8-K
PHOENIX MOTOR INC. (PEVM)
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
November 14, 2022
Date of Report (Date of earliest event reported)
Phoenix Motor Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-41414 | 85-4319789 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| 1500 Lakeview Loop<br><br> <br>Anaheim, CA | 92807 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(909) 987-0815
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act |
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| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
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| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.0004 per share | PEV | NASDAQ Capital Market |
| x | Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |
| --- | --- | |
| ¨ | 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. | |
| --- | --- | |
| Item 2.02 | Results of Operations and Financial Condition. | |
| --- | --- |
On November 14, 2022, Phoenix Motor Inc., a Delaware corporation (the “Company”), issued a press release announcing the Company’s financial results for the quarter ended September 30, 2022. A copy of this press release is furnished as Exhibit 99.1 and is incorporated herein by reference.
In addition, the script used for the earnings release conference call on November 14, 2022, is attached to this Form 8-K as Exhibit 99.2.
The information in this Current Report on Form 8-K (including Exhibit 99.1 and Exhibit 99.2 attached hereto) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing by the Company, under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated November 14, 2022 issued by Phoenix Motor Inc. |
| 99.2 | Earnings release conference call transcript dated November 14, 2022 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PHOENIX MOTOR INC. | ||
|---|---|---|
| Dated: November 16, 2022 | ||
| By: | /s/ Chris Wang | |
| Name: | Chris Wang | |
| Title: | Chief Financial Officer |
Exhibit 99.1
Phoenix MotorInc. Announces Third Quarter 2022 Financial and Operational Results
And
Provides BusinessUpdate Detailing Future Growth Plans
Anaheim, California(November 14, 2022) – Phoenix Motor Inc. (Nasdaq: PEV) (“Company” or “Phoenix”), a leader in manufacturing of all-electric, medium-duty vehicles, today announced its financial results for the third quarter ended September 30, 2022.
Financial HighlightsThird Quarter
| · | Revenue<br> totaled $409,000 for the third quarter, a decrease of approximately 26% compared to the prior-year<br> period of $554,000 principally due to software-related issues and battery supply constraints<br> that resulted in a delay in delivery of electric vehicles (“EVs”) from the third<br> quarter into the fourth quarter of 2022 and the first quarter of 2023. |
|---|---|
| · | Gross<br> profit increased to $121,000 in the third quarter of 2022, compared to a loss of $49,000<br> in the third quarter of 2021, primarily driven by a shift in the product mix to higher gross<br> margin products, particularly lithium ion powered electric forklifts. |
| --- | --- |
| · | Net<br> losses increased to $3.9 million in the third quarter of 2022, compared to a loss of $2.2<br> million in the prior-year period. |
| --- | --- |
| · | Total<br> assets were $20.5 million as of September 30, 2022. |
| --- | --- |
| · | Cash<br> and cash equivalents were $1.3 million as of September 30, 2022. |
| --- | --- |
Financial HighlightsNine Months Ending September 30
| · | Revenues<br> for the nine months ended September 30, 2022 were $2.6 million, an increase of 53.5% compared<br> to the prior-year period, primarily driven by the increase in sales of electric forklifts. |
|---|---|
| · | Gross<br> profit increased to $566,000 for the most recent nine-month period, compared to a loss of<br> $156,000 for the prior-year period, due to a shift in product mix, particularly attributable<br> to the 20.1% gross margin of electric forklifts products. |
| --- | --- |
| · | Net<br> losses increased to $8.1 million during the nine-month period ending September 30, 2022,<br> compared to $6.4 million in the prior-year period. |
| --- | --- |
Recent Highlights
| · | Phoenix<br> just received a nomination letter from CATL (Contemporary Amperex Technology Co., Limited),<br> the world’s largest EV battery manufacturer, forming a strategic partnership and outlining<br> the terms for the procurement of K-Pack batteries and related products for Phoenix Motorcars’<br> product lines. |
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| · | In<br> October, the Company and Pegasus Specialty Vehicles announced the formation of a strategic<br> partnership to jointly develop Class A electric school buses, targeted for the North American<br> market. |
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| · | Also<br> in October, the Company engaged IAT to advance engineering and design work for Phoenix’s<br> Gen 4 EVs, to maximize cost efficiencies, speed time to market and ensure the highest quality<br> standards. |
|---|
“We are excited to have received the Board’s approval for our Gen 4 Development Program,” Phoenix Motorcars CEO, Dr. Lance Zhou commented. “We are well underway in the design, development and engineering processes and have already built a strong order book for our Gen 4 vehicles.”
“We expect our Gen 4 development to be a game changer for Phoenix. The project will demonstrate our “asset light” business model, which will allow for lower costs and shorter time to market than before. We will have standardized design and production processes, which combined with the proven project management experience of our executive leadership team, will enable us to ramp production quickly. We look forward to providing regular updates regarding our strategic plans, important milestones and our progress in the coming quarters for both our Gen 4 and our Gen 5 ground-up chassis vehicles.”
Gen 4 is the “Bridge”to Gen 5
In 2023, Phoenix will introduce its fourth generation “Gen 4” vehicles to the medium-duty EV market. The development of Gen 4 will provide a natural a bridge between our current Gen 3 vehicles and the introduction of our Gen 5 ground-up chassis design. The Gen 4 development will provide several advantages versus our current Gen 3 models, specifically:
| · | Asset Light Business Model: Gen 4 will mark the deployment of the Company’s “asset<br> light” business model both upstream and downstream. Upstream, Phoenix will leverage<br> its strategic partnerships with R&D partners and engineering suppliers such as IAT, Aulton<br> and Fangsheng. Downstream, Phoenix is partnering with customers and third parties to develop<br> manufacturing and assembly facilities. |
|---|---|
| · | Scale: The Company anticipates efficient scaling of its production, utilizing customer and third-party<br> assembly facilities. Phoenix is reconfiguring its current Anaheim manufacturing facility<br> to increase production capacity and to utilize it as a showcase facility and training center<br> to ensure its processes and procedures are standardized across all partner-operated locations. |
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| · | Reduced Costs: Gen 4 is expected to achieve lower production and materials costs compared to<br> Gen 3 vehicles, benefiting from standardization of processes and procedures, as well as components<br> and sub-assemblies—a benefit which will carry over to Gen 5 production as well. |
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| · | Battery Supply: The Company expects it will benefit from its recent partnership with CATL for<br> long-term strategic supply of K-Packs and related products for our Gen 4 electric vehicles. |
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Gen 5 Will Offer Chassis IndependenceBeginning in 2024
Design, development and production planning for Phoenix’s Gen 5 vehicles will leverage on Phoenix’s experience and benefit from the development of its Gen 4 line of vehicles. Unique highlights of Gen 5 are expected to include:
| · | Ground-up Chassis Design: The Company will be producing its own ‘ground-up’ chassis<br> in 2024. |
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| · | Chassis Independence: The development of Gen 5 will provide Phoenix with chassis independence,<br> overcoming one of the major impediments facing businesses such as ours. |
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| · | Lower Cost: Phoenix should be able to produce its chassis for far less than the cost it is<br> currently paying to acquire each chassis. |
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| · | Increased Design Flexibility and Customer Satisfaction: Phoenix’s ground up chassis will<br> enable it to customize vehicle designs to meet specialized needs, while maintaining standardized<br> processes and procedures, increasing the Company’s capacity to accommodate customer<br> requirements and meet the evolving needs of the transforming electric vehicle market. |
| --- | --- |
EdisonFuture: The Platform for Growthin 2025 and Beyond
Phoenix continues to make progress in the design and development of its EdisonFuture line of light-duty electric vehicles. This product line is anticipated to provide the market with both consumer and commercial pick-up trucks, SUVs and delivery vans. The development of EdisonFuture will, much like Gen 5, benefit greatly from the development of prior generations, which will further lower costs and speed time-to-market.
Conference CallInformation
Phoenix Motor will host a conference call today at 5:00 PM ET to discuss the results. Interested investors and other parties may access a live webcast of the conference call which will be available on the Events and Presentations page on the Investor Relations section of Phoenix’s website at https://ir.phoenixmotorcars.com/events-and-presentations/default.aspx. The call can also be accessed live via telephone by dialing (888) 660-6373 or for international callers (929) 203-1975 and referencing Phoenix Motorcars.
An archive of the webcast will be available after the call on the Events and Presentations page on the Investor Relations section of Phoenix’s website, along with Phoenix’s earnings press release.
About Phoenix Motor Inc.
Phoenix Motor Inc., a pioneer in the electric vehicle (“EV”) industry, designs, builds, and integrates electric drive systems and light and medium duty EVs and sells electric forklifts and electric vehicle chargers for the commercial and residential markets. Phoenix operates two primary brands, “Phoenix Motorcars”, which is focused on commercial products including medium duty EVs (shuttle buses, school buses, municipal transit vehicles and delivery trucks, among others), electric vehicle chargers and electric forklifts, and “EdisonFuture”, which intends to offer light-duty EVs. Phoenix endeavors to be a leading designer, developer and manufacturer of electric vehicles and electric vehicle technologies. For more information, please visit: www.phoenixmotorcars.com and www.edisonfuture.com.
Forward-LookingStatement
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. No assurance can be given that the net proceeds of the Offering will be used as indicated. Forward-looking statements are no guarantee of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company’s expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company’s ability to convert concept trucks and vans into production and sales; the Company’s product development timeline and expected start of production; development of competitive trucks and vans manufactured and sold by the Company’s competitors and major industry vehicle companies; the Company’s ability to scale in a cost-effective manner; the Company’s future capital requirements and sources and uses of cash; the Company’s ability to obtain funding for its future operations; the Company’s financial and business performance; changes in the Company’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; the implementation, market acceptance and success of its business model; expectations regarding the Company’s ability to obtain and maintain intellectual property protection and not infringe on the rights of others; and other risks contained in the Offering prospectus and reports filed by the Company with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company’s filings with the SEC, including those set forth in the Risk Factors section of the Company's registration statement and Offering prospectus, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.
Investor Relations Contacts:
Mark Hastings, SVP & Head of Investor Relations
Sioban Hickie, ICR Inc.
PhoenixIR@icrinc.com
Phoenix Motor,Inc.
ConsolidatedStatement of Operations
For the three and nine months ended September 30, 2022 and September 30, 2021
(Dollars in thousands,except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br><br> 2022 | September 30,<br><br> 2021 | September 30,<br><br> 2022 | September 30,<br><br> 2021 | |||||||||
| Net sales | $ | 409 | $ | 554 | $ | 2,579 | $ | 1,680 | ||||
| Cost of revenues | 288 | 603 | 2,013 | 1,836 | ||||||||
| Gross profit (loss) | 121 | (49 | ) | 566 | (156 | ) | ||||||
| Operating expenses: | ||||||||||||
| Selling, general and administrative | 3,847 | 2,117 | 9,160 | 6,216 | ||||||||
| Operating loss | (3,726 | ) | (2,166 | ) | (8,594 | ) | (6,372 | ) | ||||
| Other income (expense): | ||||||||||||
| Interest expense, net | (2 | ) | (4 | ) | (6 | ) | (2 | ) | ||||
| Others | (202 | ) | 1 | 437 | 1 | |||||||
| Total other (expense) income, net | (204 | ) | (3 | ) | 431 | (1 | ) | |||||
| Loss before income taxes | (3,930 | ) | (2,169 | ) | (8,163 | ) | (6,373 | ) | ||||
| Income tax provision | - | - | (14 | ) | (3 | ) | ||||||
| Net loss | $ | (3,930 | ) | $ | (2,169 | ) | $ | (8,177 | ) | $ | (6,376 | ) |
| Net loss per share of common stock: | ||||||||||||
| Basic and Diluted | $ | (0.20 | ) | $ | (0.12 | ) | $ | (0.44 | ) | (0.36 | ) | |
| Weighted average shares outstanding | 19,664,273 | 17,500,000 | 18,390,891 | 17,500,000 |
Phoenix Motor,Inc.
ConsolidatedBalance Sheet
As of September 30, 2022, and December 31, 2021
| December 31,<br><br> 2021 | |||||
|---|---|---|---|---|---|
| (Unaudited) | |||||
| Assets | |||||
| Current assets | |||||
| Cash and cash equivalents | 1,317 | $ | 2,683 | ||
| Accounts receivable, net | 1,422 | 1,201 | |||
| Inventories | 5,682 | 2,225 | |||
| Prepaid expenses and other current assets | 3,464 | 528 | |||
| Amount due from related party | 103 | - | |||
| Total current assets | 11,988 | 6,637 | |||
| Restricted cash, non current | 250 | - | |||
| Property and equipment, net | 1,942 | 2,205 | |||
| Security deposits | 209 | - | |||
| Intangible assets, net | 1,859 | 2,323 | |||
| Goodwill | 4,271 | 4,271 | |||
| Total assets | 20,519 | $ | 15,436 | ||
| Liabilities | |||||
| Current liabilities | |||||
| Accounts payable | 1,245 | $ | 1,786 | ||
| Accrued liabilities | 594 | 779 | |||
| Advance from customers | 1,124 | 803 | |||
| Deferred revenue | 477 | 714 | |||
| Warranty reserve | 325 | 360 | |||
| Long-term borrowing, current portion | 25 | 10 | |||
| Total current liabilities | 3,790 | 4,452 | |||
| Long-term borrowings | 148 | 756 | |||
| Total liabilities | 3,938 | 5,208 | |||
| Commitments and contingencies (Note 9) | |||||
| Equity | |||||
| Common stocks, par 0.0004, 450,000,000 shares authorized, 20,185,625 and 17,500,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively* | 8 | 7 | |||
| Subscription receivable | - | (7 | ) | ||
| Additional paid in capital | 40,607 | 26,085 | |||
| Accumulated deficit | (24,034 | ) | (15,857 | ) | |
| Total equity | 16,581 | 10,228 | |||
| Total liabilities and equity | 20,519 | $ | 15,436 |
All values are in US Dollars.
Phoenix Motor,Inc.
ConsolidatedStatement of Cash Flows
For the nine months ended September 30, 2022 and September 30, 2021
| Nine months ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | |||||
| Cash flows from operating activities: | ||||||
| Net loss | $ | (8,177 | ) | (6,376 | ) | |
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||
| Depreciation and amortization | 1,305 | 1,384 | ||||
| Gain on disposal of fixed assets | (54 | ) | - | |||
| Forgiveness of PPP loan | (586 | ) | - | |||
| Stock-based compensation expenses | 947 | 49 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | (221 | ) | 20 | |||
| Inventories | (3,532 | ) | (600 | ) | ||
| Prepaid expenses and other assets | (3,145 | ) | (3,586 | ) | ||
| Accounts receivable, related party | (103 | ) | - | |||
| Accounts payable | (541 | ) | (399 | ) | ||
| Accrued liabilities | (185 | ) | 26 | |||
| Warranty reserve | (35 | ) | (115 | ) | ||
| Deferred revenue | (237 | ) | 87 | |||
| Advance from customer | 321 | (102 | ) | |||
| Net cash used in operating activities | $ | (14,243 | ) | (9,612 | ) | |
| Cash flows from investing activities: | ||||||
| Proceeds from disposal of property and equipment | $ | 273 | - | |||
| Purchase of property and equipment | (722 | ) | (680 | ) | ||
| Net cash used in investing activities | $ | (449 | ) | (680 | ) | |
| Cash flows from financing activities: | ||||||
| Proceeds from borrowings | $ | - | 586 | |||
| Proceeds from a related party | 1,676 | - | ||||
| Repayment to a related party | (1,676 | ) | - | |||
| Repayment of borrowings | (7 | ) | (17 | ) | ||
| Proceeds from IPO | 13,438 | - | ||||
| Proceeds from capital injection by a shareholder | 7 | - | ||||
| Proceeds from exercise of employee stock options | 138 | |||||
| Net cash generated from financing activities | $ | 13,576 | 569 | |||
| Decreasein cash, cash equivalents and restricted cash | (1,116 | ) | (9,723 | ) | ||
| Cash, cash equivalents and restricted cash at beginning of the period | 2,683 | 15,699 | ||||
| Cash, cash equivalents and restricted cash at end of the period | 1,567 | 5,976 | ||||
| Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets | ||||||
| Cash and cash equivalents | $ | 1,317 | 5,976 | |||
| Restricted cash | 250 | - | ||||
| Total cash, cash equivalents, and restricted cash | $ | 1,567 | 5,976 | |||
| Supplemental cash flow information: | ||||||
| Interest paid | 6 | 7 | ||||
| Income tax paid | 7 | 3 | ||||
| Non-cash investing activities: | ||||||
| Inventories transferred to property and equipment | 75 | - |
Exhibit 99.2
Script:3Q 2022 Earnings Call
November14, 2022
Operator
Welcome to the third quarter 2022 Phoenix Motors Inc. earnings conference call. My name is Emma and I'll be your operator for today's call. As a reminder, this call is being recorded and all participants are in a listen-only mode. All questions can be directed after the call to PhoenixIR@icrinc.com.
It is now my pleasure to introduce Mark Hastings, Senior Vice President of Corporate Development and Strategy and Head of Investor Relations.
Mark Hastings,SVP & Head of IR, Phoenix Motorcars
Thank you, Emma, and welcome everyone to our third quarter earnings call.
I am joined on the call today by Dr. Lance Zhou, our Chief Executive Officer, and Chris Wang, our Chief Financial Officer.
By way of brief introduction to the company, Phoenix is headquartered in Anaheim, California. Our goal is to be a leader in sustainable and zero-emission medium-duty transportation, with a range of products available to our customers, including shuttle buses, delivery vans, school buses and work trucks.
We market our medium duty vehicles through our brand, Phoenix Motorcars. In addition, we also offer a full range of electric forklifts, as well as EV chargers, we offer telematics solutions for fleets, EV infrastructure solutions and vehicle maintenance and service programs.
We also are currently developing a light-duty consumer and commercial vehicle line which will offer pickup trucks, SUVs and delivery vans, that will be marketed under our EdisonFuture brand.
We are not a pre-revenue company like many others in our sector. We were founded in 2003, delivered our first trucks nearly a decade ago and our vehicles have logged nearly four million zero-emission miles on the road. As a result, we have a stable and loyal customer base, and we provide a simple one-stop-shopping solution for customers by offering vehicles, charging and telematics solutions, and complete service support.
With that I will turn the call over to Dr. Lance Zhou, our Chief Executive Officer, who will say a few words about our tremendous growth outlook and his plans for leading our company through the next phase of value creation.
DrLance Zhou, Chief Executive Officer, Phoenix Motorcars
Thank you, Mark, and thank you all for joining us today.
I am very excited to report that the Phoenix executive team has received the Board of Directors’ approval for our Gen 4 Development program, which Mark will review with you in detail shortly. We are well underway in the design, development and engineering functions and have already built a strong order book for our Gen 4 vehicles.
We expect our Gen 4 development to be a game changer for Phoenix. The project will demonstrate our “asset light” business model, which will allow for lower costs and shorter time to market than before. We have developed standardized design and production processes, which combined with the proven project management experience of our executive leadership team, will enable us to ramp production quickly.
We look forward to providing more detailed information regarding our strategic plans, important milestones and our progress in the coming quarters for both our Gen 4 vehicles and our Gen 5 ground-up chassis vehicles, which will follow shortly behind Gen 4.
I will now turn the call back over to Mark.
MarkHastings, SVP & Head of IR, Phoenix Motorcars
Thank you, Lance.
For those of you who don’t know Lance yet, he has a long history of success in the full vehicle development arena…he has taken 3 different vehicles all the way from concept, through design, production and into sales. In addition, Dr. Lance, as we affectionately refer to him, has a particular expertise in mass production, which is one of the most important of the many attributes he brings to our company.
With that I will turn the call over to Chris Wang, our Chief Financial Officer, who will discuss our third quarter financial results; after which we will take some time to provide additional information about our products and update you on our current growth and development plans.
Chris.
ChrisWang, Chief Financial Officer
Thank you, Mark.
Turning to the quarter, for the three months ended September 30, 2022, our revenues were $409 thousand, compared to $654 thousand for the same period in 2021. This represented a decrease in revenue of approximately 26%, principally due to software-related issues and battery supply constraints that resulted in a delay in delivery of about 12 EVs from the third quarter of this year into the fourth quarter of this year and first quarter of next year.
For the first nine months of 2022, our revenues were $2.6 million, compared to $1.7 million in 2021. The increase of approximately 53% in revenues was primarily driven by an increase in the sales of forklifts.
For the third quarter of 2022, our cost of revenues was $288 thousand, compared to $603 thousand in the year-ago quarter. Cost of revenues decreased by $320 thousand, or approximately 52%, primarily driven by a change in product mix in the quarter to include more forklift sales, which have lower bill of materials and labor costs.
For the nine months ended September 30, 2022 our cost of revenues was $2.0 million, up from $1.8 million. The approximate 10% increase was primarily driven by of the inclusion of electric forklift costs which was launched in Q4 of 2021.
Our gross margin comparisons are as follows: for this analysis, Gross Profit is defined as revenues minus cost of revenues and the Gross Margin percentage is Gross Profit divided by revenues.
For the third quarter, our gross margin improved significantly to 29.6% from a negative 8.8% in the year-ago quarter, driven by a shift in product mix to higher gross margin products, particularly electric forklifts and others.
For the nine-month period ending September 30, 2022, our gross margin also improved to 21.9% from negative 9.3%, supported by the 20.1% gross margin of electric forklifts products.
Operating expenses, consisting of selling, general, administrative expenses, were $3.8 million in the most recent quarter compared with $2.1 million a year ago. The increase in operating expenses was mainly due to increases in payroll and research and development expenses.
For the first nine months of 2022, our operating expenses were $9.2 million, up from $6.2 million in 2021. The increase in operating expenses was mainly due to the increase in salaries and wages, professional service fee and insurance expenses, largely associated with becoming a public company this year.
Our other income for the first nine months of 2022 were $0.4 million, primarily due to recognition of a forgiven PPP loan and refund of employee retention credits from the IRS.
As a result of the above factors, the net loss for the third quarter of 2022 was $3.9 million, compared to a loss of $2.2 million in the prior-year period.
The net loss for the first nine months of 2022 was $8.2 million, compared to a loss of $6.4 million in the prior-year period.
We ended the third quarter with $1.3 million in cash and had total assets of $20.5 million.
With that, I will now turn the call back over to Mark, who will provide a high-level overview of our strategic plans.
Mark Hastings,SVP & Head of IR, Phoenix Motorcars
Thank you, Chris.
For those new to our story, to recap again what Phoenix does, in addition to offering medium-duty electric vehicles, we also provide a full offering of electric forklifts and EV chargers. In addition, we offer telematics solutions for electric vehicle fleets, EV infrastructure solutions and maintenance service programs.
Our legacy, all-electric, medium duty, commercial vehicle line is marketed under the Phoenix Motorcars brand and includes school and shuttle buses, utility and service trucks and box trucks. These are sold as complete vehicles, as well as in electrified kit form for our customers to add to their trucks.
Phoenix Motorcars’ customers are sourced from a wide range of industries, with applications such as airport parking, hotels, campuses, cities, municipalities, ports, micro-transit services and dial-a-ride applications. We serve over 50 commercial fleet customers, to whom we have deployed well over 100 shuttle buses and trucks, with a combined distance traveled of nearly 4 million miles.
Today we are manufacturing and selling our Gen 3 vehicles, but we are excited to share that we will be bringing our Gen 4 vehicles to market in 2023. We will provide even more specifics in the quarters to come, but Gen 4 will achieve of several exciting benefits and milestones:
First and foremost, Phoenix is dedicated to pursuing our asset light business model as a corporate strategy as we grow and expand in the coming years. The development of Gen 4 will see the deployment of this strategy for the first time.
Our asset light model extends both upstream and downstream in our Gen 4 development. Upstream we have worked hard to cultivate partnerships and networks of suppliers across the industry and we will leverage their expertise, experience and staffing. These relationships will enable us to bring this generation, and future generations of our vehicles, to market faster, cheaper and with higher quality than we could ever hope to do by building the entire team on our own. As an example, we are proud to have already been able to announce strategic partnerships with R&D partners and Engineering suppliers such as IAT, Aulton and Fangsheng.
Likewise, we are extending our asset light strategy downstream to the production side of the business as well. We are partnering with certain customers as well as with third-party manufacturing and assembly facilities in order to scale our production cheaper, faster and more capital-efficiently than we could ever hope to accomplish on our own. As part of this strategy, we are reconfiguring and streamlining our existing Anaheim manufacturing facility. We will use the plant as a showcase facility and training center, where our third-party manufacturing partners will send their technicians to learn our standardized processes and procedures in order to ensure maximum efficiency and quality across our entire production network.
In addition to achieving faster time-to-market and lower development costs as a result of our asset light model, we also expect to be able to achieve lower production and BOM (or bill of materials) costs compared to our Gen 3 vehicles, by utilizing standardized processes and procedures, and better use of our components and sub-assemblies.
As most of you know, two of the major hurdles that we, and other similarly positioned EV manufacturers, face is 1) security of battery supply and, 2) access to an adequate number of Ford E450 chassis to meet our production and sales pipeline. I will now discuss how we are addressing each of these two challenges in our planning.
On the battery side, we are securing supply agreements and will benefit from our recent partnership with CATL for the long-term procurement of K-Packs and related products for our Gen 4 vehicles. We are working on additional battery partnerships as well.
On the chassis side, we recognize that the medium duty EV market is heavily dependent on the supply of Ford chassis, and, as the industry continues to grow, we foresee a supply shortage and are moving quickly to plan for our Gen 5 ground-up design, which we expect to introduce in 2024.
The development of our Gen 5 vehicle line, which will follow closely on the heels of SOP (or start of production) for Gen 4 will benefit immensely from all the hard work we are putting into the development of Gen 4. All the benefits of our asset light business model, our partnerships and supply and production agreements will transfer directly to Gen 5. In addition, most of the components and sub-assemblies will be used in Gen 5 as well. For these reasons, we view Gen 4 as a BRIDGE to Gen 5. Our Gen 4 development will be profitable with high gross margins in its own right, but its true value will be unlocked as we apply the learnings and principles to our Gen 5 ground-up chassis design that will ensure not only security of battery supply but also chassis independence.
Two other positive features of our Gen 5 vehicles, in addition to battery and chassis supply security, will be even lower costs than Gen 4 and greater design flexibility to meet the needs of our customers. We expect to produce our new chassis for far less than the cost we are currently paying to acquire chassis and we will have the ability to customize our vehicle designs to meet specialized needs, while maintaining standardized processes and procedures, increasing the company’s capacity to accommodate customer requirements and meet the evolving needs of the transforming electric vehicle market.
We look forward to sharing more about our Gen 4 and 5 vehicles in the coming quarters, and to telling you more about our exciting plans for our EdisonFuture vehicles. EdisonFuture will be a light-duty offering with a solar-powered component, marketed for personal and commercial use in the form of pickup trucks, SUVs and delivery vans. The EdisonFuture pickup truck and van debuted at last year’s LA Auto Show to much fanfare and broad acclaim. We expect to bring EdisonFuture to market in 2025.
Our goal is to create a vehicle lineup that will have tremendous reliability and be cost competitive, without subsidies. Our ability to be cost competitive is a key focus as we seek to meet future market demands, as the markets and EV technologies move from an emerging market phase to a steadier state market phase.
At its core, Phoenix is an engineering-focused company with patented technologies that address the market’s need for the next generation of zero-emission vehicles. We have constructed our company to be flexible and asset light. We have talked a lot about our asset light model, which is logical since it is central to everything we do.
We have an exciting road ahead, with launches of Gen 4 in 2023, Gen 5 in 2024 and EdisonFuture in 2025. But we are not developing these product lines as an academic exercise--we are building a scalable business, that endeavors to maximize our returns on your capital, while also deploying industry-leading technology. We've put together a management team that's seasoned and established in the EV sector and incentivized to overachieve, putting us in an excellent position to execute in the high-growth, zero-emission commercial and consumer vehicle sector.
If you have any questions, please direct them to PhoenixIR@icrinc.com. Thank you to everyone who joined the call today, we really appreciate your interest in our company and look forward to sharing more of the Phoenix story and our progress in the coming quarters.
Operator
This concludes our call. You may now disconnect.