.1 billion in 2024 and is projected to growth at a compounded annual growth rate of 14.3% to 2030 and the U.S. drone market specifically was valued at $25.1 billion in 2024 and is projected to more than double by 2030 to approximately $52.5 billion.
AI Infrastructure Demand Trends
Separately, the rapid adoption of AI technologies is expected to drive significant growth in demand for data center infrastructure. Industry forecasts indicate that U.S. data center power demand is increasing at a pace that exceeds historical norms, driven primarily by AI-related compute workloads. For example, BloombergNEF projected that U.S. data center power demand could reach approximately 106 gigawatts by 2035. In addition, Goldman Sachs Research forecasts data center power demand rising by approximately 175% by 2030 relative to 2023, driven by pervasive AI workloads and infrastructure expansion. The International Energy Agency (IEA) also reported that global data center electricity demand is expected to more than double by 2030, with accelerated servers (mainly AI workloads) driving a significant share of demand increases. As a result, we consider the availability of reliable power, speed of deployment, and integration of power and hardware systems to be critical constraints for data center expansion. We have seen these dynamics contribute to increased focus on infrastructure solutions to support power-intensive computing environments, including configurations that reduce reliance on traditional grid expansion timelines.
Products and Segments
We develop and deploy power-backed hardware systems across multiple end markets that require reliable energy delivery, integrated hardware, and system-level execution. Our activities are organized around a common foundation of power management, electrification, and hardware-software integration. As of the end of 2025, our operations and development initiatives are focused on the following areas: (i) commercial EVs, (ii) drone systems, and (iii) medical supplies. In addition, at the beginning of 2026, we announced a new strategic focus on the development and deployment of power-driven computing and data infrastructure designed to support high density, compute intensive workloads.
In early 2026, we announced a strategic initiative focused on the development and deployment of modular, power-backed computing infrastructure to support high-density artificial intelligence and advanced computing workloads. Our planned offerings include containerized data center modules integrating dedicated power generation (including natural gas and alternative energy sources), electrical distribution equipment, thermal management systems, and rack-level high-performance compute hardware. We intend to pursue this strategy through a combination of internal development, strategic partnerships, and potential joint ventures. Following commercialization, our role is expected to include system design, power integration, project development, and deployment execution. These systems are expected to incorporate commercially available central processing units (“CPUs”) and, in future configurations, graphics processing units (“GPUs”) capable of supporting AI and other advanced compute workloads. These platforms are intended to be deployable in traditional data center environments as well as distributed or site-constrained locations where power availability, reliability and speed of deployment are critical considerations. We do not intend to design or manufacture semiconductor components.
We are evaluating both grid-connected and off-grid power solutions to support these deployments, including on-site generation and hybrid configurations designed to enhance uptime and reduce reliance on extended grid interconnection timelines. Power strategies that are currently under our consideration include clean natural gas–based generation and other reliable energy sources, subject to regulatory and permitting requirements, as discussed under “Governmental Regulation” below. We believe that access to cost-effective and dependable power infrastructure is a key constraint facing data center expansion and AI compute deployment in the U.S.
Potential customers for these solutions may include hyperscale operators, government agencies, and commercial enterprises seeking secure, power-resilient computing infrastructure. In addition, we may evaluate opportunities to utilize excess compute capacity for internally managed workloads, including digital asset–related applications, as part of an overall infrastructure utilization strategy. These initiatives remain in research and development, and we have not yet commenced commercial sales.
Drone Systems
During 2025, we initiated research and development efforts in the drone systems market, leveraging our power management, hardware integration, and electrification expertise but have not yet begun offering our drone products as of the end of 2025. We are developing a heavy-lift drone platform designed to carry payloads of approximately 500 pounds. This platform is intended to be manufactured in the U.S. and is being designed primarily for agricultural, fire suppression, and forestry applications, including precision spraying and related use cases.
We believe that recent federal regulatory actions discussed under “Government Regulation” below and procurement preferences limiting the use of certain foreign-manufactured drones have created an opportunity for domestically produced alternatives in agricultural and federally funded projects. We are developing a drone platform to provide greater payload capacity, durability, and operational flexibility than our competitors.
In addition to agricultural applications, we are designing our drone platform to support fire suppression and forestry management use cases, including the transport and deployment of water or fire retardant materials. We are also evaluating the integration of advanced software capabilities, including geospatial mapping, coordinated multi-drone operations (“swarming”), and AI–enabled applications to support data-driven operations in complex environments.
These drone products and associated software systems remain in development, and we have not yet commenced commercial manufacturing or sales in this segment.
In February 2025, we engaged a drone manufacturer for the manufacture of a U.S.-made heavy-lift drone in accordance with our detailed specifications and, following delivery of the drone, for transfer of the associated intellectual property rights. This initial heavy-lift drone is purpose-built for the agricultural market, with advanced spraying and mapping functionality. As part of our business strategy, following delivery of the model drone, we intend to open our U.S. drone manufacturing facility and commence commercial sales, subject to applicable regulatory approvals.
Commercial Electric Vehicles
Our commercial EV segment includes purpose-built electric vans, trucks, buses, and specialty vehicles designed for fleet, municipal, and institutional customers. These vehicles are manufactured through third-party OEMs located in China and Malaysia, followed by a Company-led final assembly and integration processes, and then marketed, sold, warrantied and serviced through our service and distribution network. Our vehicles include options for telemetry 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.
During 2025, in response to market conditions—including reduced federal and state incentives to support the EV market, substantial increases in import tariffs on certain components, including tariffs exceeding 100% on selected parts and subassemblies sourced from Asia, and reduced profit margins due to cost pressure—we have moderated the pace of expansion within this segment. We remain focused on commercial use cases where electrification provides a measurable return on investment, particularly in jurisdictions with established incentive programs such as New Jersey and California.
Medical Supplies (Maddox Industries)
We maintain U.S.-based production capabilities through our wholly owned subsidiary, Maddox Industries that are focused on fulfilling our subcontract with Maddox Medical for medical supplies for government use.
While our medical supplies segment is not a primary growth area for us, our manufacturing operations for medical supplies provide operational validation of our ability to design, deploy, and manage semi-automated manufacturing processes within regulated environments. We believe this capability supports our broader strategy by demonstrating U.S.-based production capacity, supply chain compliance, and disciplined execution and operational control in support of government contracts.
Our Strategy
Our strategy is focused on building a diversified, power-backed hardware and infrastructure platform centered on markets where energy availability, compute density, and execution capability are critical constraints. In response to market conditions during 2025, we refined our strategic priorities to emphasize scalable infrastructure, margin durability, and selective acquisition-driven expansion.
Our strategy is guided by the following pillars:
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Establish Power-Driven AI Data Infrastructure as the Core Growth Platform. One strategic focus that we view as a key area of growth for our company is the development and deployment of power-driven computing and data infrastructure capable of supporting high-density AI workloads. We believe that accelerating demand for AI compute has created a structural imbalance between compute demand and available infrastructure, particularly with respect to power availability, cooling capacity, and deployment speed. Our strategy is to address these constraints by integrating compute hardware, power systems, and thermal management into cohesive AI infrastructure solutions. We intend to pursue deployments utilizing grid-connected, off-grid, or hybrid power configurations, including on-site generation where permitted, with the objective of maximizing uptime and operational reliability. During the first quarter of 2026, we initiated our evaluation and development of data center infrastructure utilizing advanced cooling technologies, including liquid immersion cooling, to support high-density compute environments. |
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Pursue Strategic Acquisitions to Accelerate Scale, Access, and Capability. As part of our growth strategy, we are evaluating strategic acquisitions, mergers, and other business combinations within the AI, GPU, and data infrastructure ecosystem. These potential transactions are intended to accelerate our access to advanced compute hardware, supply chain priority, technical expertise, and established customer relationships. We also intend to evaluate additional opportunities to vertically integrate or consolidate complementary assets and businesses across the AI, compute, and data infrastructure value chain, subject to market conditions, financing availability, and regulatory considerations. |
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Integrate Power Infrastructure with Compute Deployment. A central element of our strategy is the integration of power infrastructure with compute deployment. We believe that access to reliable, cost-effective energy is becoming a primary bottleneck for data center expansion. Accordingly, we are pursuing strategies that combine compute infrastructure with dedicated power solutions, including on-site generation and hybrid power models. During 2025, we advanced initiatives related to securing power resources and evaluating infrastructure build-outs in select U.S. regions, including South Texas, where energy availability and industrial development support data center deployment. These initiatives are intended to support scalable, long-term infrastructure development aligned with customer demand. |
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Maintain Disciplined Exposure to Commercial Electric Vehicles. We continue to support our commercial EV operations and customer base. However, in light of market conditions discussed above, we have moderated the pace of expansion within this segment. Our EV strategy emphasizes commercial use costs where electrification provides a measurable return on investment, while prioritizing capital allocation toward higher-margin, power-driven infrastructure initiatives. |
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Develop Complementary Hardware Platforms with Lower Policy Dependence. We are exploring opportunities to develop complementary hardware platforms, including drone systems, that leverage our expertise in power systems and hardware integration. These initiatives are intended to diversify revenue opportunities and reduce reliance on policy-dependent market segments. |
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Execute with Capital Discipline and Phased Deployment. We intend to execute our strategy through a phased deployment model that emphasizes technical validation, customer alignment, and capital efficiency. Investments will be prioritized based on margin potential, scalability, and alignment with our core power-driven infrastructure thesis. We will continue to evaluate partnerships, acquisitions, and financing structures that support disciplined growth while maintaining flexibility to adapt to market conditions. |
Manufacturing, Operations, and Facilities
We maintain an operational footprint designed to support the development, integration, and deployment of power-backed hardware systems across our core business lines. Our manufacturing and operations strategy emphasizes proximity to skilled labor, access to energy infrastructure, supply chain efficiency, and logistical connectivity to customers and partners.
Transition of Manufacturing and Operations
During 2025, we undertook a strategic evaluation of our manufacturing and operational footprint. As part of this process, we discontinued our plans to further expand operations in Arkansas and relocated our primary corporate, manufacturing, and operational activities to Houston, Texas.
Our decision to exit Arkansas was driven by a combination of operational and economic considerations, including the condition and cost structure of available facilities, limitations on workforce availability for specialized technical and manufacturing roles, logistical constraints, and the overall scalability of operations in a remote geographic location. While we had previously explored the potential for expanded operations in Arkansas, we ultimately determined that this location did not align with our long-term operational requirements or growth objectives. The transition of our operations from Arkansas to Houston, Texas is still ongoing and is expected to be complete in the first half of 2026.
Establishment of Houston, Texas as the Primary Operating Hub
We selected Houston, Texas as our primary operating hub based on our strategic advantages as a major energy, industrial, and logistics center. Houston serves as a global hub for the energy, power, and industrial sectors. The region provides direct access to natural gas infrastructure, refineries, pipelines, and energy counterparties, as well as a deep ecosystem of suppliers and service providers relevant to power-intensive infrastructure projects.
Workforce and Operational Scale
Since relocating operations to Houston, we have expanded our workforce and operational capacity. We believe the region offers a large, educated, and skilled labor pool across engineering, manufacturing, information technology, energy systems, and industrial operations. We have been able to recruit personnel across a broad range of technical and operational disciplines necessary to support our evolving business lines.
We have scaled our workforce significantly compared to prior periods and have established multiple functional operations in the Houston area, including corporate headquarters, manufacturing and assembly operations, drone testing facilities, logistics, and warehousing. We have implemented multiple assembly and production lines to support our medical supplies manufacturing and hardware integration activities.
Operational Alignment with Strategic Focus
Our relocation to Houston aligns with our strategic emphasis on power-driven infrastructure, AI data center development, and advanced hardware systems. Houston’s position within the U.S. energy corridor supports our efforts to integrate compute infrastructure with reliable power solutions, including natural gas-based generation and hybrid power models. The region also supports collaboration with energy producers, infrastructure developers, and industrial customers.
Facilities
Our current facilities include corporate headquarters located in downtown Houston, Texas, as well as manufacturing, assembly, testing, logistics, and warehousing facilities within the greater Houston metropolitan area. These facilities are intended to support current operations and provide flexibility for future expansion as market conditions and strategic initiatives evolve. Our 86,000 square foot facility in Houston is subleased from Maddox Defense, Inc. ("Maddox Defense"), of which Jason Maddox, our President and Interim Chief Financial Officer is the sole stockholder, with a three-year term (with renewal options), for approximately $20,000 per month.
During 2025, we undertook a strategic evaluation of our manufacturing and operational footprint. As part of this process, we discontinued our plans to further expand operations in Arkansas and relocated our primary corporate, manufacturing, and operational activities to Houston, Texas. The transition of our operations from Arkansas to Houston is still ongoing and is expected to be complete in the first half of 2026.
Our Customers
Our customer engagement strategy is designed to align each of our business lines with customers whose operational requirements, procurement processes, and economic drivers are well suited to our potential power-backed hardware platforms. We focus on customers with mission-critical use cases, high utilization requirements, and long-term infrastructure or equipment needs.
AI Data Infrastructure
Our power-driven computing and data infrastructure initiatives are intended to serve customers requiring reliable, high-density computing environments where access to power, uptime, and deployment speed are critical constraints. Our target customer categories for this business line are intended to be:
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Hyperscale and cloud service providers seeking incremental or distributed compute capacity to support AI, machine learning, and data-intensive workloads, particularly in regions where grid access or power availability limits traditional data center expansion; |
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Government agencies and government-adjacent entities requiring secure, resilient computing infrastructure for data processing, analytics, modeling, simulation, and mission-critical applications, including customers subject to data security and domestic infrastructure considerations; |
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Enterprise and commercial customers operating compute-intensive workloads, including energy, industrial, logistics, and technology-driven businesses, where power reliability, latency, or geographic placement is a key operational requirement; and |
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Infrastructure developers and strategic partners seeking integrated power-and-compute solutions for data center development, including customers evaluating hybrid, off-grid, or dedicated power configurations. |
We expect that customer engagements in AI compute business will typically involve extended evaluation and planning cycles and may include discussions related to long-term capacity requirements, power sourcing, site development, cooling technologies, and infrastructure integration. These initiatives remain in development, and we have not yet commenced commercial sales or recognized revenue from any AI data infrastructure deployments.
Drone Systems (Agricultural, Fire, and Forestry Applications)
Our drone systems initiatives are focused on the development of heavy-lift, industrial-grade drone platforms designed for demanding commercial and public-sector applications. Our target customer categories for this segment include:
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Large-scale agricultural operators and agricultural service providers, including farms and contractors engaged in precision agriculture, crop spraying, fertilization, and related operations, where high payload capacity, durability, and operational efficiency are critical; |
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Forestry management organizations, including public and private land managers, seeking aerial platforms for vegetation management, monitoring, and environmental operations; |
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Fire suppression and emergency response organizations, including state and local fire authorities and related agencies, evaluating aerial platforms for fire suppression, delivery of water or fire retardant, and situational awareness in hazardous environments; and |
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Government and government-adjacent customers subject to domestic sourcing requirements or procurement preferences favoring U.S.-manufactured unmanned systems. |
During 2025, following our public announcement of our heavy-lift agricultural drone development program, we engaged with prospective customers regarding anticipated operational requirements and use cases. In connection with these early engagements, we received limited, refundable customer deposits from certain prospective customers seeking priority access to initial production units once the platform becomes commercially available. These deposits are intended to secure a position in a prospective delivery queue and do not constitute firm purchase commitments, backlog, or guaranteed delivery timelines. No revenue has been recognized in connection with these deposits, and we have not commenced commercial manufacturing or sales of drone products.
Commercial Electric Vehicles
Our commercial EV customers primarily include:
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Fleet operators, including delivery, logistics, and service fleets with centralized operations and predictable duty cycles; |
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Municipalities and public agencies, including utilities, ports, and school districts, seeking to reduce emissions and operating costs through electrification; and |
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Institutional and commercial customers with specific operational requirements where EVs provide a clear return on investment. |
Sales in this segment are driven by defined use cases and are often influenced by the availability of state or local incentive programs. During 2025, customer purchasing behavior became more selective, with extended sales cycles and heightened sensitivity to total cost of ownership. We continue to support our existing vehicle lineup and customer relationships while prioritizing deployments where electrification provides measurable economic benefits.
Manufacturing, Product Delivery and Service Model
We manufacture and deliver our products and services through a combination of in-house system assembly, system integration, and development activities, supported by third-party manufacturing partners and strategic suppliers. Our delivery and service model is tailored by business line and is designed to maintain control over product specifications, performance standards, and compliance requirements while preserving operational flexibility and capital efficiency.
Commercial Electric Vehicles
For the manufacture of our commercial EVs, we utilize a semi-knocked-down (“SKD”) assembly model in which vehicles are produced to our designs, technical specifications, and component requirements. Under this model, vehicle chassis, bodies, and subassemblies are sourced from the OEMs located in China and Malaysia and delivered in SKD form, after which we perform final assembly, integration, and configuration.
Our SKD assembly process includes the integration of Company-specified components and systems, which may include powertrain elements, battery systems, electrical architecture, software, telematics, and application-specific hardware, depending on vehicle class and customer requirements. This approach allows us to maintain control over vehicle design standards, performance specifications, regulatory compliance, and quality assurance while leveraging external manufacturing capacity.
In addition to final assembly, we support customers through vehicle customization, delivery coordination, and post-delivery service arrangements. Service and support activities may include maintenance coordination, parts support, and technical assistance, provided directly by us or through qualified third-party service providers.
Drone Systems
Our drone systems activities are currently focused on product design, engineering, and development. We are developing heavy-lift, industrial-grade drone platforms intended for agricultural, fire suppression, and forestry applications. These products are being designed for U.S.-based manufacturing and are not yet in commercial production. Commercial manufacturing, sales, and post-delivery support models have not yet been finalized and will depend on product readiness, regulatory approvals, and market demand.
AI Data Infrastructure
Our initiatives related to power-driven computing and data infrastructure are currently in the development and planning phase. These activities include system design, infrastructure planning, power integration, thermal management evaluation, and customer engagement related to high-density compute deployments. Future delivery models may include integrated hardware deployment, infrastructure development, power integration, and ongoing operational support, subject to customer requirements, regulatory considerations, and capital availability. We have not yet commenced commercial sales or recognized revenue related to these initiatives.
Medical Supplies (Maddox Industries)
Through our wholly owned subsidiary, Maddox Industries, we maintain U.S.-based, semi-automated manufacturing capabilities to produce medical supplies for Maddox Medical in support of its government contracts.
While Maddox Industries is not a primary growth segment for us, its operations provide operational validation of our ability to design, deploy, and manage semi-automated manufacturing processes within regulated environments. We believe these capabilities support our broader manufacturing strategy by demonstrating execution discipline, domestic production capacity, and compliance with government procurement requirements.
Manufacturing and Service Flexibility
Across all business lines, our product delivery and service model emphasizes disciplined execution, modular deployment, and adaptability to customer and market requirements. We may adjust our delivery, assembly, and service approaches over time based on operational scale, customer needs, and strategic priorities.
Marketing Approach and Sales Cycles
Across all business lines, our marketing activities are primarily relationship-driven and technical in nature. We do not rely on mass-market advertising and instead focus on direct engagement with customers, industry participants, and strategic partners. Sales cycles vary significantly by segment and customer type and may range from several months to multiple years, particularly for infrastructure-related initiatives. Marketing expenditures are managed conservatively and aligned with our strategic priorities and stage of development.
Backlog
As of December 31, 2025, we had a backlog of two zero-emission Class 4 trucks and 38 zero-emission Class 4 cargo vans, which consists of unfilled firm orders for products undersigned by contracts with customers.
Employees
As of December 31, 2025, we employed 293 full-time employees across our operations. Our workforce currently supports commercial EV integration, medical supplies manufacturing, product development initiatives, power-driven infrastructure planning, manufacturing and assembly activities, logistics, and corporate and administrative functions.
During 2025, we significantly expanded our workforce, adding more than 250 manufacturing and machine-operator roles in connection with the relocation and scale-up of our manufacturing operations in Houston, Texas. This expansion was undertaken to establish and support production capacity for our medical supplies segment.
In addition to manufacturing personnel, we added highly skilled technical staff, including production and manufacturing design engineers, electrical engineers, computer systems engineers, and logistics professionals to support system design, assembly processes, power management, automation, quality control, and infrastructure integration across our business lines.
Our workforce includes engineers, technicians, manufacturing and assembly personnel, machine operators, logistics and supply chain staff, information technology professionals, sales and business development personnel, and corporate management and administrative employees. Certain functions may also be supported by contractors, consultants, or temporary labor, depending on project requirements and operational needs.
We are not a party to any collective bargaining agreements. We place emphasis on workplace safety, regulatory compliance, training, and maintaining a professional work environment consistent with applicable labor laws and industry standards.
Our workforce size and composition may continue to evolve based on operational scale, product development progress, development and commercialization activity, and strategic priorities.
Competition
The markets in which we operate are highly competitive and characterized by rapid technological change, evolving regulatory environments, and shifting capital availability. Competitive dynamics vary significantly across our business lines, and competitors range from large, well-capitalized enterprises to smaller, specialized technology providers.
Commercial Electric Vehicles
The commercial EV market has experienced significant contraction and consolidation in recent periods. Competition in this segment includes established vehicle manufacturers, specialized EV developers, and integrators serving fleet and institutional customers. During 2025, a number of EV-focused companies reduced operations, restructured, exited the market, or were delisted from public markets, due to capital constraints, margin pressure, and sensitivity to changes in policy and incentive programs.
Competition in the commercial EV segment is influenced by factors including total cost of ownership, availability of incentives, vehicle performance and reliability, service and support capabilities, and access to capital. While competitive pressure remains, we believe that fewer participants, combined with increased selectivity by customers, has shifted the market toward use-case-driven deployments rather than broad adoption initiatives.
Drone Systems
The drone systems market includes a mix of domestic and foreign manufacturers offering products across a wide range of payload capacities and applications. In agricultural and industrial use cases, competition has historically been dominated by foreign-manufactured platforms, particularly in smaller payload classes.
Recent regulatory and procurement trends discussed above have altered the competitive landscape in certain markets, particularly for use of drones by federal agencies and federally funded projects. We believe that these developments have reduced the number of viable suppliers for high-payload, industrial-grade drone systems intended for agricultural, fire suppression, and forestry use cases.
Competition in this segment is driven by payload capacity, durability, operational reliability, software integration, and regulatory compliance. Many competitors offer lighter-duty systems that may not address the operational requirements of large-scale or industrial applications targeted by our development efforts.
AI Data Infrastructure
The power-driven computing and data infrastructure market is highly competitive and includes large technology companies, data center developers, infrastructure providers, and specialized system integrators. Competition is influenced by access to computing hardware, availability of reliable power, speed of deployment, and ability to support high-density workloads.
We believe that demand for AI-driven compute infrastructure has intensified competition for power resources and suitable sites, particularly for large-scale deployments. In this environment, competitive differentiation increasingly depends on the ability to integrate compute systems with reliable power solutions, advanced cooling technologies, and scalable infrastructure. Barriers to entry include capital requirements, supply chain access, technical expertise, and regulatory approvals.
Competitive Positioning
Across our business lines, we compete based on our ability to integrate power systems, hardware, and software into cohesive solutions tailored to specific operational requirements. We believe our experience in power management, electrification, system integration, and domestic manufacturing provides a competitive foundation, particularly in markets where reliability, compliance, and execution capability are critical.
However, we compete with entities that may have greater financial, technical, or operational resources, and increased competition could adversely affect pricing, margins, and market share. We expect competitive conditions to continue to evolve as markets mature, technologies advance, and regulatory frameworks change.
Technology
Our business relies on a combination of proprietary designs, engineering know-how, system integration expertise, software development, and licensed or third-party technologies. Our intellectual property strategy is focused on protecting critical elements of our designs and processes while maintaining flexibility to incorporate third-party components and technologies where appropriate.
Technology Platform
Our technology platform is centered on power-backed hardware systems, including electrification, power management, thermal regulation, and integrated hardware-software architectures. These capabilities are applied across our commercial EVs, unmanned aerial systems, and power-driven computing and data infrastructure business lines.
Core technical competencies include:
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Power system design and integration; |
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Electrical architecture and controls; |
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Hardware-software integration; |
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Thermal management and cooling solutions; |
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System-level design for reliability and uptime; and |
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Manufacturing process design and automation. |
Commercial Electric Vehicles
For our commercial EVs, we develop and maintain vehicle designs, performance specifications, and system requirements that are implemented through our SKD assembly model. We specify key vehicle attributes, components, and system integrations, including battery systems, powertrain elements, electrical architecture, telematics, and application-specific hardware.
While certain vehicle components and subassemblies are sourced from third-party OEMs, we retain control over system-level design, integration standards, quality requirements, and regulatory compliance. Our intellectual property in this area consists primarily of proprietary design documentation, engineering specifications, software configurations, and integration processes rather than patents on individual components.
Drone Systems
Our drone systems involve the design and development of heavy-lift, industrial-grade drone platforms intended for agricultural, fire suppression, and forestry applications. Technology development efforts in this area include:
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Airframe and structural design optimized for heavy payloads; |
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Power and propulsion system integration; |
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Flight control systems and redundancy architecture; |
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Payload deployment mechanisms; and |
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Software and control systems for autonomous and semi-autonomous operation. |
We are also evaluating and developing advanced software capabilities, including geospatial mapping, coordinated multi-drone operations (“swarming”), and AI-enabled sensing and analytics. These technologies remain in development, and we have not yet commenced commercial production or sales of drone products.
AI Data Infrastructure
Our power-driven computing and data infrastructure initiative involves the design and integration of high-density computing platforms and supporting infrastructure. These efforts focus on:
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Modular computing architectures utilizing CPUs and, in future configurations, GPUs; |
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Integration of computing hardware with reliable power systems; |
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Thermal management solutions, including advanced cooling technologies; and |
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Infrastructure layouts designed for scalability, uptime, and efficiency. |
The goal of our technology development in this area emphasizes system integration rather than development of proprietary semiconductor technologies. We expect to rely on a combination of commercially available computing hardware, licensed software, and proprietary integration methodologies.
Medical Supplies (Maddox Industries)
Through our wholly owned subsidiary Maddox Industries, we have developed manufacturing process knowledge related to semi-automated production, quality control, and compliance with government contracting requirements. This know-how includes production line design, automation workflows, documentation, and process controls. While our processes are not protected by patents, we consider this operational expertise to be valuable.
Intellectual Property
We seek to protect our intellectual property through a combination of confidentiality agreements, employee and contractor assignment agreements, trade secret protections, and selective use of intellectual property registrations where appropriate. We also rely on contractual protections in our relationships with suppliers, manufacturing partners, and customers. 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 with respect to our EV segment. We do not currently hold any other patents, trademarks, franchises or concessions.
Following the delivery of the initial drone model by our U.S. manufacturer, we will also own accompanying intellectual property rights in any work product resulting from the delivered drone, including, but not limited to, copyright and trademark rights.
Our success depends in part on our ability to protect our proprietary designs and processes and to avoid infringing on the intellectual property rights of others. There can be no assurance that our intellectual property protections will be sufficient or that will not be subject to claims of infringement or misappropriation.
Government Regulations
We operate in markets that are subject to extensive regulation at the federal, state, local, and international levels. These regulations affect product design, manufacturing, sales, deployment, and ongoing operations. Compliance with applicable regulatory requirements is an integral part of our business, and regulatory changes may impact demand, costs, or the timing of commercial activities.
Commercial Electric Vehicles
Our commercial EV operations are subject to regulations governing motor vehicle safety, emissions, transportation, and environmental compliance. In the United States, these include regulations administered by federal and state transportation and safety authorities, as well as state and local vehicle registration and operational requirements.
Emission and Fuel Economy Standards
Government regulation related to climate change is under consideration at the U.S. federal and state levels. The Environmental Protection Agency ("EPA") and National Highway Traffic Safety Administration (the “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. On March 29, 2024, the EPA announced a final rule, “Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles – Phase 3,” that sets stronger standards to reduce greenhouse gas emissions from heavy-duty vehicles beginning in model year 2027. The new standards will be applicable to heavy duty vocational vehicles, such as delivery trucks, refuse haulers, public utility trucks, transit, shuttle, school buses, etc., and tractors, such as day cabs and sleeper cabs on tractor-trailer trucks.
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 program 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.
Demand for commercial EVs may be influenced by government incentive programs, grants, rebates, and procurement policies at the federal, state, and local levels. Such programs are subject to modification, reduction, or elimination based on legislative, regulatory, or budgetary changes. We do not control the availability or terms of these programs, and changes in incentive structures may affect customer purchasing decisions.
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.
Drone Systems
Our drone systems initiatives are subject to aviation, safety, and operational regulations. In the United States, commercial drone operations are regulated by the Federal Aviation Administration (the “FAA”), including requirements related to aircraft certification, operator licensing, airspace use, and operational limitations.
National Defense Authorization Act and American Security Drone Act
In December 2024, Congress passed the National Defense Authorization Act (“NDAA”), which includes the American Security Drones Act (“ASDA”). The bill prohibits, starting in January 2026, federal agencies and federally funded programs from purchasing or using drones manufactured in countries that are viewed as threats to U.S. national security, such as China. The basis for the legislation is that purchases from these countries (i) pose a significant threat to national security, (ii) represent efforts to infiltrate and influence American society, and (iii) risk the theft of personal and business data. Specifically, the American Security Drone Act: (i) prohibits federal departments and agencies from procuring and operating certain foreign commercial off-the-shelf drone or covered unmanned aircraft system manufactured or assembled in countries identified as national security threats, and provides a timeline to end current use of these drones; (ii) prohibits the use of federal funds awarded through certain contracts, grants, or cooperative agreements to state or local governments from being used (1) to procure a covered unmanned aircraft system that is manufactured or assembled by a covered foreign entity or (2) in connection with the operation of such a drone or unmanned aircraft system; (iii) requires the Comptroller General of the United States to submit a report to Congress no later than 275 days after the enactment of the NDAA detailing the amount of foreign commercial off-the-shelf drones and covered unmanned aircraft systems procured by federal departments and agencies from countries identified as national security threats. We believe that the NDAA will help to drive manufacturing of drone systems for government use to the U.S.
Federal Aviation Administration ("FAA")
The FAA is responsible for the regulation and oversight of civil aviation within the U.S. Its primary mission is to ensure the safety of civil aviation. In December 2015, the FAA announced that all drones weighing more than 250 grams, or 0.55 pounds, must be registered with the FAA. In January 2021, the FAA finalized rules requiring that drones be identifiable remotely. These rules are effective for drone manufacturers beginning in September 2023 and for drone pilots beginning in September 2024. The FAA believes that remote ID technologies will enhance safety and security by allowing the FAA, law enforcement, and federal security agencies to identify drones flying in their jurisdiction. These efforts lay the foundation for more complex operations, such as those beyond visual line of sight at low altitudes, as the FAA and the drone industry move toward a traffic management ecosystem for drone system flights separate from, but complimentary to, the air traffic management system.
In the United States, commercial drone operations are regulated primarily by the FAA under Part 107 of the Federal Aviation Regulations. These regulations govern pilot certification, aircraft registration, operational limitations, and airspace access. Current FAA regulations generally limit commercial drone operations to visual line-of-sight (VLOS) conditions, operations during daylight hours, and altitudes below 400 feet above ground level. Operations beyond these limitations require waivers or special authorizations from the FAA. The regulatory environment for beyond visual line-of-sight (BVLOS) operations is evolving, with the FAA implementing new frameworks to enable broader commercial drone deployment. In June 2024, the FAA revised BVLOS criteria to facilitate commercial drone operations for delivery and inspection applications.
Our drone systems will require appropriate FAA certifications and authorizations for commercial operation. The specific regulatory pathway will depend on the intended use case, operating environment, and level of autonomy. We are designing our drone systems with regulatory compliance as a key consideration and intend to work closely with the FAA and other relevant agencies throughout the development process.
International Markets
In international markets, including the European Union, agricultural drone operations are permitted under applicable aviation and safety frameworks, subject to country-specific regulations, operator certification, and operational approvals. Regulatory requirements may vary by jurisdiction and may impose limitations on payloads, flight operations, or use cases.
Government Procurement
In addition, procurement policies and regulatory frameworks emphasizing domestic sourcing, cybersecurity, and national security considerations may influence market access for drone systems, particularly for government and government-adjacent customers.
AI Data Infrastructure
The regulatory landscape surrounding AI, data center infrastructure and cloud computing is evolving rapidly, and we anticipate increased scrutiny and potential regulation in the near and long term as we develop our power-driven computing and data infrastructure initiatives. In the realm of cloud computing, there are growing concerns about the ethical implications and potential misuse of these technologies, particularly in association with AI and machine learning. Governments and regulatory bodies are considering measures to ensure the responsible development and deployment of AI systems, including transparency, accountability, and fairness guidelines.
In addition, our power-driven computing and data infrastructure initiatives are currently subject to laws and regulations governing energy production, power generation, environmental compliance, land use, zoning, construction, and data security. Data center operations may also be subject to cybersecurity, privacy, and data protection requirements, depending on customer use cases and jurisdiction.
In particular, our evaluation of grid-connected and on-site power generation solutions for modular computing infrastructure is subject to extensive federal, state, and local regulatory frameworks.
If we deploy grid-connected systems, interconnection to the transmission or distribution grid is governed by applicable state public utility commissions and regional transmission organizations (“RTOs”), including queue processes that may involve technical studies, capacity allocation determinations, and cost-sharing obligations for system upgrades. Interconnection timelines can extend multiple years depending on regional grid congestion and infrastructure constraints.
For projects incorporating on-site generation, including natural gas–fired generation, we would be subject to environmental permitting requirements under federal and state law. These may include:
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Air emissions permits under the Clean Air Act, administered by the U.S. Environmental Protection Agency (“EPA”) or delegated state environmental agencies; |
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State-level air quality permits and operating permits; |
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Water discharge permits, if applicable; |
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Local land-use approvals and zoning compliance; and |
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Building permits and fire safety approvals. |
Projects utilizing natural gas infrastructure may also require compliance with federal and state pipeline safety regulations, including oversight by the Pipeline and Hazardous Materials Safety Administration, where applicable.
Additionally, depending on project structure, generation facilities could be subject to:
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Federal Energy Regulatory Commission regulations related to wholesale power sales or grid interconnection; |
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State public utility commission oversight, particularly if electricity is sold to third parties; and |
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Reliability standards established by the North American Electric Reliability Corporation for certain grid-connected facilities. |
Certain jurisdictions also impose greenhouse gas reporting requirements, emissions offset programs, or renewable portfolio standards that may affect permitting, capital costs, or operating expenses. We may also be subject to federal and state environmental review requirements, including assessments under the National Environmental Policy Act if federal lands, federal funding, or federal permits are involved.
Data center operations may also be subjected to cybersecurity, privacy and data protection requirements, depending on customer use cases and jurisdiction.
Delays in obtaining required permits or regulatory approvals could impact the timing, cost, or feasibility of certain deployments.
Regulatory requirements related to emissions, environmental impact, and safety may affect the design, cost, and timing of infrastructure deployment. We continue to evaluate regulatory requirements applicable to grid-connected, off-grid, and hybrid power solutions.
Medical Supplies (Maddox Industries)
Through our wholly owned subsidiary Maddox Industries, we manufacture medical supplies for Maddox Medical in support of fulfillment of a government contract with certain federal government agencies. Such government contracts and related programs are subject to extensive regulations governing procurement processes, pricing, quality standards, reporting obligations, and compliance requirements.
As a subcontractor, our participation in government programs may require compliance with laws and regulations related to domestic sourcing, labor standards, cybersecurity, and ethics. Our medical supplies segment relies on Maddox Medical’s primary government contract, and such government contract may be subject to modification, termination, audit, or review. There can be no assurance that Maddox Medical’s future program participation will be awarded or renewed.
Regulatory Compliance and Risk
We devote resources to monitoring regulatory developments and maintaining compliance with applicable laws and regulations. However, regulatory requirements may change, and compliance may involve significant costs or operational constraints. Failure to comply with applicable regulations could result in fines, penalties, delays, or restrictions on operations.
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.
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 and management’s conclusion that there is substantial doubt about our ability to continue as a going concern; |
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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 our products and services; |
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Our ability to compete successfully against current and future competitors; |
| ● | Volatility of demand in our industries; | |
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Our sales cycle, which can be long and unpredictable, 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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Our ability to keep pace with technological advances and dependence on advances in technology by other companies; |
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Our ability to predict the size of the markets for our current and future products; |
| ● | The continuing emergence of the market for heavy-lift drones and the failure of this market to scale as expected; | |
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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; |
| ● | Unfavorable conditions in the global economy, inflation and high interest rates and capital market liquidity issues; | |
| ● | 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; | |
| ● | Our management team’s limited experience in operating as a public company; | |
| ● | Forecasts of market growth that may prove to be inaccurate, and our ability to grow our business at similar rates or at all; | |
| ● | Our acquisition of complementary business and technologies may disrupt our operations and adversely affect our operating results, and we may not achieve the anticipated benefits of such acquisitions; | |
| ● | The increased competitive, operational, legal and regulatory risks posed by the expansion of our business strategy into the AI infrastructure market; | |
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A product safety failure, quality issue or other failure affecting our or our customers’ or suppliers’ products or systems, which could seriously harm our business; |
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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 the 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, our ability to identify and form adequate strategic relationships in the future and the failure to realize or the delayed realization of anticipated benefits from such relationships; |
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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 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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The dependence of our medical supplies segment on a single customer; |
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Our exposure to substantial regulations 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 EVs; |
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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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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; |
| ● | Our ability to maintain compliance with Nasdaq continued listing requirements and to rectify any deficiencies; | |
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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, 2025 and 2024, we incurred net losses of $39.1 million and $8.8 million, respectively. The 2025 net loss included approximately $13.4 million of non-cash goodwill impairment charges and impairment of intangibles. As of December 31, 2025, we had negative working capital of approximately $9.8 million and an accumulated deficit of approximately $112.6 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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| • | successfully develop and commercially market new products and services; |
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design, develop and manufacture our light to medium to heavy-duty fleet vehicles and their components; |
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| • | acquire and maintain market share in our EVs and drones segments; | |
| • | achieve and manage growth in our operations; | |
| • | keep pace with technological developments; | |
| • | timely address the increasingly sophisticated needs of our customers, including as a result of changes in government regulation related to our products and services; |
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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, recent elimination of certain federal and state incentive programs, lack of demand for our products and services, 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.
Management has concluded that there is substantial doubt about our ability to continue as a going concern.
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of December 31, 2025, we had cash and cash equivalents of $0.4 million and negative working capital of $9.8 million. To date, we have financed our operations primarily through capital raises from issuing common stock. We believe that our existing cash and cash equivalents may not be sufficient to allow us to operate for the next 12 months due to our current and potential liabilities. We may need to raise additional capital through equity or debt issuances. There can be no assurance that any required future financing can be successfully completed on a timely basis or on terms acceptable to us. Based on these circumstances, management has determined there is substantial doubt about our ability to continue as a going concern.
The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Our operating results may fluctuate significantly, which makes our 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, develop and commercially market new products and services, open new design, sales and service facilities, hire additional personnel, 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 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 (as defined under Item 8, Part II of this Annual Report), the addition of our drone segment and the introduction of our initiative to develop high-performance, energy-integrated AI compute infrastructure 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 our products and services in markets that are rapidly evolving.
Our growth is highly dependent upon the market acceptance of, and we are subject to an elevated risk of any reduced demand for, our products and services, including the commercial adoption of zero-emission trucks and other fleet vehicles and heavy lift drones. We are also developing, but have not yet commercialized, our high-performance, energy-integrated AI compute infrastructure. If any of these markets 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. Each of these markets is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new technological and product announcements and changing consumer demands and behaviors. Factors that may influence the market acceptance of our products include:
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perceptions about product quality, safety design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of any product ; |
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perceptions about the limitations in the technology in our products; |
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perceptions about product safety in general, in particular safety issues that may be attributed to the use of advanced technology; |
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for our EVs, 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 our products; |
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for our EVs, the environmental consciousness of owners of diesel- and gasoline-powered buses, truck and other fleet vehicles; |
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for our EVs, changes in the cost of oil and gasoline and perceptions about and the actual cost of alternative fuel; |
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government regulations and the availability of incentives for our EVs and a change in the administration and the legislation and regulations of federal and state governments applicable to our products; |
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access to charging stations for our EVs, standardization of electric vehicle charging systems and perceptions about convenience and cost to charge an electric vehicle; |
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the availability of rebates to purchase and operate EVs or future regulation requiring increased use of zero-emission or hybrid vehicles; 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 products, 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 or heavy lift drones, as applicable, 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 EVs is 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.
Similarly, the UAV and drone industry is highly competitive and rapidly evolving, particularly in the areas of defense, public safety, industrial inspection, and autonomous logistics. Once we begin distributing our heavy-lift, industrial-grade drone platforms designed for agricultural, fire suppression, and forestry applications, we will compete with both legacy agricultural drone companies and newer drone-focused entrants. We expect this competition to intensify as regulatory pathways for UAVs and drones become more defined and commercial drone applications expand globally.
Most of our existing and potential competitors 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. Particular to our drone segment, our competitors may be able to provide customers with different or greater capabilities or benefits than we can provide in areas such as technical qualifications, past contract performance, geographic presence, price and the availability of key professional personnel, including those with security clearances. 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 competitive advantage 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. In order to secure contracts successfully when competing with larger, well-financed companies, we may be forced to agree to contractual terms that provide for lower aggregate payments to us over the life of the contract, which could adversely affect our margins.
We expect competition in the EVs 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 as well as recent elimination of certain federal and state incentives for EVs. 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. 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 EV or drone industry by a competitor could adversely affect the sales of our products.
Demand in our industries 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. We have fewer financial resources than more established market participants have to withstand changes in the market and disruptions in demand. Volatility in demand may lead to lower sales of our products 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.
We may not be able to keep pace with technological advances and we depend on advances in technology by other companies
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.
In addition, the drone industry continues to undergo significant changes, primarily due to technological developments. Because of the rapid growth and advancement of technology, shifting consumer tastes and the popularity and availability of other forms of activities, it is impossible to predict the overall effect these factors could have on potential revenue from, and profitability of, the broader drone industry. The development of specialized software and hardware is a costly, complex and time-consuming process, and investments in product development often involve a long wait until a return, if any, can be achieved on such investment. We might face difficulties or delays in the development process that will result in our inability to timely offer products that satisfy the market, which might allow competing products to emerge during the development and certification process.
It is impossible to predict the overall effect these factors could have on our ability to compete effectively in a changing market, and if we are not able to keep pace with these technological advances or to react to changes in customer preferences, then our revenues, profitability and results of operations may be materially adversely affected. However, if we struggle to adapt to an industry-shifting technological advancement or competitor offerings that render our products relatively less attractive or obsolete, it could have a material adverse effect on our business.
Further, we rely on and will continue to rely on components of our products that are developed and produced by other companies over which we have limited control. The commercial success of certain of our planned future products will depend in part on advances in these and other technologies by other companies, and our ability to procure them from such third parties in a timely manner and on economically feasible terms.
The demand for commercial zero-emission EVs 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 EVs 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, as we have seen with the impact of the recent presidential administration. 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 EVs 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 EVs may decrease, which could have an adverse effect on our business, prospects, financial condition and operating results.
The sizes of the markets for our current and future drone products or AI data compute infrastructure may be smaller than we estimate.
Our addressable market projections for heavy lift drones and AI data compute infrastructure are based on internal models and third-party data. While we believe our assumptions are sound, market conditions, regulatory changes, or customer adoption may diverge from these assumptions. If the actual demand, pricing structure, or target applications for our products fall short of expectations, this could materially impair our growth, financial performance, and operational results.
The market for heavy-lift drones is still emerging and may not scale as expected.
The heavy-lift drone sector, especially in agricultural and forestry applications, is evolving rapidly. The speed and scale of adoption will depend heavily on regulatory frameworks (e.g., the FAA and the European Union Aviation Safety Agency (“EASA”)), operational proof points, and customer confidence in our drone solutions. If this market develops more slowly than anticipated, or if drone-based operations face resistance due to safety, reliability, or cost concerns, our growth may be constrained.
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, distributing and servicing our products 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 in the design, manufacture, and sales of our products
For example, we incur significant costs related to procuring the materials and components required to build our EVs. 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 products, 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 EVs 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, including through the addition of our drone segment and medical supplies segment and the expansion of our business strategy to include AI data compute infrastructure, 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, combined with 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 our operations scale and as we begin to commercialize our drone solutions and AI data compute infrastructure; |
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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 as we expand our current and future product offerings, the timing of which will depend on the success of our sales efforts. Because our products utilize specialized technology, individuals with sufficient training in such technology 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 our products 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 products 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. Any future significant public health crisis could adversely impact the global economy, our industries 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 depend 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 EVs, heavy-lift drones and AI data compute infrastructure, 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 in the markets that we serve. 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 appropriate industry experience and skills. 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 any of our key members of management or other highly skilled employees 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 with 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, heavy-lift drones, AI data compute infrastructure 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. The pursuit of potential future acquisitions may divert the attention of management and cause us to incur 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.
Expansion of our business strategy into the AI infrastructure market could increase competitive, operational, legal and regulatory risks to our business in ways we cannot predict.
At the beginning of 2026, we announced a partnership with Azio AI Corporation (“Azio”), an AI infrastructure provider, to pilot a joint immersion-cooled energy infrastructure for AI data centers. As we continue to enter the AI data center market, competitive, operational, legal and regulatory risks may be exacerbated as there is substantial uncertainty about the extent to which AI will result in changes that come with risks that we may not be able to anticipate, prevent, mitigate or remediate.
Through the expansion of our business to include AI data compute infrastructure, we will face new sources of competition and new customer relationships, and our competitors may be larger, have longer operating histories and significantly greater resources than we do. As a result, there can be no assurance that any AI data compute infrastructure solutions we develop will be adopted by the market or be profitable or viable. Our limited experience with respect to the provision of AI data compute infrastructure solutions could limit our ability to successfully execute on this growth strategy or adapt to market changes. If we are unsuccessful in continuing to develop and offer AI data compute infrastructure, our business, results of operations and financial condition could be adversely affected. Further, an increased focus on AI data compute infrastructure could displace or reduce our existing operations related to EVs, medical supplies and drones, which may adversely affect our business, results of operations and financial condition.
Our investments in developing and offering AI data compute infrastructure may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns or other complications that could adversely affect our business, reputation, results of operations or financial condition. The increasing focus on the risks and strategic importance of certain AI or machine learning technologies has already resulted in regulatory restrictions that target products and services capable of enabling or facilitating AI and machine learning and may in the future result in additional restrictions impacting any infrastructure solutions we may develop. Complying with multiple evolving laws, rules and regulations from different jurisdictions related to such new solutions could increase our cost of doing business or may change the way that we operate in certain jurisdictions. We may not be able to adequately anticipate or respond to these evolving laws and regulations, and we may need to expend additional resources to adjust our products in certain jurisdictions if applicable legal frameworks are inconsistent across jurisdictions.
For example, in April 2023, the U.S. Federal Trade Commission, Department of Justice, Consumer Financial Protection Bureau and Equal Employment Opportunity Commission issued a joint statement on AI, demonstrating their interest in monitoring the development and use of automated systems and enforcement of their respective laws and regulations. In December 2025, the presidential administration issued an executive order aimed at challenging and preempting state AI laws that are inconsistent with federal policy with respect to AI regulation and calling for federal AI legislation.
Such future regulatory frameworks, as well as developing regulatory guidance and judicial decisions in this area, may affect our use of AI and our ability to provide and to improve our products, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us and could adversely affect our business, financial condition and results of operations.
Furthermore, concerns regarding third-party use of AI for purposes contrary to governmental and societal interests, including concerns relating to the misuse of AI applications, models, and solutions, could result in restrictions on AI products. Any such restrictions could reduce the demand for our intended AI data compute infrastructure, and negatively impact our business, financial condition and operating results, and damage our reputation.
It is also unclear how our strategy to provide infrastructure for customers developing and deploying AI applications could affect the applicability of these existing or proposed regulatory frameworks and other restrictions with respect to any solutions we may offer from time to time. However, it is possible that such regimes will impose obligations on infrastructure providers, such as us, to oversee, monitor or restrict the use of AI systems that are trained or deployed on their systems, and/or to ensure compliance with such regulatory frameworks and other restrictions. If our customers violate existing or proposed regulatory regimes or other restrictions, or if they use our services for unlawful, harmful or non-compliant purposes, we could be subject to regulatory investigations, regulatory fines, reputational damage or contractual liability for any such actions, even if we do not control the customer applications. Further, AI data compute customers increasingly are looking to pass through their regulatory obligations and other liabilities to their outsourced data center providers, and we may not be able to limit our liability or damages in the event of loss suffered by such customers whether as a result of our breach of an agreement or otherwise.
These competitive, operational, legal and regulatory risks are evolving and uncertain and could impact our business in ways we cannot predict. Any of the foregoing could limit our ability to offer, or grow our partnership in, AI data center infrastructure solutions and continue to grow our business, which could have a material adverse effect on prospects, results of operations and financial condition.
Risks Relating to the Design, Supply and Manufacturing of our Products
Due to the nature of our products and services, a product safety failure, quality issue or other failure affecting our or our customers’ or suppliers’ products or systems could seriously harm our business
Our products may not perform in a manner that is consistent with our customers’ expectations for a variety of reasons. If our products 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 products. Technical, mechanical, quality, electronic, and other failures may occur from time to time, whether as a result of manufacturing or design defect, operational process, or production issue attributable to us, our customers, suppliers, partners, third-party integrators, or others. Product design changes and updates could also have associated cost and schedule impacts. In addition, our products could fail as a result of cyber-attacks, such as those that seize control and result in misuse or unintended use of our products, or other intentional acts. A product or system failure, or perceived failure, could lead to negative publicity, a diversion of management attention, and damage to our reputation that could reduce demand for our products and services. It could also result in product recalls and product liability and warranty claims (including claims related to the safety or reliability of our products) and related expenses, other service, repair and maintenance costs, labor and material costs, customer support costs, significant damages, and other costs, including fines and other remedies, and regulatory and environmental liabilities. 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. We may also incur increased costs, delayed payments, reputational harm, or lost equipment or services revenue in connection with a significant issue with a third party’s product with which our products are integrated. Further, our insurance coverage may not be adequate to cover all related costs and we may not otherwise be fully indemnified for them. Any of the foregoing could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.
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.
Our zero-emission EVs are 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 of 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 depend 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 increasingly depend on 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 products and services 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 joint ventures, partnerships and other strategic relationships with third parties. We may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future. The anticipated benefits of potential strategic relationships may not be fully realized or take longer to realize than expected.
Our business success will depend in part on our ability to continue to successfully manage and enter into productive strategic relationships with third parties. For example, at the beginning of 2026, we announced a partnership with Azio to pilot a joint immersion-cooled energy infrastructure for AI data centers. This partnership is at a very early stage, as we have only commenced a pilot of the proposed infrastructure. The success of this partnership will depend, in part, on the successful development of the data center infrastructure, and we may not realize all of the anticipated benefits. Such development may be more difficult, time-consuming, or costly than expected and could result in increased costs, decreases in the amount of expected revenues, and diversion of management's time and energy, which could materially impact our business, operating results, financial condition, and prospects.
In February 2025, we engaged a U.S. drone manufacturer for the manufacture of a U.S.-made heavy-lift drone in accordance with our detailed specifications and, following delivery of the drone, for transfer of the associated intellectual property rights. This initial heavy-lift drone is purpose-built for the agricultural market, with advanced spraying and mapping functionality. As part of our business strategy, following delivery of the model drone, we intend to open our U.S. drone manufacturing facility and commence commercial sales, subject to regulatory approvals. Any delay or failure on the part of our U.S. drone manufacturer to perform, whether due to factors within its control or otherwise, may adversely affect our ability to commercialize and sell our heavy lift drones, thereby adversely affecting our growth and operational results.
The success of any partnership, joint venture or other strategic relationship will depend, in part, on the successful relationship between us and our business partners. A failure to successfully partner, or a failure to realize our expectations for the strategic relationship, including any contemplated exit strategy from such relationship, could materially impact our business, operating results, financial condition, and prospects. These strategic relationships could also be negatively impacted by inflation, supply chain issues, an inability to obtain financing on favorable terms or at all, an inability to market and sell the infrastructure to customers as planned, and development and construction delays.
We also depend on various third parties to provide critical parts for our process. For example, we currently maintain strategic relationships with key manufacturers of components we require for our zero-emission EVs. 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 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.
Further, in the future, we may co-invest with other third parties through partnerships, joint ventures, or other entities. These joint ventures could result in our acquisition of non-controlling interests in, or shared responsibility for, managing the affairs of a partnership, joint venture, or other entity. We may be subject to additional risks, including:
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we may not have the right to exercise sole decision-making authority regarding the partnership, joint venture, or other entity; |
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if our partners become bankrupt or fail to fund their share of required capital contributions, we may choose to or be required to contribute such capital; |
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our partners may have economic, tax, or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our interests or objectives; |
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our joint venture partners may take actions that are not within our control, which could require us to dispose of the joint venture asset or purchase the partner's interests or assets at an above-market price; |
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our joint venture partners may take actions unrelated to our business agreement but which reflect poorly on us because of our joint venture relationship; |
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disputes between us and our partners may result in litigation or arbitration that would increase our expenses and prevent our management from focusing their time and effort on our day-to-day business; |
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we may in certain circumstances be liable for the actions of our third-party partners or guarantee all or a portion of the joint venture's liabilities, which may require us to pay an amount greater than its investment in the joint venture; |
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we may need to change the structure of an established joint venture or create new complex structures to meet our business needs or the needs of our partners which could prove challenging; and |
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a joint venture partner's decision to exit the joint venture may not be at an opportune time for us or in our business interests. |
Each of these factors may result in returns on these investments being less than we expect or in losses, and business, operating results, financial condition, and prospects may be 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 products as well as limited experience allocating our available resources among the design and production of our products. We are also planning to develop multiple new product lines simultaneously, which will increase the complexity and importance of our execution in establishing the processes, operations and procedures necessary for the commercialization, marketing, sale and distribution of these products. 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. Our industries may experience significant product liability claims and we face inherent risk of exposure to claims in the event our products do not perform as expected or malfunction and personal injury or death results. 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 products, which would have a material adverse effect on our brand, business, prospects and operating results. We have 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 products or 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 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 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 EVs 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 products and demand for our products may be volatile, 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 EVs. 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. 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. In 2025, the presidential administration rescinded federal support for EVs, with agencies like the EPA and DOT moving to roll back emission standards, revoke California’s zero-emission waiver, and freeze funding for charging infrastructure. Through the One Big Beautiful Bill Act, the presidential administration terminated the IRA's $7,500 consumer EV tax credit for vehicles acquired after September 30, 2025, while also clawing back unspent IIJA funding for charging networks. If government subsidies and economic incentives to produce and purchase zero-emission EVs 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 decentralized assembly, sales and service model for our EVs business 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 for our zero-emission EVs 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 EVs and converting existing vehicles to zero-emission EVs. 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 no longer be available or 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 EVs 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 EVs, 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 EVs. 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 EVs 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 EVs. 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.
Our medical supplies segment is solely dependent on a single customer.
Our medical supplies segment derives all of its revenue from a single customer, Maddox Medical, of which Jason Maddox, our President and Interim Chief Financial Officer, is the founder and a stockholder, and Elgin Tracy, our Chief Operating Officer, is a stockholder. The loss of this customer or a significant amount of business from this customer would materially and adversely affect our results of operations until such time, if ever, as we are able to replace the lost business. We are also subject to the risks faced by Maddox Medical to the extent that such risks impede its ability to stay in business and make timely payments to us.
Risks Relating to the Legal and Regulatory Matters
We are subject to substantial regulations, which are evolving, and unfavorable changes or any failure by us to comply with these regulations could substantially harm our business and operating results.
Our zero-emission EVs, heavy lift drones, and certain of their components 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 EV industry, alternative and renewable energy and drones 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 EVs 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 EV adoption resulting from the changes in federal policy with the introduction of a new presidential administration; and |
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To the extent the laws governing our business and products change, some or all of our 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.
Our drones business is highly regulated and our ability to generate revenues and profit may be limited by regulatory restrictions and/or changes and the speed with which such restrictions and/or changes occur.
Drone manufacturers and operators are subject to extensive regulatory and legal requirements that involve significant compliance costs. The civil aviation authorities, including the FAA and the EASA, may issue regulations relating to the operation of drones that could require significant expenditures. Implementation of the requirements created by such regulations may result in increased costs for our customers and us. Additional laws, regulations, taxes and airport rates and charges have been proposed from time to time that could significantly increase the cost of our operations or reduce the demand for drones. If adopted, these measures could have the effect of reducing revenue and increasing costs. Moreover, the nature of and the speed with which these regulations are completed and implemented pose a risk for our financial performance and condition, timing of growth and overall potential. As a result, we cannot ensure that these and other laws or regulations enacted in the future will not have a negative impact on our business, financial condition, and results of operations.
Governments and regulatory agencies in the markets where we manufacture and sell drone products may enact additional regulations relating to product safety and consumer protection in the future and may also increase the penalties for failure to comply with product safety and consumer protection regulations. In addition, one or more of our customers might require changes in our products, such as the non-use of certain materials, in the future. Complying with any such additional regulations or requirements could impose increased costs on our business. Similarly, increased penalties for non-compliance could subject us to greater expenses in the event any of our products were found to not comply with such regulations. Such increased costs or penalties could have a negative impact on our business, financial condition, and results of operations.
Vehicle dealer and distribution laws could adversely affect our ability to sell our commercial zero-emission EVs.
Sales of our zero-emission EVs 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, 2025. 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, 2025, 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 and continuing into 2025, 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, 2024 and 2025.
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 products 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 may 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 may need to raise additional capital in the short- and long-term to operate our business and scale our business, among other activities. We intend to continue to make investments to support our business growth and may 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 industries, improving our operating infrastructure or acquiring complementary businesses and technologies. In addition, 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. We opened our new corporate headquarters and manufacturing facility in 2025. Additional capital expenditures will be required to set up the infrastructure that is necessary to our operations.
We believe that our existing cash and cash equivalents may not be sufficient to allow us to operate for the next 12 months due to our current and potential liabilities, and we do not expect to be able to satisfy our cash requirements solely through product sales in the near future. We may need to raise additional capital through equity or debt issuances. 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). 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. In addition, we will also need to satisfy the closing conditions to the sale of the Second Closing Debentures (as defined in Part II, Item 7 "Management's Discussion and Analysis of Financial Conditions and Results of Operations" of this Annual Report), including the effectiveness of the Resale Registration Statement (as defined in Part II, Item 7 "Management's Discussion and Analysis of Financial Conditions and Results of Operations" of this Annual Report), before we are able to access this additional tranche of our Debenture financing.
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 Nasdaq’s corporate governance 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 minimum closing bid price requirement. Due to the resignation of one of our directors effective as of our 2025 Annual Meeting of Stockholders, we no longer satisfy the requirements to maintain a majority of independent directors on our Board as required by Nasdaq Listing Rule 5605(b)(1) or to maintain an Audit Committee comprised of three independent directors meeting the additional requirements under Nasdaq Listing Rule 5605(c)(2)(A). We are relying on the cure period to regain compliance with these requirements provided in Nasdaq Listing Rules 5605(a)(1)(A) and 5605(c)(4).
If we do not regain compliance before the end of this cure period or if we fail to satisfy any of the 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, 2025, 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 have not been 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, 2025 and December 31, 2024.
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 Generally Accepted Accounting Principles ("GAAP").
GAAP, as prescribed by the Financial Accounting Standards Board, is subject to interpretation by 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:
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overall performance of the equity markets; |
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the development and sustainability of an active trading market for our common stock; |
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our operating performance and the performance of other similar companies; |
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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; |
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press releases or other public announcements by us or others, including our filings with the SEC; |
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changes in the market perception of all-electric products and services generally or in the effectiveness of our products and services in particular; |
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announcements of technological innovations, new applications, features, functionality or enhancements to products, services or products and services by us or by our competitors; |
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announcements of acquisitions, strategic alliances or significant agreements by us or by our competitors; |
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announcements of customer additions and customer cancellations or delays in customer purchases; |
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announcements regarding litigation involving us; |
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recruitment or departure of key personnel; |
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changes in our capital structure, such as future issuances of debt or equity securities; |
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our entry into new markets; |
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regulatory developments in the United States or foreign countries; |
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the economy as a whole, market conditions in our industry, and the industries of our customers; |
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the expiration of market standoff or contractual lock-up agreements; |
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the size of our market float; |
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resales of our common stock under the A&R SEPA; and |
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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.
Future sales of our Common Stock could lower our stock price and dilute existing stockholders.
We may, in the future, sell additional shares of Common Stock in subsequent public or private offerings. We cannot predict the size or terms of future issuances of our Common Stock or the effect, if any, that future sales and issuances of shares of our Common Stock will have on the market price of our Common Stock. Sales of substantial amounts of our Common Stock, or the perception that such sales could occur, may adversely affect prevailing market prices for our Common Stock. In addition, these sales may be dilutive to existing stockholders.
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 amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:
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authorize the issuance of “blank check” preferred stock that could be issued by our Board to defend against a takeover attempt; |
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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; |
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require that directors only be removed from office for cause and only upon a supermajority stockholder vote; |
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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; |
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prevent stockholders from calling special meetings; and |
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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.
Item 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
Risk Management and Strategy
Governance
At the beginning of 2022, we acquired a 580,000 sq. ft. manufacturing facility located in Osceola, Arkansas, which served as our operational base until our relocation to Houston, Texas was announced in the first quarter of 2025. Following the completion of our transition to the Houston facility, our Osceola facility will be closed during 2026.
In the first quarter of 2025, we announced the relocation of our corporate headquarters to Houston, Texas and the establishment of a new 86,000 square foot facility in Houston, Texas. Our 86,000 square foot facility in Houston is subleased from Maddox Defense, of which Jason Maddox, our President and Interim Chief Financial Officer, is the sole stockholder, with a three-year term (with renewal options), for approximately $20,000 per month. We also lease other office and storage space on a month-to-month basis or under agreements with terms expiring within one year.
The information set forth under Note 12 to our consolidated financial statements contained in Item 8, Part II of this Annual Report is incorporated herein by reference.
In December 2024, the Company received a subpoena from the SEC requesting certain information related to, among other matters, the Company’s restated financial statements announced in its Current Report on Form 8-K filed on April 4, 2023 and its Quarterly Reports on Form 10-Q/A filed on September 22, 2023 for the quarterly periods ended March 31, 2022, June 30, 2022 and September 30, 2022. Subsequently, certain current and former executive officers of the Company received subpoenas from the SEC. The Company is cooperating fully in responding to the subpoena.
Item 4. MINE SAFETY DISCLOSURES
Not applicable
| 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 March 25, 2026, we had approximately 150 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.
| [Reserved] |
| 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 diversified, power-backed hardware technology company focused on the development, integration, and deployment of electrified and energy-intensive systems across multiple end markets. Our operating and development initiatives are organized around a common foundation of power management, electrification, and integrated hardware know-how, with current focus areas including commercial EVs, electric drone platforms, and medical supplies.
For the years ended December 31, 2025 and 2024, respectively, we generated sales revenue of approximately $5.9 million and $1.9 million, respectively, and our net losses were $39.1 million and $8.8 million, respectively. The 2025 loss includes approximately $26.4 million of certain non-cash expenses of which $10.1 million is related to a goodwill impairment charge, $3.3 million is related to impairment of intangibles, $6.0 million is related to inventory write-downs and $7.0 million is related to write-offs of inventory deposits.
Recent Developments
Maddox Acquisition
On October 30, 2024, we entered into a Membership Interest Purchase Agreement (the “MIPA”) with Maddox Industries and Jason Maddox, the sole member of Maddox Industries (the “Seller”), pursuant to which, subject to the terms and conditions of the MIPA, 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 of the Maddox Acquisition, we issued 3,100,000 shares of our common stock (the “Stock Consideration”) to the Seller. 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 MIPA, during such calendar month, subject to an aggregate limit of $1 million with respect to all Earnout Payments payable under the MIPA. On October 20, 2025, the MIPA was amended to extend the Earnout Period to June 17, 2026. In 2025, Earnout Payments totaling $770,000 were paid out to the Seller in conjunction with these earnout provisions.
On December 18, 2024, we consummated the Maddox Acquisition. This strategic acquisition was intended 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.
One Big, Beautiful Bill Act (the "OBBBA")
The demand for our vehicles may be affected adversely by the OBBBA due to significant reductions in EV credits made available to consumers. This may affect our future profitability.
Import Tariffs
Tariffs imposed by the current presidential administration may significantly affect demand for our EVs or reduce our gross profits if we are unable to pass such tariffs to our customers. We are currently assessing the impact and will take appropriate action to minimize the impact of such tariffs on our EV strategy.
Nasdaq Deficiency Notices
On March 6, 2025, we received a letter from the Nasdaq Listing Qualifications Department, notifying us that, based upon the closing bid price of our common stock for the 30 consecutive business days from January 21, 2025 to March 5, 2025, we no longer meet the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).
On August 6, 2025, we filed a certificate of amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split of our common stock at a ratio of 1-for-10 (the “Reverse Stock Split”). Our common stock began trading on a post-split basis on the Nasdaq Capital Market as of the open of trading on August 8, 2025 (the “Split Effective Time”). Pursuant to the Reverse Stock Split, every 10 shares of our common stock issued and outstanding immediately prior to the Split Effective Time were automatically combined into one issued and outstanding share of our common stock without any change in the par value per share or the total number of authorized shares. Proportional adjustments were made to the exercise price and number of shares of our common stock issuable upon exercise of outstanding stock options and warrants to purchase shares of our common stock and the shares reserved for issuance under our 2017 Equity Incentive Plan (the “2017 Plan”).
On August 25, 2025, we received a letter from the Nasdaq Listing Qualifications Department confirming that we had regained compliance with the Minimum Bid Price Requirement.
Due to the resignation of one of our directors effective as of our 2025 Annual Meeting of Stockholders, we no longer satisfy the requirements to maintain a majority of independent directors on our Board as required by Nasdaq Listing Rule 5605(b)(1) or to maintain an Audit Committee comprised of three independent directors meeting the additional requirements under Nasdaq Listing Rule 5605(c)(2)(A). We are relying on the cure period to regain compliance with these requirements provided in Nasdaq Listing Rules 5605(a)(1)(A) and 5605(c)(4). We are in the process of identifying a new independent director to appoint to the Board to fill the vacancy created by this resignation, and we anticipate appointing such replacement director within the applicable cure period. However, there can be no assurance that we will do so.
Debenture Financing
On March 6, 2026, we entered into a securities purchase agreement (the “SPA”) with YA II PN, Ltd. (the “Investor”), pursuant to which we agreed to issue and sell to the Investor, and the Investor agreed to purchase, debentures (the “Debentures”) in the aggregate principal amount of $11,000,000 (the “Subscription Amount”) in two tranches with the purchase price of the Debentures in each tranche being equal to 96% of the Subscription Amount to be purchased. The closing of the initial tranche of Debentures occurred on March 6, 2026 (the “First Closing”), in which we issued Debentures in the aggregate principal amount of $4,000,000 (the “First Closing Debentures”) to the Investor. Pursuant to the SPA, we and the Investor have agreed that the closing of the second tranche of the remaining $7,000,000 in aggregate principal amount of the Debentures (the “Second Closing” and such Debentures, the “Second Closing Debentures”) will occur on or before the first business day after our filing of the registration statement with SEC registering the resale of the shares of our common stock issuable upon exercise of the Warrants (as defined below) and no less than 10,000,000 shares of our common stock issuable pursuant to the A&R SEPA(such registration statement, the “Resale Registration Statement”), has been declared effective and subject to the satisfaction or waiver of customary closing conditions set forth in the SPA. The sale of the Debentures to the Investor is expected to result in gross proceeds to us of approximately $10.5 million, after deducting a one-time due diligence and structuring fee to the Investor of $25,000 but before deducting any other fees and expenses.
In addition, in connection with the First Closing, as a commitment fee for the transactions contemplated by the SPA, we issued to the Investor warrants to purchase up to 1,291,778 shares of our common stock at an exercise price of $0.01 per share (the “Warrants”). The Warrants are immediately exercisable and will expire 60 months from the date of issuance. The Warrants include customary adjustment provisions for stock splits, combinations and similar events.
The Debentures bear interest at a rate of 5.0% per annum, subject to a potential increase to 18.0% per annum upon the occurrence of certain events of default. The Debentures mature on March 6, 2027 (the “Maturity Date”). We will repay the outstanding principal of the Debentures in monthly installments of (i) $363,636 for the First Closing Debentures and (ii) $636,364 for the Second Closing Debentures, in each case, plus accrued and unpaid interest, in cash, beginning on the earlier of the 30th calendar day following the effectiveness of the Resale Registration Statement or June 6, 2026, with all remaining outstanding principal plus accrued and unpaid interest due in full on the Maturity Date. Any outstanding principal amount of, and accrued and unpaid interest on, the Debentures as of the Maturity Date will be due and payable on the Maturity Date.
The Debentures provide us with an optional redemption right pursuant to which we, at any time, may redeem in cash, in whole or in part, all amounts outstanding under the Debentures prior to the Maturity Date. The redemption amount shall be equal to the outstanding principal balance of the Debentures being redeemed by us, plus all accrued and unpaid interest thereon as of such redemption date.
Going Concern and Management’s Plan
The consolidated financial statements included elsewhere herein were prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We sustained significant losses and negative cash flows from our operations and are dependent on debt and equity financing to fund our operations. We incurred a net loss of approximately $39.1 million and $8.8 million for the years ended December 31, 2025 and 2024, respectively. Cash used in operating activities was approximately $5.6 million and $3.5 million for the years ended December 31, 2025 and 2024, respectively. Accumulated deficit was approximately $112.6 million and $73.5 million as of December 31, 2025 and 2024, respectively
These conditions raise substantial doubt about our ability to continue as a going concern within one year after the filing of this Annual Report. The consolidated financial statements included elsewhere herein do not include any adjustments that might be necessary if we were unable to continue as a going concern.
As more fully described above under "Debenture Financing," we closed the initial tranche of Debentures in the First Closing on March 6, 2026, resulting in gross proceeds of approximately $3.8 million. Subject to the Resale Registration Statement being declared effective, we will close the second tranche of Debentures in the second closing for gross proceeds of approximately $6.7 million. The Company also plans to grow and expand its operations and seek additional sources of capital through either an additional debt or equity financial and to pursue acquisitions of cash flow generating assets or businesses. Although the Company has been successful in raising funds in the past, and expects to do so in the future, there are no guarantees that it will be able to raise funds as anticipated. In addition, there is no assurance that any such acquisition will be successful or that we will realize the anticipated benefits for such acquisition following the closing.
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. |
| • |
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 EVs; 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 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 EVs 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 EVs and as more conversions of existing fleet vehicles to zero-emission EVs 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. |
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Sales revenue growth from additional products. We seek to add to our product offerings additional zero-emission EVs 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. |
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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 in our electric vehicles segment 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. Sales of our gowns in the medical supplies segment are also recognized in accordance with ASC Topic 606.
Cost of Sales
Cost of sales in our electric vehicles segment 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. Cost of sales in our medical supplies segment primarily includes costs of labor.
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
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 is recorded when our fair value is less than the carrying value of our net assets.
Other Income/Expenses, Net
Other income/expenses, net 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 2025 and 2024.
Results of Operations
The following discussion compares operating data for the year ended December 31, 2025 to the data for the year ended December 31, 2024:
Sales
| Year Ended December 31, |
||||||||||||||||
| 2025 |
2024 |
$ Change |
% Change |
|||||||||||||
| Sales |
$ | 5,939,008 | $ | 1,870,060 | $ | 4,068,948 | 218 | % | ||||||||
Sales were approximately $5.9 million for the year ended December 31, 2025, compared to $1.9 million for the year ended December 31, 2024. Sales for the year ended December 31, 2025 for our EV segment, totaled approximately $349,000 and consisted primarily of 2 logistics cargo vans and two cab and chassis trucks. The remaining $5.6 million of sales occurred in our medical supplies segment. 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, all of which occurred in our EV segment. The decrease in sales in our electric vehicles segment was primarily due to unfavorable market and geopolitical conditions under the new presidential administration and a shift in our strategy to other industries.
Cost of Goods Sold
| Year Ended December 31, |
||||||||||||||||
| 2025 |
2024 |
$ Change |
% Change |
|||||||||||||
| Cost of goods sold |
$ | 19,137,380 | $ | 1,381,257 | $ | 17,756,123 | 1286 | % | ||||||||
Cost of sales related to the sales revenue described above was approximately $19.1 million for the year ended December 31, 2025, which resulted in negative gross profit of $13.2 million and a negative gross margin percentage of 222%, compared to approximately $1.4 million for the year ended December 31, 2024, which resulted in gross profit of approximately $489,000 and a gross margin percentage of 26%. The decrease in gross margin percentage was primarily due to a $6.0 million write-down of inventory and $7.0 million of inventory deposits write-offs as a result of unfavorable market and geopolitical conditions under the new presidential administration.
Operating Expenses
| Year Ended December 31, |
||||||||||||||||
| 2025 |
2024 |
$ Change |
% Change |
|||||||||||||
| General and administrative |
$ | 11,281,889 | $ | 8,146,275 | $ | 3,135,614 | 38 | % | ||||||||
| Consulting |
65,261 | 70,000 | (4,739 | ) | -7 | % | ||||||||||
| Research and Development |
731,808 | 192,885 | 538,923 | 279 | % | |||||||||||
| Goodwill impairment charge |
10,103,048 | — | 10,103,048 | 100 | % | |||||||||||
| Impairment of intangible assets |
3,300,801 | — | 3,300,801 | 100 | % | |||||||||||
| Total operating expenses, net |
$ | 25,482,807 | $ | 8,409,160 | $ | 17,073,647 | 203 | % | ||||||||
Stock-based compensation expense (included as part of "General and administrative" in the table above) is as follows:
| Year Ended December 31, |
||||||||||||||||
| 2025 |
2024 |
$ Change |
% Change |
|||||||||||||
| Stock-based compensation expense |
$ | 639,815 | $ | 1,889,353 | $ | (1,249,538 | ) | (66 | )% | |||||||
General and Administrative Expenses
General and administrative expenses for the year ended December 31, 2025 were $11.3 million, compared to $8.1 million for general and administrative expenses for the year ended December 31, 2024. General and administrative expenses increased by $3.1 million primarily due to an increase of $0.9 million in legal fees as a result of additional filings and the SEC subpoena described under Item 3, Part II of this Annual Report, and increase of $1.3 million in accounting and other professional fees as a result of additional consultants needed within finance and operations, additional amortization of $0.7 million related to our intangible assets recorded from the Maddox Acquisition, additional bad debts of $0.8 million as a result of unfavorable market conditions, additional tax and licenses of $0.5 million and an increase in other expenses of $0.1 million, partially offset by a decrease in stock-based compensation of $1.2 million.
Consulting
Consulting expenses were approximately $65,000 for the year ended December 31, 2025, as compared to $70,000 for the year ended December 31, 2024.
Research and Development
Research and development expenses were $731,808 and $192,885 for the year ended December 31, 2025 and December 31, 2024, respectively. R&D expenses increased as we incurred expenses primarily related to our drone segment in alignment with our venture into new business opportunities.
Goodwill Impairment
As a result of our declining stock price in 2025, we conducted a goodwill impairment test and we recorded a non-cash goodwill impairment of $10.1 million as of December 31, 2025.
Impairment of Intangible Assets
Due to a decline in our cash flow forecast related to our medical supplies segment, we conducted an impairment test in 2025 for our intangible assets and recorded a non-cash impairment charge of $3.3 million as of December 31, 2025.
Other Income (Expense)
| Year Ended December 31, |
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| 2025 |
2024 |
$ Change |
% Change |
|||||||||||||
| Interest income |
$ | 33,320 | $ | 7,669 | $ | 25,651 | 334 | % | ||||||||
| Loss on conversions and changes in fair value of convertible notes |
$ | (461,019 | ) | (633,981 | ) | 172,962 | (27 | )% | ||||||||
| Other (expense) income, net |
(18,108 | ) | (302,306 | ) | 284,198 | (94 | )% | |||||||||
| Total other (expense) income, net |
$ | (445,807 | ) | $ | (928,618 | ) | $ | 482,811 | (52 | )% | ||||||
Interest income, net consists primarily of interest earned on short-term investments. Interest income, net increased by $25,651 as a result of higher cash balances obtained from our issuance of convertible notes.
We recorded a non-cash loss on conversions and changes in fair value of convertible notes of $0.5 million and $0.6 million for the year ended December 31, 2025 and December 31, 2024, respectively, 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 $0.2 million related to debt borrowings during the fourth quarter of 2024.
Liquidity and Capital Resources
As of December 31, 2025, we had cash and cash equivalents of $0.4 million and negative working capital of $9.8 million. To date, we have financed our operations primarily through capital raises from issuing common stock. We believe that our existing cash and cash equivalents may not be sufficient to allow us to operate for the next 12 months due to our current and potential liabilities. We may need to raise additional capital through equity or debt issuances. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations and reducing overhead expenses. We cannot provide any assurance that any new financing will be available on commercially acceptable terms, if at all, or will be completed on a timely basis. These conditions raise substantial doubt about our ability to continue as a going concern.
The accompanying consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we were unable to continue as a going concern.
In February 2022, we moved into an approximately 580,000 square foot facility in Osceola, Arkansas. We plan to close this facility in 2026.
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. We opened our new corporate headquarters and manufacturing facility in 2025. As a result of this relocation, we incurred additional capital expenditure and one-time relocation costs.
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities for the years ended December 31, 2025 and 2024:
| Year Ended December 31, |
||||||||
| 2025 |
2024 |
|||||||
| Cash flows used in operating activities |
$ | (5,587,517 | ) | $ | (3,504,673 | ) | ||
| Cash flows used in investing activities |
(176,828 | ) | (4,706,374 | ) | ||||
| Cash flows provided by financing activities |
4,182,130 | 9,695,509 | ||||||
| Net change in cash, restricted cash and cash equivalents |
$ | (1,582,215 | ) | $ | 1,484,462 | |||
Operating Activities
Net cash used in operating activities for the year ended December 31, 2025 was $5.6 million, primarily due to a net loss of $39.1 million, partially offset by changes in operating assets and liabilities, net of $4.2 million and non-cash operating charges of $29.1 million, of which $6.0 million was related to inventory write-downs, $7.0 million was related to write-offs of inventory deposits, $10.1 million was related to goodwill impairment, $3.3 million was related to impairment of intangible assets, $0.6 million was related to non-cash stock-based compensation expense and $0.5 million was related to non-cash loss on conversions and changes in fair value of convertible notes and other non-cash charges of $1.9 million. The changes in operating assets and liabilities, net was due to a decrease in inventory of $0.4 million, a decrease in prepaid expenses of $0.9 million, a decrease in accounts receivable of $0.2 million, an increase in accounts payable of $2.1 million, an increase in other non-current liabilities of $0.3 million and an increase in accrued liabilities and deferred revenue of $3.4 million, partially offset by an increase in receivable from related party of $0.2 million, an increase in inventory deposits of $2.5 million and an increase in other non-current assets of $0.3 million.
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 loss on changes in fair value of convertible notes. 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.
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 in our EV segment; the success we have in obtaining and executing on profitable contracts in our medical supplies segment and the success we have in generating business to achieve profitability in our drones segment.
Investing Activities
Net cash used in investing activities during the year ended December 31, 2025 was $0.2 million, primarily related to the purchase of property and equipment used in our current operations.
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.
Financing Activities
Net cash provided by financing activities during the year ended December 31, 2025 was $4.2 million, primarily due to proceeds from the issuance of our common stock of $0.4 million, proceeds from the issuance of convertible notes of $4.8 million and proceeds from issuance of debt for $0.3 million, partially offset by an earn-out payment to Jason Maddox for $0.8 million related to the Maddox Acquisition and repayment of debt of $0.5 million.
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 from the 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.
Amended and Restated Standby Equity Purchase Agreement
On October 31, 2024, we entered into an amended and restated standby equity purchase agreement (as supplemented and amended, the “A&R SEPA”) with 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. We 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) $21.4800 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 $3.5800 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, we issued 6,410 shares of common stock to the Investor as a commitment fee.
During the first quarter of 2025, the obligation under the EVTV-2 Promissory Note in the principal amount of $1 million was fully satisfied through the conversion of the EVTV-2 Promissory Note into shares of our common stock. As a result of this conversion, 174,348 shares of our common stock were issued at a weighted average price of $5.70. The principal balance of the EVTV-2 Promissory Note was zero on December 31, 2025.
During the first quarter of 2025, the obligation under the EVTV-1 Promissory Note in the principal amount of $2 million was partially satisfied through the conversion of the EVTV-1 Promissory Note into shares of our common stock. As a result of this conversion, 149,030 shares of our common stock were issued at a weighted average price of $4.10. During the second quarter of 2025, the obligation under the EVTV-1 Promissory Note was partially satisfied through the conversion of the EVTV-1 Promissory Note into shares of our common stock. As a result of this conversion, 56,144 shares of our common stock were issued at a weighted average price of $2.38. During the fourth quarter of 2025, the obligation under the EVTV-1 Promissory Note was partially satisfied through the conversion of the EVTV-1 Promissory Note into shares of our common stock. As a result of this conversion, 1,210,941 shares of our common stock were issued at a weighted average price of $0.52. The remaining principal balance of the EVTV-1 Promissory Note on December 31, 2025, was $285,000. During the first quarter of 2026, the remaining obligation under the EVTV-1 Promissory Note was fully satisfied through the conversion of the EVTV-1 Promissory Note into shares of our common stock, resulting in 1,266,907 shares of our common stock being issued at a weighted average price of $0.71.
Supplemental Agreement to A&R SEPA
On February 24, 2025, we entered into a supplemental agreement, dated February 24, 2025 (the “Supplemental Agreement”), with the Investor, which amends and supplements the A&R SEPA to: (i) provide for the advancement by the Investor to us, subject to the satisfaction of certain conditions as set forth in the Supplemental Agreement, of $5 million under the A&R SEPA (the “Additional Pre-Paid Advance”), to be evidenced by convertible promissory notes (the “Additional Promissory Notes”) in two tranches, (ii) amend the maturity date for the EVTV-1 Promissory Note to March 9, 2026, and (iii) amend the floor price for the EVTV-1 Promissory Note to $0.7130 per share.
The Additional Promissory Notes accrue interest on the outstanding principal balance at an annual rate equal to 5%, which will increase to an annual rate of 18% upon the occurrence of an Event of Default (as defined in the Additional Promissory Notes) or a Registration Event (as defined in the Additional Promissory Notes) for so long as such event remains uncured. The Additional Promissory Notes will mature on March 9, 2026, which may be extended at the option of the Investor. The Additional Promissory Notes are convertible at a conversion price equal to the lower of (i) $10.00 per share or (ii) 93% of the lowest daily VWAP during the five consecutive trading days immediately preceding the conversion date (but no lower than the “floor price” then in effect, which is $0.7130 per share, subject to adjustment from time to time in accordance with the terms contained in the Additional Promissory Notes).
The first tranche of the Additional Pre-Paid Advance was disbursed on February 25, 2025 in the principal amount of $3 million (with net proceeds to us of approximately $2.7 million after deducting discounts and fees) as evidenced by an Additional Promissory Note issued by us to the Investor on February 24, 2025 (the “EVTV-3 Additional Promissory Note”). During 2025, the obligation under the EVTV-3 Additional Promissory Note in the principal amount of $3 million was partially satisfied through the conversion of the EVTV-3 Additional Promissory Note into shares of our common stock. As a result of this conversion, 2,134,613 shares of our common stock were issued at a weighted average price of $1.51. The remaining principal balance of the EVTV-3 Additional Promissory Note on December 31, 2025, was $50,000. During the first quarter of 2026, the remaining obligation under the EVTV-3 Additional Promissory Note was fully satisfied through the conversion of the EVTV-3 Additional Promissory Note into shares of our common stock, resulting in 189,093 shares of our common stock being issued at a weighted average price of $0.55.
The second tranche of the Additional Pre-Paid Advance in the principal amount of $2 million (with net proceeds of approximately $1.8 million after deducting discounts and fees) was disbursed to us on May 7, 2025 (the "EVTV-4 Additional Promissory Note"). During 2025, the obligation under the EVTV-4 Additional Promissory Note in the principal amount of $2 million was fully satisfied through the conversion of the EVTV-4 Additional Promissory Note into shares of our common stock. As a result of this conversion, 1,163,731 shares of our common stock were issued at a weighted average price of $1.51. The principal balance of the EVTV-4 Additional Promissory Note was zero on December 31, 2025.
Debenture Financing
On March 6, 2026, we entered into the SPA with the Investor, pursuant to which we agreed to issue and sell to the Investor, and the Buyer agreed to purchase from us, the Debentures in the aggregate principal amount of the Subscription Amount in two tranches with the purchase price of the Debentures in each tranche being equal to 96% of the Subscription Amount to be purchased. The closing of the initial tranche of Debentures occurred at the First Closing on March 6, 2026 in which we issued the First Closing Debentures in the aggregate principal amount of $4,000,000 to the Investor. Pursuant to the Purchase Agreement, we and the Investor have agreed that the Second Closing of the remaining $7,000,000 in aggregate principal amount of the Second Closing Debentures will occur on or before the first business day after the Resale Registration Statement filed by us with the SEC registering the resale of the shares of our common stock issuable upon exercise of the Warrants and no less than 10,000,000 shares of Common Stock issuable pursuant to the A&R SEPA and subject to the satisfaction or waiver of customary closing conditions set forth in the SPA. The sale of the Debentures to the Investor is expected to result in gross proceeds to us of approximately $10.5 million, after deducting a one-time due diligence and structuring fee to the Investor of $25,000 but before deducting any other fees and expenses.
In addition, in connection with the First Closing, as a commitment fee for the transactions contemplated by the Purchase Agreement, we issued to the Investor the Warrants to purchase up to 1,291,778 shares of Common Stock at an exercise price of $0.01 per share. The Warrants are immediately exercisable and will expire 60 months from the date of issuance. The Warrants include customary adjustment provisions for stock splits, combinations and similar events.
The Debentures bear interest at a rate of 5.0% per annum, subject to a potential increase to 18.0% per annum upon the occurrence of certain events of default. The Debentures mature on Maturity Date. We will repay the outstanding principal of the Debentures in monthly installments of (i) $363,636 for the First Closing Debentures and (ii) $636,364 for the Second Closing
Debentures, in each case, plus accrued and unpaid interest, in cash, beginning on the earlier of the 30th calendar day following the effectiveness of the Resale Registration Statement or June 6, 2026, with all remaining outstanding principal plus accrued and unpaid interest due in full on the Maturity Date. Any outstanding principal amount of, and accrued and unpaid interest on, the Debentures as of the Maturity Date will be due and payable on the Maturity Date.
The Debentures provide us with an optional redemption right pursuant to which we, at any time, may redeem in cash, in whole or in part, all amounts outstanding under the Debentures prior to the Maturity Date. The redemption amount shall be equal to the outstanding principal balance of the Debentures being redeemed by us, plus all accrued and unpaid interest thereon as of such redemption date.
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 continue increasing those expenditures as we transfer assembly and corporate functions to the Houston, Texas 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, 2025.
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.
Recently Adopted Accounting Pronouncements
ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 adopted ASU 2023-09 on a prospective basis. The adoption did not have a material impact on the Company's consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
ASU No. 2024-03, “Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses”
In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires additional information about certain expenses in the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 and will adopt the guidance when it becomes effective on a prospective basis.
| 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 rising costs of production in our various segments. 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.
| FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
INDEX 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 consolidated balance sheets of Envirotech Vehicles, Inc. and its Subsidiaries (the Company) as of December 31, 2025 and 2024, 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 consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, 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.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has sustained significant losses and negative cash flows from operations and has an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. Management’s plans in that regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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. 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.
Revenue Recognition
The Company’s medical supplies segment revenue is generated exclusively by sales to a related party and these transactions were material to the financial statements and involved especially challenging auditor judgement, as a result revenue recognized from sales to related parties was identified as a critical audit matter. The Company’s revenue recognized is more fully described in the Notes to the consolidated financial statements.
Auditing revenue from related-party transactions required significant judgement due to the increased risk of material misstatement associated with the determination of whether the transactions were conducted at arm’s length and whether revenue was recognized in accordance with ASC 606. In particular, evaluating whether control of the goods transferred to the related party, assessing the appropriateness of transaction prices, and determining whether collectability was probable involved complex judgements.
Our audit procedures related to revenue recognized from related-party transactions included; Evaluating management’s identification of related parties and testing the completeness and accuracy of related-party disclosures. Obtained an understanding of the contractual terms of related-party revenue arrangements and assessing the arms-length nature of the terms. Evaluating management’s conclusions regarding the satisfaction of performance obligations and the timing of revenue recognition. Testing a sample of related-party revenue transactions by inspecting contracts, invoices, shipping documents, and cash receipts.
Going Concern
As described in Note 2 to the financial statements, the Company has sustained significant losses and negative cash flows from operations and are dependent on debt and equity financing to fund operations. If the Company is unable to improve operational performance or is unable to raise sufficient funding, it may not be able to meet its current and future obligations.
Accordingly, the company has determined that these factors raise substantial doubt as to the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued.
Management’s plans to identify adequate sources of funding to provide operating capital for continued growth. Auditing the Company’s assessment and related disclosures regarding its ability to continue as a going concern required significant auditor judgment due to the high level of uncertainty surrounding the projections and assumptions related to the timing and likelihood of future cash flows, including external funding which cannot be assumed. Assessing whether the Company’s disclosures adequately reflect the uncertainty and risks associated with its going concern status also demanded considerable auditor judgement and effort.
We have served as the Company’s auditor since 2023.
April 13, 2026
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | |||||||
| Accounts receivable, net of allowance of $ and $, respectively, | ||||||||
| Receivable from related party, net of allowance of $ and $, respectively | ||||||||
| Inventory, net | ||||||||
| Inventory deposits | ||||||||
| EPA fulfillment asset | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use asset | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Other non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Deferred revenue | ||||||||
| EPA contract liability | ||||||||
| Accrued liabilities | ||||||||
| Operating lease liability - short-term | ||||||||
| Options liability, at fair value | ||||||||
| Debt - current | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Operating lease liability - long-term | ||||||||
| Debt - long-term | ||||||||
| Total liabilities | ||||||||
| Commitment and contingencies (Notes 11 and 12) | — | — | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, authorized, $ par value per share, issued and outstanding as of December 31, 2025 and 2024 | ||||||||
| Common stock, authorized, $ par value per share, and issued and outstanding as of December 31, 2025 and 2024, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ( | ) | ||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended December 31, |
||||||||
| 2025 |
2024 |
|||||||
| Sales |
$ | $ | ||||||
| Cost of sales |
||||||||
| Gross profit |
( |
) | ||||||
| Operating expenses: |
||||||||
| General and administrative |
||||||||
| Consulting |
||||||||
| Research and development |
||||||||
| Goodwill impairment |
||||||||
| Impairment of intangible assets |
||||||||
| Total operating expenses, net |
||||||||
| Loss from operations |
( |
) | ( |
) | ||||
| Other income (expense): |
||||||||
| Interest income |
||||||||
| Loss on conversions and changes in fair value of convertible notes |
( |
) | ( |
) | ||||
| Other expense |
( |
) | ( |
) | ||||
| Total other income |
( |
) | ( |
) | ||||
| Loss before income taxes |
( |
) | ( |
) | ||||
| Income tax expense |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Net loss per share to common stockholders: |
||||||||
| Basic and diluted |
$ | ( |
) | $ | ( |
) | ||
| Weighted shares used in the computation of net loss per share: |
||||||||
| Basic and diluted |
||||||||
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, 2023 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| Common stock issued for cash |
||||||||||||||||||||
| Conversion of short-term note to common stock |
||||||||||||||||||||
| Common stock issued - commitment fee (equity line of credit) |
||||||||||||||||||||
| Common stock issued as consideration for acquisition (Note 3) |
||||||||||||||||||||
| Fractional shares - reverse stock split |
||||||||||||||||||||
| Stock based compensation |
— | |||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||
| Balance, December 31, 2024 |
$ | $ | $ | ( |
) | $ | ||||||||||||||
| Common stock issued for cash |
||||||||||||||||||||
| Common stock issued from convertible notes conversion |
||||||||||||||||||||
| Fractional shares - reverse stock split |
||||||||||||||||||||
| Stock based compensation |
— | |||||||||||||||||||
| Net loss |
— | ( |
) | ( |
) | |||||||||||||||
| Balance, December 31, 2025 |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
See accompanying notes to consolidated financial statements.
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, |
||||||||
| 2025 |
2024 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
||||||||
| Provision for bad debt |
||||||||
| Stock based compensation expense |
||||||||
| Goodwill impairment |
||||||||
| Impairment of intangible assets |
— | |||||||
| Loss on conversions and changes in fair value of convertible notes |
||||||||
| Inventory write-down |
||||||||
| Write-off of inventory deposits |
||||||||
| Other |
||||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
( |
) | ||||||
| Receivable from related party |
( |
) | ||||||
| Inventory |
||||||||
| Inventory deposits |
( |
) | ( |
) | ||||
| Prepaid expenses |
( |
) | ||||||
| Other current assets |
( |
) | ||||||
| Other non-current assets |
( |
) | ||||||
| Accounts payable |
||||||||
| Accrued liabilities and deferred revenue |
||||||||
| Other non-current liabilities |
( |
) | ||||||
| Net cash used in operating activities |
( |
) | ( |
) | ||||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment, net |
( |
) | ( |
) | ||||
| Acquisition of Maddox Industries, net of cash |
( |
) | ||||||
| Net cash used in investing activities |
( |
) | ( |
) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from issuance of common stock |
||||||||
| Common stock issued - Maddox acquisition |
||||||||
| Contingent consideration payment - Maddox Industries acquisition |
( |
) | ||||||
| Proceeds from convertible notes |
||||||||
| Proceeds from related party loan |
||||||||
| Repayment of related party loan |
( |
) | ||||||
| Proceeds from the issuance of Conrod convertible note |
||||||||
| Proceeds from debt |
||||||||
| Principal repayments on debt |
( |
) | ( |
) | ||||
| Net cash provided by financing activities |
||||||||
| Net change in cash, restricted cash and cash equivalents |
( |
) | ||||||
| Cash, restricted cash and cash equivalents at the beginning of the period |
||||||||
| Cash, restricted cash and cash equivalents at the end of the period |
$ | $ | ||||||
| Supplemental cash flow disclosures: |
||||||||
| Cash paid for interest expense |
$ | $ | ||||||
| Non-cash transfer of inventory deposits to EPA fulfillment asset |
$ | $ | ||||||
| Non-cash transfer of deferred revenue to EPA contract liability |
$ | $ | ||||||
| Conversion of short-term notes to common stock |
$ | $ | ||||||
See accompanying notes to consolidated financial statements.
ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Operations
Envirotech Vehicles, Inc., including its consolidated subsidiaries ("we," "us," "our," or the "Company"), is a United States ("U.S.") distributor of zero-emission commercial vehicles and heavy capacity drones engineered for logistics, infrastructure, and precision agriculture applications worldwide. The Company's systems enable a cleaner, safer, and more efficient future for critical industrial operations. During the first quarter of 2025, the Company increased its business portfolio by adding new business operations: (1) medical supplies and (2) drones. The medical supplies segment currently consists of manufacturing medical gowns for the government of the U.S.
On August 8, 2025, the Company effected a 1-for-
2. Summary of Significant Accounting Policies
Going Concern—The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company sustained significant losses and negative cash flows from operations and is dependent on the overall improvement of its operating activities as well as debt and equity financing to fund operations. The Company incurred a net loss of $
The Company plans to grow and expand operations and seek sources of capital to pay its contractual obligations as they come due. Failure to successfully continue to grow operational revenues could harm the Company’s profitability and adversely affect the Company’s financial condition and results of operations. Management believes that its future operating strategy will provide the opportunity to continue as a going concern as long as the Company is able to obtain additional financing; however, there is no assurance this will occur. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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 and delivery of medical supplies to the customers of its related party. 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.
Net revenue recorded for the year ended December 31, 2025 was $
Net revenue recorded for the year ended December 31, 2024 was $
In applying ASC 606, the Company is required to:
| (1) | identify 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, revenue is recognized.
Other revenue for the electric vehicles segment for the years ended December 31, 2025 and December 31, 2024 were $
Accounts Receivable and Allowance for Doubtful Accounts—The accounts receivable balance relates to the Company's electric vehicles segment. The Company establishes an allowance for bad debts 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. The Company had trade accounts receivable of $
Receivable from Related Party and Allowance for Doubtful Accounts—The receivable from related party relates to the Company's medical supplies segment. The allowance for doubtful accounts is established by reviewing several factors, including historical collection experience, current aging of the customer account and financial condition of its customer. The Company had a receivable from related party of $
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 $
Inventory Deposits—Certain of our vendors require the Company to pay upfront deposits before they will commence manufacturing our vehicles, and then progress payments are required 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 of the completed inventory by the Company, and passage of title to the Company, deposits are reclassified to inventory. The Company had inventory deposits of $
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, 2025 and December 31, 2024.
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, 2025,
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
Stock-Based Compensation—The Company accounts for employee stock-based compensation in accordance with the guidance of 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 $
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 13 - 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 Company's Consolidated 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.
Recently Adopted Accounting Pronouncements
ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”
In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 adopted ASU 2023-09 on a prospective basis. The adoption had no material impact on the Company's consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
ASU No. 2024-03, “Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses”
In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires additional information about certain expenses in the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 and will adopt the guidance when it becomes effective on a prospective basis.
3. Goodwill and Intangible Assets
The Company has determined that it has three reporting units, and based on both qualitative and quantitative analysis and management’s assessment during the period ended December 31, 2025, the Company recorded a non-cash impairment charge of $
The following table presents a reconciliation of the carrying amount of goodwill for the year ended December 31, 2025.
| Goodwill: | ||||
| Total | ||||
| Goodwill as of December 31, 2023 | $ | |||
| Increase due to acquisitions | ||||
| Goodwill as of December 31, 2024 | ||||
| Impairment | ( | ) | ||
| Goodwill as of December 31, 2025 | $ |
The following table presents the carrying amount of intangible assets for the years ended December 31, 2025 and December 31, 2024:
| As of December 31, 2025 | ||||||||||||||||||||
| Weighted average amortization period (in years) | ||||||||||||||||||||
| Gross carrying amount | Accumulated amortization | Impairment charge | Net amount | |||||||||||||||||
| Intangible assets: | ||||||||||||||||||||
| Customer relationships | $ | $ | ( | ) | $ | ( | ) | $ | - | |||||||||||
| Trade names and trademarks | ( | ) | ( | ) | $ | - | ||||||||||||||
| Intangible assets, net | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||
| As of December 31, 2024 | ||||||||||||||||
| Weighted average amortization period (in years) | ||||||||||||||||
| Gross carrying amount | Accumulated amortization | Net amount | ||||||||||||||
| Intangible assets: | ||||||||||||||||
| Customer relationships | $ | $ | ( | ) | $ | |||||||||||
| Trade names and trademarks | ( | ) | $ | |||||||||||||
| Intangible assets, net | $ | $ | ( | ) | $ | |||||||||||
Amortization expense for the years ended December 31, 2025 and 2024 was $
4. Property and equipment, net
Components of property and equipment, net consist of the following as of December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | |||||||
| Furniture and fixtures | $ | $ | ||||||
| Leasehold improvements | ||||||||
| Machinery & equipment | ||||||||
| Vehicles | ||||||||
| Test/Demo vehicles | ||||||||
| Total property and equipment | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Net property and equipment | $ | $ | ||||||
Depreciation expense was $
5. Income Taxes
The cumulative estimated net operating loss (“NOL”) carry-forward is $
| December 31, | ||||||||
| 2025 | 2024 | |||||||
| Tax effected net operating loss | $ | $ | ||||||
| Deferred tax asset attributable to: | ||||||||
| Net operating loss carryover | ||||||||
| Research and development tax credit carryforward | ||||||||
| Sub-total | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset | $ | $ | ||||||
| Cumulative NOL | $ | $ | ||||||
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 are still open for examination by the Internal Revenue Service.
The following table reconciles the Federal statutory rate to the Company's effective tax rate.
| 2025 | 2024 | |||||||||||||||
| Amount | Percentage | Amount | Percentage | |||||||||||||
| U.S. Federal statutory rate | $ | % | $ | % | ||||||||||||
| Valuation allowance | ( | ) | ( | )% | ( | ) | ( | )% | ||||||||
| Total | $ | % | $ | % | ||||||||||||
6. 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 $
On June 15, 2025, the Company entered into a premium financing agreement with AFCO Insurance Premium Finance to finance its directors' and officers' insurance coverages. The $
On August 20, 2025, the Company entered into a premium financing agreement with AFCO Insurance Premium Finance to finance certain insurance coverages other than its directors' and officers' insurance coverages. The $
Convertible Note
On January 18, 2024, the Company entered into a convertible promissory note agreement ("Note") for $
The Company 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 3 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 as Level 3 under the fair 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 $
Amended and Restated Standby Equity Purchase Agreement (as Supplemented and Amended, the "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 standby equity purchase agreement, dated September 23, 2024, by and between the Company and the Investor (the “Original SEPA”).
Pursuant to the A&R SEPA, except for so long as there is a balance outstanding under the Promissory Notes (as defined below) and the Additional Promissory Notes (as defined below), the Company has the right, from time to time, until November 1, 2027, to require the Investor to purchase up to $
During 2025, the obligation under the EVTV-1 Promissory Note was partially satisfied through the conversion of the EVTV-1 Promissory Note into shares of the Company's common stock. As a result of this conversion,
During the first quarter of 2025, the obligation under the EVTV-2 Promissory Note in the principal amount of $
The Company has elected to measure the Promissory Notes at fair value. In estimating the fair value of the Promissory Notes, 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 3 under the fair value hierarchy as provided by ASC 820.
Supplemental Agreement to A&R SEPA
On February 24, 2025, the Company entered into a supplemental agreement, dated February 24, 2025 (the “Supplemental Agreement”), with the Investor, which amends and supplements the A&R SEPA to: (i) provide for the advancement by the Investor to the Company, subject to the satisfaction of certain conditions as set forth in the Supplemental Agreement, of $
The Additional Promissory Notes accrue interest on the outstanding principal balance at an annual rate equal to
The first tranche of the Additional Pre-Paid Advance was disbursed on February 25, 2025 in the principal amount of $
The second tranche of the Additional Pre-Paid Advance in the principal amount of $
The Company has elected to measure the Additional Promissory Notes at fair value. In estimating the fair value of the Additional Promissory Notes, 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 Company's common stock. The Additional Promissory Notes' fair values are classified as Level 3 under the fair value hierarchy as provided by ASC 820.
The following table depicts the future annual minimum payments of the Company's outstanding debt as of December 31, 2025:
| Amount | ||||
| 2026 | $ | |||
| Total payments | $ | |||
7. Stockholders' Equity
The Company has
The Company has
A&R SEPA
On September 23, 2024, the Company entered into the Original SEPA, which was amended and restated pursuant to the A&R SEPA on October 31, 2024. Pursuant to the A&R SEPA, except for so long as there is a balance outstanding under the Promissory Notes and the Additional Promissory Notes and subject to certain limitations and conditions set forth therein, the Company has the right, but not the obligation, to sell to the Investor, and the Investor agreed to purchase from the Company, an aggregate amount of up to $
8. Stock Warrants
The Company’s outstanding warrants as of December 31, 2025 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 | $ | |||||||||||
| Outstanding warrants expiring | $ | |||||||||||
| Outstanding warrants on December 31, 2025 | ||||||||||||
December 2020 Warrants
The warrants issued pursuant to a 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
September 2024 Warrants
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
As of December 31, 2025 and 2024, the outstanding warrants have no intrinsic value.
9. 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, 2025:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | ||||||||||
| Outstanding at December 31, 2024 | ||||||||||||
| Options Granted at $2.50 Exercise Price | $ | |||||||||||
| Options Expired at $26.50 Exercise Price | ( | ) | $ | |||||||||
| Options Expired at $21.10 Exercise Price | ( | ) | $ | |||||||||
| Options Expired at $24.40 Exercise Price | ( | ) | $ | |||||||||
| Options forfeited at $26.50 Exercise Price | ( | ) | $ | |||||||||
| Options Granted at $2.12 Exercise Price | $ | |||||||||||
| Outstanding at December 31, 2025 | ||||||||||||
| Outstanding Options at $20.00 Exercise Price | $ | |||||||||||
| Outstanding Options at $24.00 Exercise Price | $ | |||||||||||
| Outstanding Options at $90.00 Exercise Price | $ | |||||||||||
| Outstanding Options at $262.00 Exercise Price | $ | |||||||||||
| Outstanding Options at $21.00 Exercise Price | $ | |||||||||||
| Outstanding Options at $21.10 Exercise Price | $ | |||||||||||
| Outstanding Options at $26.60 Exercise Price | $ | |||||||||||
| Outstanding Options at $15.00 Exercise Price | $ | |||||||||||
| Outstanding Options at $27.50 Exercise Price | $ | |||||||||||
| Outstanding Option at $17.60 Exercise Price | $ | |||||||||||
| Outstanding Options at $14.90 Exercise Price | $ | |||||||||||
| Outstanding Options at $22.00 Exercise Price | $ | |||||||||||
| Outstanding Options at $2.50 Exercise Price | $ | |||||||||||
| Outstanding Options at $2.12 Exercise Price | $ | |||||||||||
| Outstanding at December 31, 2025 | ||||||||||||
As of December 31, 2025 stock options for
On March 10, 2025, the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors (the "Board") granted the non-employee directors and certain executives and consultants options to purchase an aggregate of
On May 21, 2025, the Compensation Committee granted a consultant options to purchase
As of December 31, 2025, the outstanding stock options had intrinsic value of $
Performance Options
On February 28, 2024, the Company issued options to an external party to purchase
The options granted during 2025 were valued using the Black-Scholes option pricing model, resulting in a weighted average fair market value of approximately $
| 2025 | ||||
| Risk-free interest rate | % | |||
| Expected volatility | % | |||
| Expected option term (years) | ||||
| Expected dividend yield | % | |||
As of December 31, 2025, the outstanding options had
Restricted Shares
In November 2023, the Company awarded
The Company recorded total stock compensation expense of $
10. 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. Two of 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 $
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 $
The Company incurred $
The Company also incurred $
During the first quarter of 2025, the Company engaged a consultant, Franklin Lim, to assist in its financial reporting and accounting process. At the end of the third quarter of 2025, the Company appointed the consultant as Vice President, Finance for the Company. The Company incurred $
All revenue earned for the year ended December 31, 2025 by the Company's medical supplies segment was from Maddox Medical Corp. ("Maddox Medical"), a company owned by Jason Maddox, President and Interim Chief Financial Officer of the Company, through a contract that Maddox Medical holds with a third party (that supplies medical gowns, among other things, to the federal government) that is fulfilled by Maddox Industries, LLC ("Maddox Industries") a wholly-owned subsidiary of the Company.
The Company also maintains a procurement contract for electric vehicles and their components and accessories with Envirotech Electric Vehicles Inc., a related party whereby one of its officers holds a significant number of shares in the Company and a significant amount of the Company's inventory deposits.
On April 1, 2025, the Company entered into a three-year sub-lease arrangement with Maddox Defense, Inc. ("Maddox Defense") (with renewal options), an entity of which Jason Maddox, the President and Interim Chief Financial Officer of the Company, is the sole stockholder, to lease a facility in Houston, Texas for its medical supplies operations. See Note 13 - Leases for additional disclosures.
11. 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 $
According to the Emry Agreement, effective on January 1, 2022, Mrs. Emry would receive an annual base salary of $
On March 28, 2023, the Company entered into a sublease with Berthaphil, Inc. ("Berthaphil") to sublease approximately
12. 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
From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business. The Company evaluates such matters on a case-by-case basis and establishes reserves when a loss is considered probable and reasonably estimable.
The Company is named as a defendant in litigation commenced in the Supreme Court of British Columbia, Canada, originally filed on December 17, 2019 by GreenPower Motor Company Inc. (“GreenPower”), along with certain related entities and individuals, including an executive officer of the Company. The claims generally allege, among other things, breach of fiduciary duty, misuse of confidential information, unfair competition, and related matters. The Company and the other named defendants have denied these allegations. In addition, certain of the defendants, including the Company, are named in a related counterclaim proceeding.
The litigation was previously scheduled for trial in 2024; however, the trial was adjourned by consent of the parties. As of December 31, 2025, no new trial date has been set, limited discovery has been conducted, and there has been no material activity in the proceedings during fiscal year 2025. The matter remains in an early procedural stage.
Lawsuit against Efraim Diveroli and Kingbird Ventures LLC
On February 5, 2026, the Company sued Efraim Diveroli and Kingbird Ventures LLC in the Houston Division of the Texas Business Court, alleging that the defendants, acting individually and in concert with one another, caused agents and representatives of theirs, including Joel E. Tasca of Greenberg Traurig, to spread lies about the Company, its principals, and its business partners in an effort to scuttle the expected merger with Azio AI Corporation. The Company asserted claims for tortious interference with contract, tortious interference with prospective economic advantage, and defamation and business disparagement as well as seeking emergency and temporary injunctive relief. On February 9, 2026, Kingbird Ventures removed the case to the United States District Court for the Southern District of Texas. An initial pretrial and scheduling conference is set on May 28, 2026. No scheduling order has been entered, nor has a trial date been set. While the Company believes that its claims have merit, even if there is an unfavorable outcome, the Company will not be subjected to a material loss.
Lawsuit against Efraim Diveroli, Kingbird Ventures LLC, VD Acquisitions, LLC, Bront Bird, and Karla Mae Capital, LLC
On December 8, 2025, the Company and Maddox Defense sued Efraim Diveroli, Kingbird Ventures LLC, VD Acquisitions, LLC, Bront Bird, and Karla Mae Capital, LLC in the Southern District of California, alleging that defendants, acting individually and in concert with one another, engaged in coercive and extortionate activities, including through abuse of the legal process, in an attempt to force the Company into unwanted transactions, including with Fenix Oro, a gold-mining enterprise. The Company asserted claims for civil extortion; RICO, 18 U.S.C. § 1962(c); fraudulent inducement; tortious interference with contract; tortious interference with prospective economic relations; abuse of process; declaratory relief; injunctive relief; civil conspiracy; and unfair competition, Bus. & Prof. Code § 17200. On January 7, 2026, Bront Bird and Karla Mae Capital were voluntarily dismissed with prejudice. No responsive pleadings have been filed. No scheduling order has been entered, nor has a trial date been set. While the Company believes that its claims have merit, even if there is an unfavorable outcome, the Company will not be subjected to a material loss.
Lawsuit from VD Acquisitions
On January 14, 2026, VD Acquisitions LLC filed suit against Jason Maddox, Elgin Tracy; Maddox Defense; Maddox Industries; the Company; Phillip Oldridge; Karla Mae Capital, LLC; and Airboss Defense Group, LLC, alleging that Maddox Defense had failed to perform under a fuel agreement. Plaintiff asserted claims for breach of contract, fraud in the inducement; fraudulent transfer; civil conspiracy; intentional interference with contract; and declaration of alter ego. The plaintiff seeks monetary damages and injunctive relief restraining the assets of Jason Maddox, Maddox Defense, Maddox Industries, and the Company. On February 10, 2025, the Court held a hearing on the plaintiff’s motion for a temporary restraining order and denied the requested relief. The Company disputes these allegations and intends to vigorously defend itself. No trial date has been set. A motion to dismiss filed by the defendants is pending.
Litigation with Former Independent Auditor
In December 2025, the Company initiated legal proceedings against its former independent registered public accounting firm, MaloneBailey LLP (“MaloneBailey”), in the United States District Court for the Central District of California (Case No. 5:25-cv-03457). The complaint alleges, among other things, breach of contract and related claims arising from MaloneBailey’s engagement to audit the Company’s financial statements for the fiscal year ended December 31, 2022. Specifically, the Company asserts that MaloneBailey failed to complete required audit procedures and did not issue an audit report in connection with the Company’s Annual Report on Form 10-K for the 2022 fiscal year, despite having been engaged to do so.
MaloneBailey previously served as the Company’s independent auditor. During 2023, the Company disclosed that MaloneBailey would not provide an audit opinion on the Company’s financial statements for the fiscal year ended December 31, 2022. As a result, the Company engaged a successor independent registered public accounting firm to complete the audit and support its financial reporting obligations.
The Company’s claims are based on alleged contractual breaches and professional failures related to MaloneBailey’s audit engagement. The Company is seeking damages and other relief deemed appropriate by the court. As of December 31, 2025, the litigation is in its early stages. The complaint was recently filed, and no substantive rulings have been issued by the court. The Company cannot predict the timing or outcome of this matter. While the Company believes that its claims have merit, even if there is an unfavorable outcome, the Company will not be subjected to a material loss. The Company has not accrued for loss contingencies in the accompanying financial statements related to this matter.
13. 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 that the term renewal options are reasonably certain to be exercised, and the Company classified such leases as operating leases in accordance with the provisions of ASC 842.
On April 1, 2025, the Company entered into a -year sub-lease arrangement with Maddox Defense (with renewal options), an entity of which Jason Maddox, the President and Interim Chief Financial Officer of the Company, is the sole stockholder, to lease a facility in Houston, Texas for its medical supplies operations. This lease is treated as an operating lease in accordance with the provisions of ASC 842. Therefore, the Company recognized operating lease liabilities with corresponding 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 to sublease approximately
On July 1, 2024, the Company entered into a month-to-month lease contract to lease a residence in Osceola, Arkansas for the purpose of housing certain of the Company's employees. The monthly lease cost is $
On August 26, 2024, the Company entered into a one-year lease contract to lease a location in Manalapan, New Jersey with the purpose of servicing the Company's New Jersey customers. The monthly lease cost is $
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, 2025 and December 31, 2024 were $
Quantitative information regarding the Company’s leases is as follows:
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Lease expenses | ||||||||
| Operating lease expenses | $ | $ | ||||||
| Short-term lease expenses | $ | $ | ||||||
| Total lease cost | $ | $ | ||||||
| Other information | ||||||||
| Cash paid for the amounts included in the measurement of lease liabilities for operating leases: | ||||||||
| Operating cash flows | $ | $ | ||||||
| Weighted-average remaining lease term (in years): | ||||||||
| Operating leases | ||||||||
| Weighted-average discount rate: | ||||||||
| Operating leases | % | % | ||||||
As of December 31, 2025, future minimum lease payments required under operating leases are as follows:
| 2026 | $ | |||
| 2027 | $ | |||
| 2028 | $ | |||
| Total payments | $ |
Segment Reporting
| Year ended December 31, 2025 | ||||||||||||||||||||
| Electric vehicles | Medical Supplies | Drones | Corporate | Total | ||||||||||||||||
| Sales, net | $ | $ | $ | $ | $ | |||||||||||||||
| Operating (Loss) Income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Interest income (expense), net | ||||||||||||||||||||
| Loss on conversions and changes in fair value of convertible notes | ( | ) | ||||||||||||||||||
| Other expense | ( | ) | ||||||||||||||||||
| Income tax expense | ||||||||||||||||||||
| Net loss | $ | ( | ) | |||||||||||||||||
15. Subsequent Events
The Company evaluates subsequent events through March 31, 2026, 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.
Debenture Financing
On March 6, 2026, the Company entered into a securities purchase agreement (the “SPA”) with the Investor, pursuant to which the Company agreed to issue and sell to the Investor, and the Investor agreed to purchase, debentures (the “Debentures”) in the aggregate principal amount of $
In addition, in connection with the First Closing, as a commitment fee for the transactions contemplated by the SPA, the Company issued to the Investor warrants to purchase up to
The Debentures bear interest at a rate of
The Debentures provide the Company with an optional redemption right pursuant to which we, at any time, may redeem in cash, in whole or in part, all amounts outstanding under the Debentures prior to the Maturity Date. The redemption amount shall be equal to the outstanding principal balance of the Debentures being redeemed by the Company, plus all accrued and unpaid interest thereon as of such redemption date.
| CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
None.
| 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, 2025 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, 2025, our internal control over financial reporting was not effective as of December 31, 2025. Deficiencies existed in the design or operation of our internal control over financial reporting that adversely affect the operation of 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 resources during such periods at the levels of prior periods, and that such changes to our procedures significantly affected our internal control over financial reporting during the year ended December 31, 2025.
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.
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the quarter ended December 31, 2025, 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).
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION
Not applicable.
| DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
MANAGEMENT
The following table sets forth information regarding our executive officers and directors at the date of this Annual Report:
| Name |
Age |
Position |
||
| Executive Officers |
||||
| Phillip W. Oldridge |
65 |
Chief Executive Officer, Chairman of the Board and Director | ||
| Jason Maddox | 47 | President and Interim Chief Financial Officer | ||
| Elgin Tracy | 41 | Chief Operating Officer | ||
| Merrick Alpert | 59 | Chief Communications Officer | ||
| Directors |
||||
| Michael Di Pietro(1)(2)(3) |
71 |
Director |
||
| Terri White Elk(1)(2)(3) |
56 |
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 since October 2012 and as Chief Executive Officer of 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
Michael Di Pietro, Director
Michael Di Pietro has served as a director since March 2021. Mr. Di Pietro was the President of Michael DiPietro, CPA, Inc., a full-service public accounting firm he founded in 1991. He retired in February 2026 and was succeeded by his sons. Mr. Di Pietro 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 was 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. He currently serves as the Chairman of NEI (Nutrition and Education Institute), an international humanitarian organization that combats malnutrition especially amongst women and children. He is also the CEO of Pathway to a Promise, an immigration services platform which is scheduled to go public later in 2026. Beginning in July of 2023, he has been serving as a Trustee and as the Chair of the Audit Committee of a major Charitable Foundation (Dan Murphy Foundation). 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.
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 Ms. White Elk. Melissa Barcellos was a member of our Audit Committee prior to her resignation effective as of our 2025 Annual Meeting of Stockholders held on February 3, 2026 (see “Recent Developments” under Part II, Item 7 "Management's Discussion and Analysis of Financial Conditions and Results of Operations" of this Annual Report for more information). 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 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
January 10, 2025: Section 16(a) filing filed late by William Miller reporting one late Form 4 reflecting one transaction.
March 14, 2025: Section 16(a) filing filed late by Melissa Barcellos, Michael Di Pietro, Terri White Elk, Jason Maddox, Phillip Oldridge, Elgin Tracy. Each filed one late Form 4 reporting one transaction, with the exception of Melissa Barcellos, Michael Di Pietro, Terri White Elk, who reported two transactions.
May 21, 2025: Section 16(a) filing filed late by Jason Maddox reporting one late Form 5 reflecting 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 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.
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, 2025 and 2024. These executive officers, determined in accordance with SEC rules, for the year ended December 31, 2025, were:
| • | Phillip W. Oldridge, our Chief Executive Officer; |
| • | Jason Maddox, our President and Interim Chief Financial Officer |
| • | Elgin Tracy, our Chief Operating Officer |
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, 2025 and 2024:
| Option | All Other | |||||||||||||||||||||
| Salary | Bonus | Awards | Compensation | Total | ||||||||||||||||||
| Name and Principal Position | Year | ($) | ($) | ($)(1) | ($) | ($) | ||||||||||||||||
| Phillip W. Oldridge(2) | 2025 | — | — | 137,600 | — | 137,600 | ||||||||||||||||
| Chief Executive Officer | 2024 | 87,500 | — | 1,070,871 | 5,250 | 1,163,621 | ||||||||||||||||
| Jason Maddox(3) | 2025 | — | — | 137,600 | 352,000 | 489,600 | ||||||||||||||||
| President and Interim Chief Financial Officer | ||||||||||||||||||||||
| Elgin Tracy(4) | 2025 | — | — | 137,600 | 352,000 | 489,600 | ||||||||||||||||
| Chief Operating Officer | ||||||||||||||||||||||
| (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, 2025. 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) | 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. |
| (3) | For Mr. Maddox, represents $352,000 earned by Shell Castle LLC, an entity owned by Mr. Maddox, for services rendered as President and Interim Chief Financial Officer of the Company. Mr. Maddox was not a named executive officer for the year ended December 31, 2024. |
| (4) | For Mr. Tracy, represents $352,000 earned by Met Consulting LLC, an entity owned by Mr. Tracy, for services rendered as Chief Operating Officer of the Company. Mr. Tracy was not a named executive officer for the year ended December 31, 2024. |
Outstanding Equity Awards at 2025 Fiscal Year-End
The following table sets forth information regarding outstanding stock options held by our Named Executive Officers as of December 31, 2025. Our Named Executive Officers did not hold any restricted stock or other equity awards as of December 31, 2025:
| Number of | Number of | ||||||||||||
| Securities | Securities | ||||||||||||
| Underlying | Underlying | ||||||||||||
| Unexercised | Unexercised | Option | |||||||||||
| Options | Options | Exercise | Option | ||||||||||
| (#) | (#) | Price | Expiration | ||||||||||
| Name | Exercisable | Unexercisable | ($) | Date | |||||||||
| Phillip W. Oldridge | 25,000 | — | 90.00 | 1/7/2031 | |||||||||
| Chief Executive Officer | 15,000 | — | 20.00 | 1/7/2032 | |||||||||
| 5,000 | — | 24.00 | 1/7/2032 | ||||||||||
| 17,426 | — | 21.00 | 7/11/2033 | ||||||||||
| 91,332 | — | 21.10 | 3/19/2034 | ||||||||||
| 100,000 | (1) | — | 2.50 | 3/10/2035 | |||||||||
| Jason Maddox | 100,000 | (1) | — | 2.50 | 3/10/2035 | ||||||||
| President and Interim Chief Financial Officer | |||||||||||||
| Elgin Tracy | 100,000 | (1) | — | 2.50 | 3/10/2035 | ||||||||
| Chief Operating Officer | |||||||||||||
| (1) | These stock options were granted on March 10, 2025 under the 2017 Plan with an exercise price equal to the closing price of the Company’s common stock on the date of grant. The options 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.
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 described 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 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, 2025, our directors who also served as employees were Mr. Oldridge, our Chief Executive Officer, and Mr. Maddox, President and Interim Chief Financial Officer. 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: $8,000
Reimbursement for all directors reasonable expenses incurred during the course of their performance.
The table below sets forth the compensation earned by each of our non-employee directors during the fiscal year December 31, 2025:
2025 Director Compensation Table
| Fees earned or | Option | Total | ||||||||||
| paid in cash | Awards | |||||||||||
| Name | ($) | ($) | ($) | |||||||||
| Terri White Elk | $ | 40,600 | $ | 27,514 | $ | 68,114 | ||||||
| Michael A. DiPietro | 43,300 | 27,514 | 70,814 | |||||||||
| Melissa Barcelos(1) | 39,000 | 27,514 | 66,514 | |||||||||
| Total | $ | 122,900 | $ | 82,542 | $ | 205,442 | ||||||
(1) On November 12, 2025, Melissa Barcellos informed the Company that she would not stand for re-election to the Board upon expiration of her current term as a Class II director effective as of the Company’s 2025 Annual Meeting of Stockholders held on February 3, 2026.
On March 10, 2025, each non-employee director received 20,000 options (grant date fair value of $27,514). Of this amount, 10,000 of these options vested immediately while the remaining 10,000 options vested on the one-year anniversary of the grant date. As of December 31, 2025, the following options were outstanding and held by each non-employee director:
| Name | Outstanding Options | |||
| Terri White Elk | 33,830 | |||
| Michael A. DiPietro | 33,830 | |||
| Melissa Barcelos | 33,830 | |||
| 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, 2025, 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 |
1,124,289(1) |
$31.50 |
1,128,693(2) |
|||
| Equity compensation plans not approved by security holders |
None |
N/A |
None |
|||
| Total |
1,124,289 |
$31.50 |
1,128,693 |
| (1) |
Represents 1,124,289 options under our 2017 Plan. |
| (2) |
Represents 1,128,693 shares available for grant under the 2017 Plan. |
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 March 25, 2026, 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 March 25, 2026. Shares of our common stock subject to options, warrants or other convertible securities that are currently exercisable or exercisable within 60 days after March 25, 2026 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) |
304,619 | 3.8 | % | |||||
| Michael A. Di Pietro(5) |
34,713 | * | ||||||
| Terri White Elk(6) |
33,830 | * | ||||||
| Jason Maddox(3) |
410,000 | 5.2 | % | |||||
| Elgin Tracy(4) |
100,000 | 1.3 | % | |||||
| All directors and executive officers as a group (6 persons) |
923,162 | 11.1 | % | |||||
| * |
Represents beneficial ownership of less than 1% |
| (1) |
Unless otherwise indicated, all shares are owned directly by the beneficial owner. |
| (2) |
Consists of (i) 2,200 shares of our Common Stock held of record by Phillip W. Oldridge, (ii) 48,661 shares owned indirectly through a family relationship and (iii) 253,759 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 25, 2026. |
| (3) |
Consists of (i) 310,000 shares of our Common Stock held of record by Jason Maddox and (ii) 100,000 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 25, 2026. |
| (4) |
Consists of 100,000 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 25, 2026. |
| (5) |
Consists of (i) 883 shares of our Common Stock held of record by Michael Di Pietro and (ii) 33,830 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 25, 2026. |
| (6) |
Consists of 33,830 shares of our Common Stock underlying options that are currently exercisable or exercisable within 60 days after March 25, 2026. |
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Director Independence
Our Board 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 determined that Mr. Di Pietro and Ms. 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 her responsibilities and that each of these directors is an “independent director” as that term is defined under the Nasdaq Rule 5605(a)(2). Prior to her resignation effective as of the 2025 Annual Meeting, the Board had determined that Ms. Barcellos was an “independent director” as that term is defined under the Nasdaq Rule 5605(a)(2).
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Other than compensation arrangements for our directors and Named Executive Officers, which are described in the sections titled “Director Compensation” and “Executive Compensation,” respectively, below we describe transactions since January 1, 2024 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 at year-end for the last two completed fiscal years; 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. |
Beginning in December 2024, the Company manufactures medical supplies under a subcontractor arrangement with Maddox Medical, a company owned by Jason Maddox, the Company’s President and Interim Chief Financial Officer, and Elgin Tracy, the Company's Chief Operating Officer. The Company earned $0 in revenue for the year ended December 31, 2024 and $5,589,945 for the year ended December 31, 2025, under this arrangement.
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. Under the ABCI Office Lease, the Company paid $60,000 during the year ended December 31, 2024, and $60,000 for the year ended December 31, 2025.
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. The Company paid 42Motorsports LTD $150,000 for the year end December 31, 2024 and $75,000 for the year ended December 31, 2025, 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 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, the Company issued 3,100,000 shares of the Company’s common stock to Mr. Maddox. As additional consideration for the acquisition, during the six-month Earnout Period, Mr. Maddox is eligible to receive up to six monthly Earnout Payments 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. On October 20, 2025, the MIPA was amended to extend the Earnout Period to June 17, 2026. Any Earnout Payment during the Extended Earnout Period is otherwise subject to the same terms and conditions set forth in the MIPA. In 2025, Earnout Payments totaling $770,000 were paid out to the Seller in conjunction with these earnout provisions.
The following table summarizes these related party transactions (other than the subcontractor arrangement with Maddox Medical) for the years ending December 31, 2025 and 2024:
| Year Ended December 31, |
||||||||
| 2025 |
2024 |
|||||||
| SRI Equipment Leases |
$ | 93,247 | $ | 93,248 | ||||
| ABCI Office leases |
60,000 | 60,000 | ||||||
| Earn-out payment |
770,000 | — | ||||||
| 42Motorsport |
75,000 | 150,000 | ||||||
| Oldridge Loan |
— | 309,000 | ||||||
| Total |
$ | 998,247 | $ | 612,248 | ||||
Policies and Procedures for Related Person Transactions
We do not currently have a formal, written policy or procedure for the review and approval of related person transactions. However, the charter for our Audit Committee provides that our Audit Committee is required to review and approve any transactions between the Company and any related parties. Each of the related person transactions described above was reviewed and either approved or ratified by our Audit Committee, and we intend to follow this practice for any future related person transactions.
| PRINCIPAL ACCOUNTING FEES AND SERVICES |
Barton CPA, PLLC served as our independent registered public accounting firm for the fiscal years ended December 31, 2025 and 2024.
Independent Registered Public Accounting Firm Fees
The following table shows the fees that were billed for audit and other services during the fiscal years ended December 31, 2025 and 2024:
| For the Fiscal Year Ended |
||||||||
| December 31, |
||||||||
| 2025 |
2024 |
|||||||
| Audit Fees(1) |
$ | 185,000 | $ | 192,000 | ||||
| Audit-Related Fees(2) |
— | — | ||||||
| Tax Fees(3) |
— | — | ||||||
| All Other Fees(4) |
— | — | ||||||
| Total |
$ | 185,000 | $ | 192,000 | ||||
| (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 2025 Annual Report, and the review of our financial statements included in 2025 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.
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
| + |
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. |
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
ENVIROTECH VEHICLES INC. |
|
|
|
|
|
| Date: April 13, 2026 |
By: |
/s/ Phillip W. Oldridge |
|
|
|
Phillip W. Oldridge Chief Executive Officer |
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Phillip W. Oldridge and Jason Maddox jointly and severally, his attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
| Signature |
Title |
Date |
||
| /s/ Phillip W. Oldridge |
Chief Executive Officer and Director |
April 13, 2026 | ||
| Phillip W. Oldridge | (Principal Executive Officer) | |||
| /s/ Jason Maddox |
President and Interim Chief Financial Officer | April 13, 2026 | ||
| Jason Maddox | ||||
| /s/ Michael Di Pietro |
Director |
April 13, 2026 | ||
| Michael Di Pietro | ||||
| /s/ Terri White Elk |
Director |
April 13, 2026 | ||
| Terri White Elk |
Exhibit 2.2
AMENDMENT TO MEMBERSHIP INTEREST PURCHASE AGREEMENT
This AMENDMENT TO MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Amendment”) is made and entered into effective as of October 20, 2025, by and among Maddox Industries, LLC, a Puerto Rico limited liability company (the “Company”), Jason Maddox, as the sole member of the Company (“Seller”) and Envirotech Vehicles, Inc., a Delaware corporation (“Buyer”), and amends that certain Membership Interest Purchase Agreement, dated October 30, 2024, by and among the Company, Seller and Buyer (the “Purchase Agreement”). Each of the Company, Seller and Buyer are referred to herein as “Party” and, collectively, the “Parties.” Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Purchase Agreement.
RECITALS
A. Pursuant to Section 9.10 of the Purchase Agreement, the Purchase Agreement may be amended by a written instrument signed by all of the Parties.
B. The Parties desire to amend certain provisions of the Purchase Agreement to reflect certain additional agreements of the Parties, as set forth below.
NOW, THEREFORE, for good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
1. Paragraph (a) of Section 2.04 (Earnout) of the Purchase Agreement is hereby amended and restated in its entirety as follows:
(a) During the period from the Closing Date through June 17, 2026 (the “Earnout Period”), Seller shall be eligible to receive monthly payments (each, an “Earnout Payment”) in an aggregate amount of up to One Million Dollars ($1,000,000) in accordance with this Section 2.04.
2. Effect of Amendment. This Amendment shall form a part of the Purchase Agreement for all purposes, and each Party thereto and hereto shall be bound hereby. From and after the execution of this Amendment by the parties hereto, each reference in the Purchase Agreement to “this Agreement,” “hereof,” “hereunder,” “herein,” “hereby” or words of like import referring to the Purchase Agreement shall mean and be a reference to the Purchase Agreement as amended by this Amendment.
3. Full Force and Effect. Except as expressly amended hereby, each term, provision, exhibit and schedule of the Purchase Agreement is hereby ratified and confirmed and remains in full force and effect. This Amendment may not be amended except by an instrument in writing signed by the Parties. Except as expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the parties to the Purchase Agreement, nor constitute a waiver of any provision of the Purchase Agreement (or an agreement to agree to any future amendment, waiver or consent).
4. Counterparts; Electronic Delivery. This Agreement may be executed, including by way of electronic signature (PDF formats included) in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[Signature page follows.]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.
| COMPANY: | ||||
| MADDOX INDUSTRIES, LLC, | ||||
| a Puerto Rico limited liability company | ||||
| By: Envirotech Vehicles, Inc., its sole member | ||||
| By: | /s/ Phillip W. Oldridge | |||
| Name: | Phillip W. Oldridge | |||
| Title: | Chief Executive Officer | |||
| SELLER: | ||||
| /s/ Jason Maddox | ||||
| Jason Maddox | ||||
| BUYER: | ||||
| ENVIROTECH VEHICLES, INC., | ||||
| a Delaware corporation | ||||
| By: | /s/ Phillip W. Oldridge | |||
| Name: | Phillip W. Oldridge | |||
| Title: | Chief Executive Officer | |||
Exhibit 10.10
SUBLEASE AGREEMENT
(Maddox Defense, Inc. to Envirotech Vehicles, Inc. and Maddox Industries, Inc.)
This Sublease Agreement (the “Sublease”) is made as of February1, 2025, by and between Maddox Defense, Inc., a California corporation with offices at 7510 Ardmore St., Houston, TX 77054 (“Sublandlord”), and Envirotech Vehicles, Inc., a Delaware corporation, and its wholly owned subsidiary Maddox Industries, Inc., collectively referred to herein as “Subtenant,” with principal business offices at1425Ohlendorf Road Osceola, Arkansas 72370.
RECITALS
WHEREAS, Sublandlord is the tenant under that certain lease agreement dated January9,2025 (the “Master Lease”), by and between SL Project Texas, LP (“Landlord”), and Sublandlord, for the lease of certain commercial real property located at 7510 Ardmore St., Houston, TX 77054 (the “Premises”), consisting of approximately 86,088 rentable square feet;
WHEREAS, Sublandlord wishes to sublease approximately fifty percent (50%) of the Premises, comprising the B-side warehouse space and the upstairs office suites (the “Subleased Premises”), to Subtenant, and Subtenant wishes to sublease the Subleased Premises from Sublandlord, subject to and on the terms set forth in this Sublease;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties hereby agree as follows:
ARTICLE 1: SUBLEASED PREMISES AND TERM
1.1 Premises. Sublandlord hereby leases and sublets to Subtenant, and Subtenant hereby accepts and leases from Sublandlord, the Subleased Premises, consisting of approximately 43,044 rentable square feet, as outlined above.
1.2 Use. Subtenant shall use the Subleased Premises for light manufacturing, warehousing, and general office use and for no other purpose without the prior written consent of Sublandlord and Landlord.
1.3 Term. The term of this Sublease (the “Term”) shall commence on February 1, 2025, a terminate on February 29, 2028, unless earlier terminated in accordance with this Sublease or the Master Lease.
ARTICLE 2: RENT AND EXPENSES
2.1 Base Rent. Subtenant shall pay to Sublandlord monthly base rent for the Subleased Premises as follows:
|
• |
February 1, 2025 – January 31, 2026:$19,696.86 per month |
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|
• |
February 1, 2026 – January 31, 2027:$19,969.36 per month |
|
|
• |
February 1, 2027 – January 31, 2028:$20,484.81 per month |
|
|
• |
February 1, 2028 – February 29, 2028:$21,304.21 (prorated for one month) |
Base Rent shall be payable in advance on the first day of each calendar month during the Term, without notice, demand, deduction, or offset.
2.2 Additional Rent–NNN. Subtenant shall also pay fifty percent (50%) of all Additional Rent items required under the Master Lease, including but not limited to:
|
• |
Real estate taxes and assessments (“Taxes”), |
|
|
• |
Property and casualty insurance premiums (“Insurance”), and |
|
|
• |
Operating expenses, repairs, maintenance, security, landscaping, and other obligations of the Tenant under the Master Lease (“Operating Expenses”). |
These costs shall be payable monthly in advance with Base Rent, or as otherwise invoiced by Sublandlord.
2.3 Utilities. Subtenant shall pay fifty percent (50%) of all utility charges incurred at the Premises, including but not limited to electricity, water, sewer, gas, trash removal, fire suppression system monitoring, pest control, internet (if shared), and other buildingservices. If utilities are separately metered, Subtenant shall pay its actual usage.
2.4 Security Deposit. No additional security deposit is required beyond Sublandlord’s security deposit under the Master Lease. However, Subtenant shall reimburse Sublandlord for any portion of Sublandlord’s security deposit that is withheld by Landlord due to Subtenant’s actions or omissions.
ARTICLE 3: OPERATION AND MAINTENANCE
3.1 Independent Control. Sublandlord and Subtenant shall each retain exclusive operational control over their respective leased spaces and may implement physical separation, access control systems, and signage subject to Landlord’s approval.
3.2 Maintenance Obligations. Subtenant shall, at its sole cost and expense, maintain and repair the Subleased Premises in accordance with the Master Lease, including HVAC, lighting, fire suppression systems, janitorial services, and any improvements it installs.
3.3 Compliance. Subtenant shall comply with all applicable laws, regulations, and the provisions of the Master Lease, including building rules and regulations.
ARTICLE 4: INSURANCE AND INDEMNITY
4.1 Insurance. Subtenant shall procure and maintain throughout the Term all insurance required to be maintained by Sublandlord under the Master Lease, including general liability, workers’ compensation, and property damage insurance. Subtenant shall name both Sublandlord and Landlord as additional insureds.
4.2 Indemnity. Subtenant shall indemnify, defend, and hold harmless Sublandlord and Landlord from any and all claims, liabilities, losses, damages, or costs arising out of Subtenant’s occupancy and use of the Subleased Premises. Likewise, Sublandlord shall indemnify Subtenant from claims resulting from Sublandlord’s use of its retained portion of the Premises.
ARTICLE 5: ASSIGNMENT, SUBLETTING, AND DEFAULT
5.1 Assignment and Subletting. Subtenant may not assign this Sublease or sublet the Subleased Premises without the prior written consent of Sublandlord and Landlord.
5.2 Default. Subtenant’s failure to comply with any material term of this Sublease or the Master Lease shall constitute an Event of Default. Upon default, Sublandlord shall have all remedies available under this Sublease, the Master Lease, or applicable law, including termination and eviction.
ARTICLE 6: TERMINATION AND GENERAL PROVISIONS
6.1 Termination of Master Lease. This Sublease shall terminate concurrently with any termination or expiration of the Master Lease, whether voluntarily or involuntarily.
6.2 Notices. All notices or communications required or permitted to be given under this Sublease shall be delivered in accordance with the notice provisions of the Master Lease.
6.3 Entire Agreement. This Sublease constitutes the entire agreement between the parties and supersedes all prior understandings, oral or written, with respect to the Subleased Premises.
6.4 Governing Law. This Sublease shall be governed by, and construed in accordance with, the laws of the State of Texas.
EXECUTION
IN WITNESS WHEREOF, the parties have executed this Sublease Agreement as of the Effective Date set forth above.
SUBLANDLORD
Maddox Defense, Inc.
|
By: |
 |
Name:Jason Maddox
Title:CEO
SUBTENANT
Envirotech Vehicles, Inc.
|
By: |
 |
Name:Elgin Tracy
Title:COO
Exhibit 10.11
Maddox Defense
Manufacturing Agreement
This Manufacturing Agreement (the "Agreement") is entered into on this9thday of September, 2024, by and between Maddox Defense ("Prime Contractor"), a company organized and existing under the laws of California, and Maddox Industries ("Subcontractor"), a company organized and existing under the common laws of Puerto Rico.
Recitals
Whereas Maddox Defense has entered into a contract with the U.S. Department of Health and Human Services (HHS) through Airboss Defense Group for the manufacturing and supply of Level 2 isolation gowns for the Strategic National Stockpile (the "HHS Contract");
Whereas Maddox Defense desires to engage Maddox Industries as a subcontractor to manufacture and supply these isolation gowns in accordance with HHS specifications;
Now, therefore, in consideration of the mutual covenants and conditions herein, the parties agree as follows:
1. Scope of Work
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• |
Maddox Industries shall manufacture Level 2 isolation gowns that meet HHS and |
|
• |
Maddox Defense specifications and criteria. |
|
• |
All production, inspection, and packaging processes shall comply with FDA and HHS requirements and pass inspection by Maddox Defense and/or designated representatives. |
|
• |
Gown production shall occur in a physically sectioned area with dedicated labor, and must meet FDA standards. |
|
• |
All gowns must be fully bagged, boxed, and labeled in accordance with Maddox Defense requirements. |
2. Compensation
|
• |
The parties agree to acost-pluscompensation structure. |
|
• |
Maddox Defense will reimburse Maddox Industries for the true labor cost associated with gown production, plus a profit margin of $0.02 to $0.035 per gown. |
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• |
All labor invoices shall be based on actual payroll records, and gowns shall be deemed delivered for accounting purposes once Maddox Industries runs and closes the applicable payroll period. |
3. Delivery and Schedule
|
• |
The scope of this contract covers production of 35 million gownsover a 30-month period. |
|
• |
Production will scale gradually from December 2024 to July 2025 to allow for labor ramp-up and training. |
|
• |
Timely and progressive delivery as agreed monthly is critical. Delays may trigger remedies under Section 6. |
4. Quality Control and Inspection
|
• |
All gowns must meet Maddox Defense and HHS specifications. |
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Maddox Defense reserves the right to inspect the facilities, review quality control systems, and reject non-compliant gowns. |
5. Facilities and Utilities
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• |
Maddox Industries shall provide its own production facilities and utilities, unless production occurs in Maddox Defense facilities under a separate facility-sharing agreement. |
6. Liquidated Damages
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• |
If Maddox Industries fails to deliver gowns timely or fails quality standards, Maddox Defense may withhold payment or assess penalties to cover losses incurred under the HHS Contract. |
7. Payment Terms
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• |
Payment terms shall be Net 60 from the date of each invoice, unless otherwise modified month to month by written agreement. |
8. Term and Termination
|
• |
This Agreement remains in effect until all gowns are delivered and accepted, or until terminated by either party with 30 days’ written notice. |
|
• |
Either party may terminate immediately upon material breach. |
9. Indemnification
|
• |
Maddox Industries agrees to indemnify and hold harmless Maddox Defense against claims, liabilities, or damages resulting from non-compliance or negligence. |
10. Governing Law
|
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This Agreement shall be governed by and construed under the laws of the State of Texas. |
11. Entire Agreement
|
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This Agreement represents the entire agreement between the parties and supersedes any prior discussions or agreements. |
|
• |
See exhibits to follow for productions schedules. |
IN WITNESS WHEREOF, the parties hereto have executed this Manufacturing Agreement as of the date first written above.
Exhibit 10.12
Exhibit 21.1
SUBSIDIARIES OF THE REGISTRANT
All subsidiaries below are wholly owned, either directly or indirectly, by Envirotech Vehicles, Inc., unless otherwise stated herein.
| Name of Subsidiary |
State or Other Jurisdiction of Incorporation or Organization |
|
| ADOMANI California, Inc. | California | |
| ADOMANI California, Inc. | Arkansas | |
| ADOMANI California, Inc. | Florida | |
| ADOMANI ZEV Sales, Inc. | California | |
| ADOMANI ZEV Sales, Inc. | Arkansas | |
| ZEV Resources, Inc. | California | |
| Zero Emission Truck and Bus Sales of Arizona Inc. | Arizona | |
| Envirotech Drive Systems, Inc. | Delaware | |
| Envirotech Drive Systems Incorporated | Wyoming | |
| Envirotech Drive Systems Incorporated | California | |
| Envirotech Drive Systems Incorporated | Arkansas | |
| Progreens Battery Labs, Inc. | Arkansas | |
| 1425 Ohlendorf Road, LLC | Arkansas | |
| Maddox Industries, LLC | Puerto Rico | |
| AG Drone Inc. (52% equity interest) | Wyoming | |
| Envirotech Vehicles, Inc. | Philippines |
Certified Public Accountants and Advisors
A PCAOB Registered Firm
713-489-5635 bartoncpafirm.com Cypress, Texas
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-224152) and Form S-1 (File Nos. 333-282961 and 333-287531) of Envirotech Vehicles, Inc. of our report dated April 13, 2026, with respect to our audits of the consolidated financial statements of Envirotech Vehicles, Inc. and Subsidiaries as of December 31, 2025 and 2024, and for the years then ended, included in this Annual Report on Form 10-K for the year ended December 31, 2025. We also consent to the reference to us under the heading “Experts” in such Registration Statements, as needed.
Very truly yours,
BARTON CPA PLLC
Cypress, Texas
April 13, 2026
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Phillip W. Oldridge, certify that:
|
1. |
I have reviewed this Annual Report on Form 10-K of Envirotech Vehicles, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
|
Date: April 13, 2026 |
/s/ Phillip W. Oldridge |
|
|
Phillip W. Oldridge Chief Executive Officer and Chairman of the Board (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jason Maddox, certify that:
|
1. |
I have reviewed this Annual Report on Form 10-K of Envirotech Vehicles, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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Date: April 13, 2026 |
By: |
/s/ Jason Maddox |
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Jason Maddox President and Interim Chief Financial Officer |
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Exhibit 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Each of the undersigned hereby certifies, in accordance with 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his respective capacity as an officer of Envirotech Vehicles, Inc., that the Annual Report on Form 10-K of Envirotech Vehicles, Inc. for the year ended December 31, 2025 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Envirotech Vehicles, Inc.
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Date: April 13, 2026 |
By: |
/s/ Phillip W. Oldridge |
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Phillip W. Oldridge Chief Executive Officer and Chairman of the Board (Principal Executive Officer) |
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| Date: April 13, 2026 |
By: |
/s/ Jason Maddox |
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Jason Maddox President and Interim Chief Financial Officer (Principal Financial and Accounting Officer) |
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