Icon (Close Menu)

Logout

Envirotech Files Delayed Quarterly Reports, Says Financial Controls Still Lacking

3 min read

Envirotech Vehicles Inc. of Osceola (Nasdaq: EVTV) this week filed 2023 financial results that were delayed while the company worked to fix inaccuracies in previous earnings reports.

The company was granted an extended filing deadline to regain compliance with Nasdaq listing rules.

In the filings, which cover the first two quarters of the year, Envirotech said it has yet to fully resolve deficiencies in its disclosure controls that contributed to past inaccuracies. The company hired a new CFO and a new controller after the mistakes were discovered, but due to staff reductions and voluntary resignations, it has been unable to “maintain levels of segregation of duties” for adequate controls.

Envirotech said it continues to search for “key employees,” and as a result, the company reported higher consulting expenses.

“We have engaged, and continue to seek additional, experienced accounting professionals with relevant expertise to provide additional accounting services intended to supplement our efforts and mitigate the negative effects of such recent changes to our disclosure controls and procedures,” the company said.

Envirotech said the errors were the result of sales figures being incorrectly recognized at the time of approval of customer purchase incentives. The sales should’ve been recognized upon delivery of the vehicles to the customer. Amended financial results from those periods show the company posted wider losses than first reported.

The company has declined interview requests concerning its accounting errors and executive changes.

The latest filings also provide an update on Envirotech’s plans for a new manufacturing facility and new corporate offices in Osceola. The company moved into a 580,000-SF warehouse in February 2022, and the second-quarter earnings report says Envirotech is in the “final stages of due diligence and contract negotiation” with the city and the Arkansas Economic Development Commission.

Envirotech previously said a purchase agreement for the facility had not been finalized because of inspection delays, along with challenges finding available contractors and sourcing equipment.

The $80 million project is eligible for $27 million in performance-based tax incentives over 10 years.

Envirotech finished the second quarter of 2023 with just $833,282 in cash and working capital of $13.5 million. The company said it believes it has sufficient funds for the next 12 months and beyond.

“However, we may not successfully execute our business plan, and if we do not, we may need additional capital to continue our operations and support the increased working capital requirements associated with the fulfillment of purchase orders,” the company said.

Envirotech has yet to report a profitable quarter.

Shares of the company were up nearly 4% on Wednesday. Year to date, shares were down 19%.

Q2 2023 results

In the second quarter of this year, the company posted a loss of $1.25 million, lower than the $1.18 million loss it reported in the same quarter the previous year.

On a per-share basis, the loss came to 8 cents, equal to the second quarter of 2022.

Sales increased to $2.13 million in the period, compared to $1.51 million. Envirotech said it sold 19 logistics cargo vans and one cab and chassis truck, an increase it attributed primarily to “favorable market conditions.”

Many of the sales were to customers in New Jersey who utilized a voucher from the state’s electric vehicle tax credit program.

Q1 2023 results

In the first quarter of this year, Envirotech narrowed its loss to $2.37 million from $2.94 million.

On a per-share basis, the loss came to 15 cents, lower than the loss of 20 cents the previous year.

Sales increased to $523,199 from $89,900. Envirotech said higher average sales prices contributed to the increase.

The company sold six logistics cargo vans primarily to customers in New Jersey who used tax credits to purchase the vehicles.

Send this to a friend