UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C., 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-41414

Phoenix Motor Inc.

(Exact name of registrant as specified in its charter)

Delaware	85-4319789
(State of other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)
1500 Lakeview Loop, Anaheim, CA	92807
(Address of Principal Executive Office)	(Zip Code)

Registrant’s telephone number, including area code: (909) 987-0815

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	The Nasdaq Stock Market LLC*

*Trading of the registrant’s common stock on Nasdaq was suspended at the opening of business on April 15, 2025. The registrant’s common stock is currently quoted on the OTC Pink Market under the symbol “PEVM”.

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 ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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 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. Yes ☐ No ☒

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. (Check one)

Large accelerated filer	☐	Accelerated filer	☐
Non-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 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 checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of June 30, 2024, the aggregate market value of the voting and non-voting common equity held by non-affiliates, computed by reference to the price at which the common equity was last sold, was $5,191,394.

At May 20, 2025, the registrant had 49,280,432 outstanding shares of common stock, par value $0.0004 per share.

DOCUMENTS INCORPORATED BY REFERENCE

None

Table of Contents

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	20
Item 1C.	Cybersecurity	20
Item 2.	Properties	20
Item 3.	Legal Proceedings	20
Item 4.	Mine Safety Disclosures	20
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	21
Item 6.	[Reserved]	21
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 8.	Financial Statements and Supplementary Data	31
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure	31
Item 9A.	Controls and Procedures	32
Item 9B.	Other Information	33
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	33
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	34
Item 11.	Executive Compensation	39
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	43
Item 13.	Certain Relationships and Related Transactions, and Director Independence	45
Item 14.	Principal Accounting Fees and Services	46
PART IV
Item 15.	Exhibits and Financial Statement Schedules	48
Item 16.	Form 10-K Summary	48
Signatures		49

i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K for the fiscal year ended December 31, 2024, and information we provide in our press releases, telephonic reports and other investor communications, including those on our website, contains forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Securities Act of 1933, as amended (the “Securities Act”), which are subject to risks, uncertainties, and assumptions that are difficult to predict. All statements in this annual report on Form 10-K, other than statements of historical fact, are forward-looking statements. These forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements include statements, among other things, with respect to anticipated future events, including anticipated trends and developments in and management plans for our business and the markets in which we operate and plan to operate; future financial results, operating results, revenues, gross profit, operating expenses, projected costs, and capital expenditures; sales and marketing initiatives; competitive position; and liquidity, capital resources, and availability of future equity capital on commercially reasonable terms.

Forward-looking statements can be identified by the use of words such as “expect,” “plan,” “will,” “may,” “anticipate,” “believe,” “estimate,” “should,” “intend,” “forecast,” “project” and the negative or plural of these words, and other comparable terminology. Our forward-looking statements are only predictions based on our current expectations and our projections about future events. All forward-looking statements included in this annual report on Form 10-K are based upon information available to us as of the filing date of this annual report on Form 10-K. You should not place undue reliance on these forward-looking statements. We undertake no obligation to update any of these forward-looking statements for any reason.

We have identified factors that could cause actual plans or results to differ materially from those included in any forward looking statements. These factors include, but are not limited to, the following:

● our ability to continue as a going concern;

● our history of losses, and expectation of incurring significant expenses and losses for the foreseeable future;

● our ability to convert concept trucks and vans into production and sales;

● our product development timeline and expected start of production;

● our ability to compete in the highly competitive EV commercial vehicle market and the development of competitive trucks and vans manufactured and sold by our competitors and major industry vehicle companies;

● our ability to scale in a cost-effective manner;

● our ability to attract new customers and retain existing customers, and reduce our substantial customer concentration;

● our ability to control operating costs and future capital requirements and sources and uses of cash;

● our need and ability to obtain funding for our future operations;

● our financial and business performance, including business metrics and any underlying assumptions thereunder;

● changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;

● the implementation, market acceptance and success of our business model;

● our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

● expectations regarding the time during which we will be an emerging growth company under the JOBS Act;

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● our business, expansion plans and opportunities;

● our ability to maintain compliance with the continued listing requirements of the Nasdaq listing rules in order to prevent our common stock from being delisted from the Nasdaq Capital Market;

● changes in applicable laws or regulations;

● our ability to execute our business model, including market acceptance of our planned products and services;

● the possibility that we may be adversely affected by other economic, business or competitive factors; and

● any potential disruptions to global economic markets caused by international conflicts, wars and terrorist threats.

These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. These factors include the matters discussed in the section entitled “Item 1A. Risk Factors” and elsewhere in this annual report on Form 10-K. You should carefully consider the risks and uncertainties described under this section.

iii

CONVENTIONS THAT APPLY TO THIS ANNUAL REPORT

Unless otherwise indicated and except where the context otherwise requires, references in this annual report on Form 10-K to:

● “we,” “us,” “our Company,” “our”, “Phoenix”, or “Phoenix Motor” refer to Phoenix Motor Inc., a Delaware corporation and its subsidiaries or any of them, or where the context so requires, in respect of the period before our Company became the holding company of its present subsidiaries, such subsidiaries as if they were subsidiaries of our Company at the relevant time;

● “2022,” “2023,” and “2024” refers to our fiscal years ended December 31, 2022, 2023 and 2024, respectively;

● “EV” refers to electric vehicle;

● “R&D” refers to research and development;

● “Shares” or “common shares” refers to our common stock, par value $0.0004 per share;

● “PCL” refers to Phoenix Cars, LLC, a LLC incorporated under the law of California;

● “PML” refers to Phoenix Motorcars Leasing, LLC, a LLC incorporated under the law of California;

● “U.S.” refers to the United States of America;

● “U.S. dollar” or “$” refers to the legal currency of the United States of America;

Discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

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ITEM 1. Business

Overview

Phoenix Motor Inc., doing business as “Phoenix Motorcars” through its wholly owned subsidiaries, Phoenix Cars LLC, Phoenix Motorcars Leasing LLC, and EdisonFuture Motor, Inc., is a leading electrification solutions provider for the commercial vehicle industry as well as other industries. Phoenix designs, develops, manufactures, assembles, and integrates electric drive systems and light and medium duty electric vehicles (“EVs”), with an aim to reduce carbon intensity and greenhouse gas (“GHG”) emissions. The Company operates two primary brands, “Phoenix Motorcars” which is focused on commercial products including medium duty electric vehicles, chargers and electric forklifts, and “EdisonFuture” which intends to offer light-duty electric vehicles.

As an EV pioneer, we launched our first medium-duty electric drivetrain in 2009 and delivered our first commercial EV in 2014. In 2019, we launched our second generation (“Gen 2”) High Power Drive System for the Ford E450 chassis, the E-200. Since April 2021, we have been in production of our third generation (“Gen 3”) drivetrain (E-300). We released our fourth generation (“Gen 4”) drivetrain in 2024, which has allowed for substantially higher production volumes and achieve significant cost reduction.

Over the last six years we have developed and deployed for our customers all-electric shuttle buses, utility trucks, service trucks, cargo trucks and flatbed trucks. This differentiates us in the market where most commercial EV manufacturers are still in the prototype phase. As of December 31, 2024, we have delivered a total of 138 EVs to more than 48 customers, representing what we believe is the largest number of Class 4 cutaway medium duty electric shuttle bus deployments in the U.S. and the most electric vehicles deployed on the Ford E-Series chassis. With over four million zero-emission miles accumulatively driven by the vehicles we delivered, we have gained significant industry experience, distinct expertise and extensive knowledge in R&D, production, commercialization, customer engagement and validation of light and medium duty EVs, enabling us to drive continued design enhancements and innovations in our current and future generations drivetrain systems and other products.

On January 11, 2024, we completed the acquisition of the Proterra transit business unit, which is the business unit of Proterra that designs, develops and sells electric transit buses as an original equipment manufacturer for North American public transit agencies, airports, universities and other commercial transit fleets, and on February 7, 2024, we completed the acquisition of Proterra battery lease contracts. After the acquisition, we engage in the business that designs, develops and sells electric transit buses as an original equipment manufacturer for North American public transit agencies, airports, universities and other commercial transit fleets and we were assigned with the right to collect certain leasing receivables which Proterra was a party as the lessor thereunder, used in connection with deployed Proterra electric transit buses. As of December 31, 2024, we have delivered a total of 30 transit buses to various customers,

Market Opportunity

The commercial EV market, which we believe is currently underserved, is projected to grow from a low base today to global sales of three million units by 2025 and nine million by 2030, led by buses and light trucks, representing significant growth opportunities. Major factors driving the growth of the commercial EV market are rising policy support, increasing electrification of public transport fleets, stringent government regulations, advancements in battery pack technologies and electric powertrains and accelerated investment in charging infrastructure. By taking advantage of our proprietary technology, industry-leading experience and expertise, as well as increasing EV demand boosted by government incentives, grants and regulations, we believe we are well positioned to capitalize on the commercial market opportunities.

Products

We have product and service offerings for both electric transit buses and the commercial trucks with purpose build and electrified vehicles. Our transit bus is a purposely built electric bus with a fully-integrated, heavy-duty technology platform designed to deliver superior performance and durability. Our medium-duty truck line plays a critical role in serving a wide range of industries. The road-proven ZX5 is engineered with advanced carbon-fiber reinforced composite materials, which is lightweight, non-conductive and rust-resistant, that make it both efficient and durable while ensuring the highest levels of operation safety, significantly reduces maintenance needs, ensuring the ZX5 stays on the road longer with fewer complications. Our Gen 4 drivetrain, offering battery pack capacities of 90kWh and 150kWh with both “Buy America” and non “Buy America” options, allowing for flexibility in pricing and configuration primarily targeting the transit bus, school bus, airport shuttle, delivery truck and work truck segments. In particular, key features such as drivetrain design with batteries mounted within frame rails, energy efficient 750V architecture and fast, bi-directional charging will significantly improve vehicle safety and overall performance of our products.

Customers

Our transit buses are already being used by many of the most prominent transit agencies across North America. Additionally, our buses are available on various state and federal contracts, universities, and airport operators. The wide range of our medium-duty fleet customers include utilities, cities, municipalities, transit agencies, airports, hotels, seaports, school districts, parking companies, universities, and corporate campuses, with the configurations varying from shuttle buses, Type A school buses, utility trucks, service trucks, to flatbed trucks, walk-in vans, and cargo trucks.

As of December 31, 2024, our backlog, firmed and letter of intent, on transit buses of approximately 154 buses representing roughly $160.8 million, and our medium duty vehicles have 73 orders representing $16.7 million of revenues.

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Recent Developments

On November 13, 2023, the Company entered into two Asset Purchase Agreements (collectively, the “Asset Purchase Agreements”) with Proterra, Inc. and its subsidiary, Proterra Operating Company, Inc. (collectively, “Proterra”), pursuant to which Phoenix agreed to purchase substantially all of the assets of the Proterra Transit business line. Pursuant to the separate Asset Purchase Agreements, Phoenix agreed to purchase:

(i) the Proterra Transit Business Unit, which is the business unit of Proterra that designs, develops and sells electric transit buses as an original equipment manufacturer for North American public transit agencies, airports, universities and other commercial transit fleets (the “Proterra Transit Business Unit”), and

(ii) the Proterra Battery Lease Agreements, which are all of the battery lease transferred contracts to which Proterra is a party as the “lessor” thereunder, used in connection with deployed Proterra electric transit buses (the “Proterra Battery Lease Agreements”).

On January 11, 2024, the Company completed the acquisition of the Proterra Transit Business Unit for a purchase price of $3.5 million. The Company also assumed certain of Proterra’s obligations associated with the purchased Proterra Transit Business Unit, free and clear of liens, claims, encumbrances, other than certain specified cure payments and other liabilities of Proterra related to the Proterra Transit Business Unit. On February 7, 2024, the Company completed the acquisition of the Proterra Battery Lease Agreements for a purchase price of $6.5 million.

On June 24, 2024, the Group entered into an asset purchase agreement with Zenobe Americas EV Assetco LLC (Zenobe). In the agreement, the Group sells the battery lease receivables to Zenobe in two batches while retains the warranty liability associated with leased batteries. The aggregate purchase price for Batch 1 transferred assets is made of: (i) $3.6 million, minus (ii) any payments received by the Group from March 1, 2024 to the Batch 1 closing date, plus (iii) the assumption of the assumed liabilities incurred after the applicable closing date related to the Batch 1 transferred assets. The aggregate purchase price for Batch 2 transferred assets is made of: (i) $2.2 million, minus (ii) any payments received by the Group from March 1, 2024 to the Batch 2 closing date, plus (iii) assumption of the assumed liabilities incurred after the applicable closing date related to the Batch 2 transferred assets.

During the year ended December 31, 2024, the Group collected a total of $0.9 million lease receivables from leasing customers and received a total of $3.8 million customer deposits from Zenobe. As of December 31, 2024, the balance of battery lease receivables was recorded at $4.7 million, which represents the best estimate of the current fair value.

Our Strategies

In addressing the market opportunities, we plan to:

● Pursue an asset light strategy. We’ve been actively building and expanding strategic partnerships and alliance in R&D, engineering and supply chain to accelerate the development and production of our solutions. Tapping into and leveraging the existing capabilities and infrastructure that our strategic partners have built, we are able to bring our solutions to market more quickly and cost efficiently, without the need to invest substantial amounts of capital. In addition, we are currently designing and executing a plan to utilize customer and third-party assembly facilities to boost production capacity with low capital requirements.

● Achieve scale. By standardizing and modularizing production and optimizing operations, we have a clear path to achieving significant scale in a cost-effective manner for our Gen 4 products and onward. The ongoing reconfiguration of our Anaheim facility is to not only ramp up production, but also to serve as a training and showcase facility to ensure procedures are standardized across our entire production network.

● Reduce costs. We’re shifting from a strategy of focus on low volume, high customization products to one that will allow us to scale quickly, based on a change of vehicle design and engineering, standardization and modularization of processes and procedures and the use of standardized components and sub-assemblies. As we ramp up and further optimize supply chains and improve processes, we expect to substantially lower production and material costs for Gen 4 vehicles compared to that for Gen 3 vehicles, transforming the fundamentals of the business towards sustainably higher profitability.

2

● Capitalize on increasing regulatory and customer demands. We believe the commercial EV space is at a significant inflection point driven by multiple tailwinds including regulations, corporate environmental mandates and state and federal grants. The growing supply chain maturity is also significantly increasing the economic attractiveness of EVs when compared with internal combustion engine vehicles. We will continue to aggressively pursue the increasing demand for EV adoption.

● Develop a purpose-built, ground-up chassis and EdisonFuture platform. The development of our fifth generation (“Gen 5”) product will enable Phoenix to be chassis independent, removing one of the major impediments facing our businesses. It’ll also reduce material and production costs and allow us to customize vehicle designs to meet specialized needs, while maintaining standardized processes and procedures, increasing our capacity to accommodate customer requirements and meet the evolving needs of the electric vehicle market. Our EdisonFuture platform will benefit greatly from the development of prior generations, which will further lower costs and speed time-to-market.

Competition

Competition in the light and medium-duty truck industry is intense, as new regulatory requirements for vehicle emissions, technological advances and shifting customer demands are pushing the industry towards zero-emission solutions.

Phoenix competes with a number of commercial EV manufacturers, such as Lightning eMotors and Green Power Motor Company. Several major companies, including BYD, Ford, General Motors, Tesla and Daimler have begun entry into the commercial EV market. In addition, many of the aforementioned companies, along with others, such as Volvo, BYD, Hyundai, Honda, and Fiat participate in the hybrid combined electric and gasoline powered vehicle business, which includes commercial vehicles that may compete with Phoenix. Most of our current and potential competitors have greater financial, technical, manufacturing, marketing and other resources than we do. They may be able to deploy greater resources to the design, development, manufacturing, distribution, promotion, sales, marketing and support of their electric truck programs. Additionally, those competitors have greater name recognition, larger sales forces, broader customer and industry relationships and other resources than we do.

Our Competitive Strengths

● Demonstrated capabilities to develop and deliver commercial EVs.

● Well-rounded management team with many years of proven industry experience in taking vehicles from concept to mass production.

● Long and deep relationships with OEMs, customers and dealerships.

● Long and deep relationships with strategic partners in R&D and engineering.

● Standardized and modularized approach to product design and optimized supply chain to ramp up production and support expansion quickly and in a cost-effective manner.

Sales and Marketing

We sell our vehicles to fleet customers directly and through our strategic relationships with premier commercial vehicle companies, including Matthews Specialty Vehicles, a leading manufacturer of specialty trucks and Pegasus Bus Company, a leading manufacturer of Type A school buses.

Manufacturing and Production

We currently carry out the production of our EV shuttle buses and trucks from a leased facility at 1500 Lakeview Loop, Anaheim, California (the “Anaheim Facility”). The Anaheim Facility is leased by us at a rent of $0.4 million per year and comprises 39,043 square feet of space consisting of 21,000 square feet of manufacturing floor and 18,043 square feet of office space. Our Anaheim Facility will allow us design, build and test prototype vehicles and components in-house. The lease on Anaheim Facility expires in March 2027. We currently carry out the production of our electric transit buses from a leased facility located at 1 Whitlee Ct, Greenville, South Carolina (the “Greenville Facility”). The Greenville Facility is leased by use at a rent of $1.3 million per year and the lease on Greenville Facility expires in June 2026. In 2024, we integrated the transit bus and medium duty truck into ONE operation team and management framework, production planning execution systems. Shifted operation focuses on efficiency and quality improvements, management and culture transformation, and is well positioned to line up operations to support the global expansion and the overall strategy of a4a and i4i. Deployed lean concept, right sized the workforce, continue to reduce the fixed cost and make the operation more efficient with the least fixed capital needed. We also reactivated and extended to the global supply chain with renovated supply chain strategies, renegotiated major supply contracts, strengthened supplier relationships, increased focus on reliable suppliers at home and global supply base. Started to implement QMS to have the closed loop (PDCA) quality issue management system to improve product and process quality and stay competitive in the marketplace. Integrated G4 production with the transit bus in Greenville with one manufacturing process management system (Visual Factory) and PLM system for the entire PhoenixEV production portfolio. Created flex-operation process to manage the production resources according to the changes of the production mix and levels. The continued deployment of One Operation will make our operation adaptable to extend our footprint expansions to support a4a and i4i strategy.

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Human Capital

As of December 31, 2024, we had 159 full-time employees based primarily in the Greenville, South Carolina area. A majority of our employees are engaged in manufacturing functions. Our targeted hires typically have significant experience working for well-respected original equipment manufacturers, automotive engineering firms and software companies. To date, we have not experienced any work stoppages and consider our relationship with our employees to be in good standing. None of our employees are either represented by a labor union or subject to a collective bargaining agreement.

Government Regulation

We operate in an industry that is subject to extensive environmental regulation, which has become more stringent over time. The laws and regulations to which we are subject govern, among others, water use; air emissions; use of recycled materials; energy sources; the storage, handling, treatment, transportation and disposal of hazardous materials; the protection of the environment, natural resources and endangered species; and the remediation of environmental contamination. We have been required to obtain and comply with the terms and conditions of multiple environmental permits, many of which are difficult and costly to obtain and could be subject to legal challenges. Compliance with such laws and regulations at an international, regional, national, provincial, and local level is an important aspect of our ability to continue our operations.

Environmental standards applicable to Phoenix are established by the laws and regulations of the state and countries in which Phoenix operates, standards adopted by regulatory agencies and the permits and licenses. Each of these sources is subject to periodic modifications and increasingly stringent requirements. Violations of these laws, regulations or permits and licenses may result in substantial civil and criminal fines, penalties, and possibly orders to cease the violating operations or to conduct or pay for corrective works.

In some instances, violations may also result in the suspension or revocation of permits and licenses.

Vehicle Safety and Testing Regulation

Our vehicles are subject to, and comply with, numerous regulatory requirements established by the National Highway Traffic Safety Administration (“NHTSA”), including applicable U.S. federal motor vehicle safety standards (“FMVSS”). As a manufacturer, we must self-certify that the vehicles meet or are exempt from all applicable FMVSSs before a vehicle can be imported into or sold in the U.S.

There are numerous FMVSSs that apply to our vehicles. Examples of these requirements include:

● Electric Vehicle Safety — limitations on electrolyte spillage, battery retention and avoidance of electric shock following specified crash tests;

● Crash Tests for High-Voltage System Integrity — preventing electric shock from high voltage systems and fires that result from fuel spillage during and after motor vehicle crashes.

In addition to the FMVSS rules, Phoenix designs our vehicles to meet the Federal Motor Carrier Safety Regulations of the Federal Motor Carrier Safety Administration, which prescribes requirements for bus and truck fleet owners. These include standards for defrosting and defogging systems and speedometers, as well as safety features such as steps and handholds.

We are also required to comply with other NHTSA requirements and federal laws administered by NHTSA, including early warning reporting requirements regarding warranty claims, field reports, death and injury reports, foreign recalls and owner’s manual requirements.

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Altoona Testing

Under the Surface Transportation and Uniform Relocation Assistance Act of 1987 (“STURAA”), federal funding of acquisition of a new model bus is unavailable unless a bus of that model has been tested for safety, structural integrity, durability, performance, maintainability, noise and fuel economy. Testing is conducted at the Larson Transportation Institute’s Bus Research and Testing Center in Altoona, Pennsylvania established for that purpose.

Vehicles that are built to Buy America compliant standards and have passed Altoona testing are eligible for FTA funding of up to 80% of the capital cost of a transit vehicle. Failure to complete testing in this timeframe would materially adversely affect order fulfillment, as well as future sales, to customers and potential customers that require successful completion of the test program.

EPA Emissions & Certificate of Conformity

The U.S. Clean Air Act requires that we obtain a Certificate of Conformity issued by the EPA and a California Executive Order issued by the California Air Resources Board (“CARB”), concerning emissions for our vehicles. A Certificate of Conformity is required for vehicles sold in states covered by the Clean Air Act’s standards and an Executive Order is required for vehicles sold in states that have sought and received a waiver from the EPA to utilize California standards. CARB sets the California standards for emissions control for certain regulated pollutants for new vehicles and engines sold in California. States that have adopted the California standards as approved by EPA also recognize the Executive Order for sales of vehicles. There are currently four states which have adopted the California standard for heavy-duty vehicles.

The Greenhouse Gas Rule was incorporated into the Clean Air Act on August 9, 2011. Since our vehicles have zero-emissions, Phoenix is required to seek an EPA Certificate of Conformity for the Greenhouse Gas Rule, and a CARB Executive Order for the CARB Greenhouse Gas Rule. Phoenix received the CARB Executive Order for its range of all-electric shuttle buses, trucks and school buses in November 2021 and application for the Executive Order for the 2023 Model Year vehicles is in process.

Greenhouse Gas (GHG) Credits — U.S. Environmental Protection Agency

In connection with the delivery and placement into service of our zero-emission vehicles under the Greenhouse Gas Rule, Phoenix will earn tradable credits that under current laws and regulations can be sold. Under the EPA’s Greenhouse Gas Rule, each BEV earns a credit multiplier of 4.5 for use in the calculation of emission credits. Commercial vehicle manufacturers are required to ensure they meet the nitrogen oxide emission standard for each type of vehicle produced. This emission standard continues to lower the emission requirement over time, increasing the difficulty for conventional diesel vehicles to meet the standard. Until technology catches up for commercial vehicles, manufacturers of diesel trucks will need to purchase GHG credits to cover their emission deficit. The Greenhouse Gas Rule provides the opportunity for the sale of excess credits to other manufacturers who apply such credits to comply with these regulatory requirements. Furthermore, the regulation does not limit the number of battery-electric credits sold within the same commercial vehicle category.

Greenhouse Gas Credits — California Air Resources Board

California has a greenhouse gas emissions standard which follows very closely to the EPA Greenhouse Gas Emissions Standard. The delivery and placement into service of our zero-emission vehicles in California under the Greenhouse Gas Rule will earn Phoenix tradable credits that can be sold. Under CARB greenhouse gas regulations, each BEV will also earn a credit multiplier of 4.5 for use in the calculation of emission credits. Commercial vehicle manufacturers are required to ensure they meet the nitrogen oxide emission standard for each type of vehicle produced. This emission standard continues to lower the emission requirement over time, increasing the difficulty for conventional diesel vehicles to meet the standard.

Until technology catches up for commercial vehicles, manufacturers of diesel buses and trucks will need to purchase GHG credits to cover their emission deficit. The California timeline for reaching very low GHG emissions is more aggressive than the EPA. Commercial vehicle manufacturers will look to cover their emission deficits first for California. The Greenhouse Gas Rule provides an opportunity for the sale of excess credits to other manufacturers who apply such credits to comply with these regulatory requirements. Furthermore, the regulation does not limit the number of battery-electric credits sold within the same commercial vehicle categories.

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ITEM 1A. RISK FACTORS

Risks Related to Our Financial Condition

Our results of operations have not resulted in profitability, and we may not be able to achieve profitability going forward.

We had accumulated deficit of $42.0 million as of December 31, 2024. We have incurred a net income of $7.2 million and a net loss of $20.6 million for the years ended December 31, 2024 and December 31, 2023, respectively. We may incur significant losses in the future for a number of reasons, including the other risks described in this annual report, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown events. Accordingly, we may not be able to achieve or maintain profitability. Our management is developing plans to alleviate the negative trends and conditions described above and there is no guarantee that such plans will be successfully implemented. Our business plan is focused on providing sustainable and cost - effective solutions to the commercial transportation sector but is still unproven. There is no assurance that even if we successfully implement our business plan, that we will be able to curtail our losses or ever achieve profitable operations.

We have yet to achieve positive cash flow and, given our projected funding needs, our ability to generate positive cash flow is uncertain.

We have had negative cash flow from operating activities of $1.9 million and $3.7 million for years ended December 31, 2024 and 2023, respectively. We anticipate that we will continue to have negative cash flow from operating and investing activities through the remainder of 2025 as we expect to incur research and development, sales and marketing, and general and administrative expenses and make capital expenditures in our efforts to increase sales and ramp up operations. Our business also will at times require significant amounts of working capital to support our growth. An inability to generate positive cash flow for the near term may adversely affect our ability to raise needed capital for our business on reasonable terms, diminish supplier or customer willingness to enter into transactions with us, and have other adverse effects that may decrease our long-term viability. There can be no assurance that we will achieve positive cash flow in the near future or at all.

Our audited financial statements included a statement that there is a substantial doubt about our ability to continue as a going concern and a continuation of negative financial trends could result in our inability to continue as a going concern.

Our audited financial statements as of and for the year ended December 31, 2024 were prepared on the assumption that we would continue as a going concern. As a result of the continuing operating costs as we develop of our EV trucks and Gen 4 as described above, our management has determined that there is a substantial doubt about our ability to continue as a going concern over the next twelve months and our independent auditor have included a “going concern” explanatory paragraph in their report on our financial statements as of and for the year ended December 31, 2024. The reaction of investors to the inclusion of a going concern statement by our independent auditor, and our potential inability to continue as a going concern, could materially adversely affect the price of our common stock.

Additionally, if our operating results fail to improve, then our financial condition could render us unable to continue as a going concern.

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We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of our electric vehicles.

The design, manufacture and sale of electric vehicles is a capital-intensive business. Our business plan to design, produce, sell and service commercial electric buses, vans and trucks, including the Gen 5, EF-1 truck and EF-1 V van, and transit buses is expected to require continued capital investment and incur substantial costs including research and development expenses, raw material procurement costs, sales and distribution expenses as we build our brand and market our vehicles, and general and administrative expenses as we scale our operations, identify and commit resources to investigate new areas of demand and incur costs as a public company. Our ability to become profitable in the future will not only depend on our ability to complete the design and development of our vehicles but also to control our capital expenditures and costs. As we expand our product portfolio, including the release of Gen 4 and the acquisition of the Proterra Transit Bus Unit in 2024, we will need to manage costs effectively to sell those products at our expected margins. If we are unable to cost efficiently design, manufacture, market, sell and distribute and service our vehicles and provide our services, our business, prospects, financial condition, results of operations, and cash flows would be materially and adversely affected. Unlike established EV automotive manufacturers that have greater financial resources than we do, there can be no assurance that we will have access to the capital we need on favorable terms when required or at all. In addition, future debt financing into which we enter may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, redeem our stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.

If we are unable to raise additional capital when required or on acceptable terms, we may be required to significantly delay, scale back or discontinue the development or commercialization of one or more of our EV products, restrict our operations or obtain funds by entering into agreements on unattractive terms, which would likely have a material adverse effect on our business, stock price and our relationships with third parties with whom we have business relationships, at least until additional funding is obtained. If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that would likely result in our stockholders losing some or all of their investment in us. In addition, our ability to achieve profitability or to respond to competitive pressures would be significantly limited.

Risks Related to Our Business and Industry

We may experience delays in launching and ramping up production or we may be unable to control our manufacturing costs.

We have previously experienced and may in the future experience launch and production ramp-up delays. In addition, we may introduce in the future new or unique manufacturing processes and design features for our products including enhancements under development relating to production assembly efficiency, material component availability, cost reduction and customer feedback. There is no guarantee we will be able to successfully and timely introduce and scale such processes or features. We have limited experience to date in manufacturing electric vehicles at low volumes. To be successful, we will need to implement, maintain, and ramp-up efficient and cost-effective manufacturing capabilities, processes and supply chains, high quality and output rates planned at our Anaheim manufacturing facility. We also need to hire, train, and compensate skilled employees for operations. Bottlenecks and other unexpected challenges such as those experienced in the past may arise during our production ramps, and we must address them promptly while continuing to improve manufacturing processes and reducing costs. If we are not successful in achieving these goals, we could face delays in establishing and/or sustaining our vehicle production ramp-ups or be unable to meet our related cost and profitability targets. Any delay or other complication in ramping up the production of our current products or the development, manufacture, launch and production ramp-ups of our future products, features and services, or in doing so cost-effectively and with high quality, may harm our brand, business, prospects, financial condition, and operating results.

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The automotive market is highly competitive, and we may not be successful in competing in this industry.

Both the automobile industry generally, and the EV segment in particular, are highly competitive, and we will be competing for customers and sales with both EV manufacturers and traditional automotive companies. Most of our current and potential competitors may have significantly greater financial, technical, manufacturing, marketing, or other resources than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products than we may devote to our products. We expect competition for EVs to intensify due to increased demand and a regulatory push for alternative fuel vehicles. In addition, as fleet operators begin transitioning to EVs on a mass scale, we expect that more well-financed competitors will enter the commercial fleet EV market. Further, as a result of new entrants in the commercial fleet EV market, we may experience increased competition for components and other parts of our vehicles, which may have limited or single-source supply.

If we are unable to successfully design, develop, manufacture and sell our Gen 4, Gen 5, EF-1 truck and EF-1 V van, and our transit buses, our business, prospects, financial condition, results of operations, and cash flows could be materially and adversely affected. If we are able to manufacture and market the Gen 4, Gen 5, EF-1 truck and EF-1 V van, and transit buses, factors affecting competition include product performance and quality, technological innovation, customer experience, brand differentiation, product design, pricing and TCO, and manufacturing scale and efficiency. Increased competition will lead to lower vehicle unit sales and increased inventory, which may result in downward price pressure and adversely affect our business, prospects, financial condition, results of operations, and cash flow.

Phoenix faces competition from global automotive manufacturers.

We compete with a number of commercial EV manufacturers, including those such as Lightning eMotors and GreenPower Motor Company. In addition to Tesla and Rivian, a number of traditional global automobile manufacturers, including Ford, General Motors, Mercedes Benz, and Nissan-Renault-Mitsubishi, Toyota, and Chinese based EV manufacturers have entered the consumer EV business, and a few, including BYD, Ford, General Motors, Tesla and Daimler have begun entry into the commercial EV market. These companies have far greater resources, brand recognition, and distribution channels than Phoenix or the Company does, which could make it difficult for Phoenix to gain widespread market acceptance. There can be no assurance that Phoenix will be able to compete successfully with other market participants, and, if Phoenix cannot, then its business could fail.

Costs of electric vehicles or transit buses are high in comparison with those of traditional vehicles powered by internal combustion engines or hybrids.

Phoenix’s EVs will not gain wide acceptance unless Phoenix can reduce manufacturing and selling costs. Prices of Phoenix EVs range from $165,000 to $250,000, whereas prices of comparable traditional combustion engine vehicles range from approximately $90,000 to $140,000. Prices of the recently acquired transit bus business range from $650,000 to $1,100,000. The cost difference is due to the incremental cost of electric drivetrain, including lithium-ion batteries, motors, inverter and control software, coupled with the relatively low volume of production, leading to higher overheads.

In addition, government subsidies and incentives, including those available in California, are important for the cost-competitiveness of Phoenix’s EVs and transit buses, and Phoenix’s growth and prospects depend in part on the availability and amounts of these subsidies and incentives. Any reduction, elimination or discriminatory application of government subsidies and incentives because of budgetary challenges, policy changes, the reduced need for such subsidies and incentives due to the perceived success of electric vehicles, or other reasons may impair the cost-competitiveness of Phoenix’s EVs and transit buses.

The range of Phoenix’s existing EVs or transit buses is limited, compared with that of traditional vehicles.

Whereas traditional combustion engine medium-duty vehicles may travel from 240 to 350 miles before refueling, Phoenix’s existing EVs have a maximum range of 160 miles and minimum recharging time of five to six hours. Currently, Phoenix’s EVs can be charged only at the owner’s location or select public charging locations using compatible charging equipment, further limiting the EVs to local use. Accordingly, potential customers needing vehicles with longer ranges or quicker turnaround of depleted electric energy supply may find Phoenix’s products relatively less attractive.

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We may experience significant delays in the design, manufacture, financing, regulatory approval, launch and delivery of our vehicles, which could harm our business, prospects, financial condition, results of operations, and cash flows.

Our future business depends in large part on our ability to execute on our plans to develop, manufacture, market and sell our vehicles. Any delay in the financing, design, manufacture, regulatory approval, launch or delivery of our vehicles could materially damage our brand, business, prospects, financial condition, results of operations, and cash flows, and could cause liquidity constraints. Vehicle manufacturers often experience delays in the design, manufacture, and commercial release of new products. To the extent we delay the launch of our vehicles, our growth prospects could be adversely affected as we may fail to establish or grow our market share. Furthermore, we rely on third-party suppliers for the provision and development of the key components and materials used in our vehicles. To the extent our suppliers experience any delays in providing us with or developing necessary components we could experience delays in delivering on our timelines.

All of Phoenix’s current range of products are built on Ford’s E-450 chassis. A decision by Ford to offer an electric version of this chassis, directly, would impact the viability of Phoenix’s current products.

Phoenix currently builds all its products on Ford’s E-450 chassis. Ford does not offer an electric version of this chassis, due to the relatively small market size for medium-duty electric vehicles. As volumes increase, there is a potential risk of Ford’s launching an electric version of Ford’s E-450 chassis directly from the factory, negating the need for Phoenix’s current range of products. Additionally, a shortage in the availability of this chassis would impact Phoenix’s capability to produce and fulfill customer’s orders in a timely manner.

Our future growth is dependent upon the willingness of operators of commercial vehicle fleets to adopt electric vehicles and upon our ability to produce, sell and service vehicles that meet their needs. If the market for commercial electric vehicles does not develop as we expect, or if it develops slower than we expect, our business, prospects, financial condition and operating results will be adversely affected.

Our growth requires adoption of commercial vehicle operators to adopt EVs for their fleets and on our ability to produce, sell and service vehicles that meet their needs. EVs’ use in the medium-duty commercial vehicle market is a relatively new development, particularly in the United States, and is characterized by rapidly changing technologies and evolving government regulation, industry standards, and customer views of the merits of using electric vehicles in their businesses. This process has been slow, as, without including the impact of government or other subsidies and incentives, the purchase prices for Phoenix’s EVs currently is higher than those for diesel-fueled vehicles. The relatively low price of oil has also hurt Phoenix’s over the last few years.

Phoenix must educate fleet managers regarding the economic benefits that Phoenix believes result over the life of its EVs. Phoenix believes that these benefits depend on the following:

● the difference in the initial purchase prices of commercial electric vehicles and vehicles with comparable gross vehicle weight powered by internal combustion engines or hybrids, both including the effect of government and other subsidies and incentives designed to promote the purchase of electric vehicles;

● the total cost of ownership of the vehicle over its expected life, which includes the initial purchase price and ongoing operating and maintenance costs;

● the availability and terms of financing options for purchases of vehicles and, for commercial electric vehicles, financing options for battery systems;

● the availability of tax and other governmental incentives to purchase and operate electric vehicles and future regulations requiring increased use of nonpolluting vehicles;

● government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

● fuel prices, including volatility in the cost of diesel fuel;

● cost and availability of other alternatives to diesel fueled vehicles, such as vehicles powered by natural gas or hybrids;

● corporate sustainability initiatives;

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● commercial electric vehicle quality, performance and safety (particularly with respect to lithium-ion battery packs);

● the quality and availability of service for the vehicle, including the availability of replacement parts;

● the range over which commercial electric vehicles may be driven on a single battery charge;

● access to charging stations and related infrastructure costs, and standardization of electric vehicle charging systems;

● electric grid capacity and reliability; and

● macroeconomic factors.

If, in weighing these factors, operators of commercial vehicle fleets determine that there is no compelling business justification for purchasing commercial EVs, the market for commercial EVs may not develop as, or may develop more slowly than, Phoenix expects which would adversely affect Phoenix’s business, prospects, financial condition and operating results.

Phoenix has a limited number of customers, with which Phoenix does not have long-term agreements, and expects that a significant portion of our future sales will be from a limited number of customers. The loss of any of these customers could materially harm Phoenix’s business.

A significant portion of Phoenix’s projected future revenue is expected to be generated from a limited number of customers. Phoenix has no contracts with customers that include long-term commitments that ensure future sales of vehicles. The loss of or a reduction in sales or anticipated sales to Phoenix’s most significant customers would have a material adverse effect on our business, prospects, financial condition and operating results.

An inability to attract new customers for our Gen 4 products and future generations of products will substantially impact our ability to grow revenue or improve our financial results.

Our growth will depend in large part on our ability to attract new customers. As we drive growth in our existing markets, and we anticipate that our sales activities will lead to additional orders and deliveries for our Gen 4 products, and, as a result, increase our base of customers. An inability to attract new customers would substantially impact our ability to grow revenue or improve our financial results. Further, we often receive binding and non-binding purchase orders from customers that are contingent on various factors, such as completing a successful pilot program, obtaining third-party financing or obtaining government grants, such as HVIP. In addition, some customers are interested in future products, not yet in our production. While we continuously strive to expand our product portfolio, developing new products takes a significant amount of time and expense, such as engineering work, sourcing new suppliers, marketing, testing and quality control. In addition, orders may be delayed for a number of reasons, many of which are beyond our control, including supplier delays, which may cause delays in our manufacturing process, or delays in customers obtaining financing. As a result, any such orders may not result in actual revenue in the near term or at all. Accordingly, revenue estimates and the amount and timing of work expected to be performed at the time the estimate of order backlog is developed is subject to change.

We may not be able to accurately estimate the supply and demand for our vehicles, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience delays.

It is difficult to predict our future revenues and appropriately budget for our expenses, and we may have limited insight into trends that may emerge and affect our business. We will be required to provide forecasts of our demand to our suppliers several months prior to the scheduled delivery of products to our prospective customers. If we overestimate our requirements, our suppliers may have excess inventory, which indirectly would increase our costs. If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt manufacturing of our products and result in delays in shipments and revenues. In addition, lead times for materials and components that our suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If we fail to order sufficient quantities of product components in a timely manner, the delivery of vehicles to our customers could be delayed, which would harm our business, financial condition and operating results.

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We face various challenges in scaling manufacturing, assembling, and converting processes effectively and quickly from low volume production to high volume production for our Gen 4 drivetrain products.

We have no experience to date in high volume manufacturing, assembling, and converting to commercial electric vehicles. We do not know whether we will be able to develop efficient, low-cost manufacturing, assembly and converting 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 we target. Any failure to develop such manufacturing, assembly and converting 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. Even if we are successful in developing our high-volume manufacturing, assembly and converting 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, or in time to meet our commercialization schedules or to satisfy the requirements of customers. In addition, certain components we integrate 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 experience disruptions in our supply chain or if we cannot obtain materials of sufficient quality at reasonable prices.

The complexity in our business is expected to grow as we develop new products and services. We have limited experience in simultaneously designing, testing, manufacturing, upgrading, adapting and selling our electric drivetrains as well as limited experience allocating our available resources among the design and production of multiple electric drivetrains. As we add complexity to our product line and introduce new products and services, we may experience unexpected delays.

If we are unable to scale our existing assembly processes and systems quickly while maintaining our current quality level, including as a result of supply chain constraints and 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.

If we fail to scale our business operations or otherwise manage future growth effectively as we attempt to rapidly grow our company, we may not be able to produce, market, service and sell our vehicles profitably or successfully.

Our future growth depends upon our ability to maintain relationships with our existing suppliers and source suppliers for our critical components, and to complete building out our supply chain, while effectively managing the risks due to such relationships.

Our success will be dependent upon our ability to maintain and expand our relationships with suppliers who are critical and necessary to the output and production of our vehicles. We also rely on a small group of suppliers to provide us with the components for our vehicles. The supply agreements we have or may enter into with key suppliers in the future may have provisions where such agreements can be terminated in various circumstances, including potentially without cause. If these suppliers become unable to provide, or experience delays in providing, components, or if the supply agreements we have in place are terminated, it may be difficult to find replacement components. Changes in business conditions, pandemics, governmental changes and other factors beyond our control or that we do not presently anticipate could affect our ability to receive components from our suppliers.

Further, we have not secured supply agreements for all of our components. In addition, there is the possibility that finalizing the supply agreements for the parts and components of our vehicles will cause significant disruption to our operations, or such supply agreements could be at costs that make it difficult for us to operate profitably.

If we do not enter into long-term supply agreements with guaranteed pricing for our parts or components, we may be exposed to fluctuations in prices of components, materials and equipment. Agreements for the purchase of battery cells typically contain pricing provisions that are subject to adjustment based on changes in market prices of key commodities. Substantial increases in the prices for such components, materials and equipment would increase our operating costs and could reduce our margins, if we cannot recoup the increased costs. Any attempts to increase the announced or expected prices of our vehicles in response to increased costs could be viewed negatively by our potential customers and could adversely affect our business, prospects, financial condition or operating results.

We may be unable to adequately control the costs or maintain adequate supply of components associated with our operations.

We may be unable to adequately control the costs associated with our operations. We expect to incur significant costs related to procuring raw materials required to manufacture and assemble our vehicles. The prices for these raw materials fluctuate depending on factors beyond our control. Our business also depends on the continued supply of battery packs for our vehicles. We are exposed to multiple risks relating to availability and pricing of quality lithium-ion battery packs.

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Furthermore, currency fluctuations, tariffs or shortages in petroleum or other raw materials and other economic or political conditions may result in significant increases in freight charges and raw material costs. Substantial increases in the prices for our raw materials or components would increase our operating costs, and could reduce our margins. In addition, a growth in popularity of electric vehicles without a significant expansion in battery cell production capacity could result in shortages, which would result in increased costs in raw materials to us or impact our prospects.

Disruption of supply or shortage of raw materials could harm our business.

Historically, we have experienced significant delivery delays and supply shortage with our BOM components, battery packs in particular. When encountered with supply disruption or shortage, our production plans and delivery schedules to our customers are to a large extent dictated by the timing of receiving these BOM components, or when a different supplier is fully qualified and customized into our product design. For example, COVID-19 has caused disruptions to and delays in our operations, including shortages and delays in the supply of certain parts, including batteries and chassis. Although we have worked diligently with our suppliers to mitigate the risks, we expect supply chain delays to continue to have an impact on our 2025 production and revenue and possibly thereafter. Any such supply interruption or shortage could materially adversely affect our business and operating results.

Phoenix EVs use lithium-ion batteries, which, if not appropriately managed and controlled, have caught fire or released smoke and flames. Such events could result in liability under Phoenix’s warranties, for damage or injury, adverse publicity and a potential safety recall, any of which would hurt Phoenix’s prospects.

The battery packs in Phoenix’s EVs use lithium-ion cells, which, if not appropriately managed and controlled can rapidly release energy by venting smoke and flames that can ignite nearby materials. Highly publicized incidents of laptop computers and cell phones bursting into flames have focused attention on the safety of these cells. These events also have raised questions about the suitability of lithium-ion cells for automotive applications. There can be no assurance that a field failure of Phoenix’s battery packs will not occur, which would damage the vehicle or lead to personal injury or death that subject Phoenix to lawsuits. Furthermore, there is some risk of electrocution if individuals who attempt to repair battery packs 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 could adversely affect Phoenix’s business, prospects, financial condition and operating results.

If our vehicles fail to perform as expected or have defects, our ability to develop, market and sell or lease our electric vehicles could be harmed.

If our vehicles were to contain defects in design and/or manufacture that cause them not to perform as expected or that require repair, our ability to develop, market and sell or lease our vehicles could be harmed. For example, the operation of our vehicles is highly dependent on software that will require modification and updates over time. Software products are inherently complex and often contain defects and errors when first introduced. We currently have a limited frame of reference by which to evaluate the long-term quality, reliability and performance characteristics of our buses, trucks, and other products. There can be no assurance that we will be able to detect and repair any defects in our products before commencing the sale of our vehicles. Any product defects or any other failure of our vehicles to perform as expected could harm our reputation and result in adverse publicity, lost revenue, delivery delays, product recalls, product liability claims or significant warranty and other expenses, and could have a material adverse impact on our business, financial condition, operating results and prospects.

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We are relying on third-party suppliers to develop a number of advanced technologies for use in our products.

There can be no assurances that our suppliers will be able to meet the technological requirements, production timing and volume requirements to support our business plan. In addition, the technology may not comply with the cost, performance useful life and warranty characteristics we anticipate in our business plan. As a result, our business plan could be significantly impacted and we may incur significant liabilities under warranty claims which could adversely affect our business, prospects and results of operations.

We are relying on a limited number of third-party suppliers to provide us with products for our charger and material handling division.

Currently we are dependent entirely on third-party suppliers and partners for our chargers and material handling product lines. If these suppliers are not able to provide us with products due to supply chain constrains or other reasons, we do not have the capability or knowledge to produce these products locally. This would result in delays in getting end products to customers and negatively impact our business and results of operations.

Our success may be dependent on our development and protection of intellectual property rights.

We rely on confidentiality and trade secret protections to protect our proprietary technology. All new EV drivetrain and technical developments by us will be owned by us. Our success will, in part, depend on our ability to obtain patents and trademarks and protect our trade secrets and proprietary technology. We are currently maintaining our engineering under confidentiality agreements and other agreements to preserve our trade secrets and other proprietary technology. Although we have entered into confidentiality agreements with our employees, consultants and contractors, our agreements may not adequately protect our intellectual property, particularly with respect to conflicts of ownership relating to work product generated by our employees, consultants and contractors, and we cannot be certain that others will not gain access to our trade secrets and other proprietary technology. Others may independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets.

We may not succeed in establishing, maintaining and strengthening our brand, which would materially and adversely affect customer acceptance of our vehicles and components and our business, revenues and prospects.

Our business and prospects heavily depend on our ability to develop, maintain and strengthen our brand. If we are not able to establish, maintain and strengthen our brand, we may lose the opportunity to build a larger base of customers. Our ability to develop, maintain and strengthen our brand will depend heavily on the success of our marketing efforts. The automobile industry is intensely competitive, and we may not be successful in building, maintaining and strengthening our brand. Our current and potential competitors, particularly automobile manufacturers headquartered in the United States, Japan, the European Union and China, have greater name recognition, broader customer relationships and substantially greater marketing resources than we do. If we do not develop and maintain a strong brand, our business, prospects, financial condition and operating results will be materially and adversely impacted.

Our electric vehicles will compete for market share with vehicles powered by other vehicle technologies that may prove to be more attractive than our vehicle technologies.

Our bus and light and medium-duty truck market currently is serviced by many manufacturers with existing customers and suppliers using proven and widely accepted fuel technologies. Additionally, our competitors are working on developing technologies that may be introduced in our target market. If any of these alternative technology vehicles can provide lower fuel costs, greater efficiencies, greater reliability or otherwise benefit from other factors resulting in an overall lower total cost of ownership, this may negatively affect the commercial success of our vehicles or make our vehicles uncompetitive.

We may be unable to keep up with changes in electric vehicle technology as new entrants and existing, larger manufacturers enter the electric vehicle space.

Our Zeus line of buses and trucks are designed for use with, and is dependent upon, existing electric vehicle technology. As new companies and larger, existing vehicle manufacturers enter the electric vehicle space, we may lose any technological advantage we may have had in the marketplace and suffer a decline in our position in the market. As technologies change, we plan to upgrade or adapt our products to continue to provide products with the latest technology. However, our products may become obsolete or our research and development efforts may not be sufficient to adapt to changes in or to create the necessary technology to effectively compete. As a result, our potential inability to adapt to and develop the necessary technology may harm our competitive position.

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The failure to successfully integrate Proterra Transit Business Unit’s business and operations in the expected time frame may adversely affect the combined company’s future results.

As previously reported, on January 11, 2024, the Company completed the acquisition of the Proterra Transit Business Unit pursuant to the asset purchase agreement with Proterra. The Company believes that the acquisition of the Proterra Transit Business Unit will result in certain benefits, including revenue growth, certain cost synergies, drive product innovations, and operational efficiencies. However, to realize these anticipated benefits, the businesses of the Company and the Proterra Transit Business Unit must be successfully combined. The success of the asset acquisition will depend on the Company’s ability to realize these anticipated benefits from combining the businesses of the Company and the Proterra Transit Business Unit. The Company may fail to realize the anticipated benefits of the asset acquisition for a variety of reasons, including the following:

● failure to successfully manage relationships with Proterra Transit Business Unit customers, distributors and suppliers;

● failure of customers to accept new products or to continue as customers of the Company;

● customer and revenue attrition of the Proterra Transit Business Unit in excess of anticipated levels;

● failure to qualify the Company’s products as a primary source of supply with OEM customers on a timely basis or at all;

● potential incompatibility of technologies and systems;

● failure to integrate and leverage the increased scale of the Proterra Transit Business Unit quickly and effectively;

● potential difficulties preparing financial statements and integrating and harmonizing financial reporting systems;

● the loss of key employees of the Proterra Transit Business Unit;

● failure to effectively coordinate sales and marketing efforts to communicate the capabilities of the combined company; and

● failure to combine product offerings and product lines quickly and effectively.

● the risk of entering market segments in which the Company has no or limited direct prior experience and where competitors in such market segments have stronger market segment positions;

● failure to have adequate capital resources to finance the Proterra Transit Business Unit operations and business

The actual integration may result in additional and unforeseen expenses or delays. If the combined company is not able to successfully integrate the Proterra Transit Business Unit’s business and operations, or if there are delays in combining the businesses, the anticipated benefits of the asset acquisition may not be realized fully or at all or may take longer to realize than expected.

Phoenix’s business requires highly technically skilled personnel, for whom Phoenix must compete for employment.

Phoenix’s manufacturing and research and development require highly skilled electrical, mechanical, and software engineers. Competition for employment of such individuals is intense, and Phoenix’s ability to attract and retained and retaining them is essential to continuing its business. Growth of Phoenix’s business will depend upon its ability to compete for increasing numbers of such employees, and there can be no assurance that Phoenix will be able to do so. Our inability to attract and retain key personnel may materially and adversely affect our business operations. Any failure by our management to effectively anticipate, implement and manage the changes required to sustain our growth would have a material adverse effect on our business, financial condition and results of operations.

We will also need to hire and train a significant number of hourly employees to expand our commercial manufacturing operations. Furthermore, in the event employees hired by us seek to join or form a labor union, we could be subject to risks as we engage in an attempt to finalize negotiations with any such union, including potential work slowdowns or stoppages, delays and increased costs. If we are unsuccessful in hiring and training an expanded workforce in a timely and cost-effective manner, our business, financial condition and results of operations could be adversely affected.

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Our lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results or prevent fraud, which may affect the market for and price of our common stock.

To implement Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report of management on the company’s internal control over financial reporting. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our Company’s internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013 Framework). The Company has identified the following material weaknesses in the design or operation of internal controls, which could adversely affect the Company’s ability to record, process, summarize and report financial data: (1) failure to maintain an effective control environment of internal control over financial reporting; (2) failure to develop an effective risk assessment process to identify and evaluate at a sufficient level of detail all relevant risks of material misstatement, including business, operational, and fraud risks; (3) ineffective monitoring activities to assess the operation of internal control over financial reporting; and (4) lack of sufficient controls designed and implemented for financial information processing and reporting and lacked resources with requisite skills for the financial reporting under U.S. GAAP.

We will be subject to the requirement that we maintain internal controls and that management perform periodic evaluation of the effectiveness of the internal controls. Effective internal control over financial reporting is important to prevent fraud. As a result, our business, financial condition, results of operations and prospects, as well as the market for and trading price of our shares of common stock, may be materially and adversely affected if we do not have effective internal controls. Before becoming a public company, we were a private company with limited resources. As a result, we may not discover any problems in a timely manner and current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our shares of common stock. The absence of internal controls over financial reporting may inhibit investors from purchasing our shares and may make it more difficult for us to raise funds in a debt or equity financing.

We intend to implement measures designed to improve our internal control over financial reporting to address the underlying causes of these material weaknesses, including (1) hiring more qualified staff and increasing resources with sufficient knowledge and experience to strengthen financial reporting; (2) setting up a financial and system control framework to ensure proper segregation of duty and review procedures, with formal documentation of polices and controls in place; (3) forming a task force to design and improve processes and controls to monitor operations and record financial data; and (4) devoting proper time by senior management to perform comprehensive review of procedures to assess risks and enforce effective accountability.

In addition, we anticipate that the process of building and improving our accounting and financial functions and infrastructure will require significant additional professional fees, internal costs and management efforts. We expect that we will need to implement a new internal system to enhance the management of our financial, accounting, human resources and other functions. However, such a system would likely require us to complete many processes and procedures for the effective use of the system or to run our business using the system, which may result in substantial costs. Any disruptions or difficulties in implementing or using such a system could adversely affect our controls and harm our business. Moreover, such disruption or difficulties could result in unanticipated costs and diversion of management’s attention.

Additional material weaknesses or significant deficiencies may be identified in the future. If we identify such issues or if we are unable to produce accurate and timely financial statements, our stock price may decline and we may be unable to maintain compliance with the Nasdaq Listing Rules.

Risks Related to Ownership of Our Common Stock

The market price of our securities may fluctuate and may decline.

Fluctuations in the price of our securities could contribute to the loss of all or part of your investment. The trading price of our securities has been volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on the market value of our securities.

● actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

● changes in the market’s expectations about our operating results;

● success or failure of competitors;

● our operating results failing to meet the expectation of securities analysts or investors in a particular period;

● changes in financial estimates and recommendations by securities analysts concerning us or the market in general;

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● operating and stock price performance of other companies that investors deem comparable to us;

● our ability to market new and enhanced services and products on a timely basis;

● changes in laws and regulations affecting our business;

● commencement of, or involvement in, litigation involving us;

● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

● the volume of shares of our common stock available for public sale;

● short selling of our common stock or other securities;

● any announced or anticipated stock or equity linked instrument offering by us;

● any major change in the board of directors or management;

● sales of substantial amounts of common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and

● general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for automotive stocks or the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial condition or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

Trading of our common stock has been suspended on Nasdaq, which may adversely affect the liquidity and trading price of our shares, and we may be unable to regain or maintain listing on a national securities exchange.

On April 8, 2025, we received a determination letter from the Nasdaq Listing Qualifications Department (the “Staff”) stating that the Staff had determined to delist our securities due to continued non-compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share, and Listing Rule 5620(a), which requires listed companies to hold an annual meeting of shareholders within one year of the end of the fiscal year. Trading of our common stock on Nasdaq was suspended at the opening of business on April 15, 2025, and our common stock is currently quoted on the OTC Pink Market under the symbol “PEVM”.

In addition, on April 30, 2025, we received a notice from the Staff indicating that we were no longer in compliance with Listing Rule 5250(c)(1) due to our failure to file our Annual Report on Form 10-K for the year ended December 31, 2024. This matter serves as an additional basis for delisting.

On May 20, 2025, we appealed the Staff’s delisting determination before a Nasdaq Hearings Panel (the “Panel”). While our appeal is pending, trading of our common stock on Nasdaq remains suspended and continues to be quoted on the over-the-counter (“OTC”) market.

On April 18, 2025, we held our 2024 annual meeting of stockholders. As a result, we believe we have regained compliance with Listing Rule 5620(a). As a result of the filing of this Annual Report on Form 10-K, we believe we have regained compliance with Listing Rule 5250(c)(1).

We are diligently working to evidence compliance with all applicable requirements for continued listing on Nasdaq, including effecting a reverse stock split of the Company’s common stock with a ratio in the range between and including 1-for-1.5 and 1-for-5, with such ratio to be determined by the Company’s Board of Directors, for the primary purpose of maintaining the Company’s listing on Nasdaq. We have submitted a plan to regain compliance to that effect to the Panel as part of the hearing process; however, there can be no assurance the Panel will grant any request for continued listing or that the Company will be able to regain compliance with the applicable listing criteria within the period of time that may be granted by the Panel.

The OTC markets, particularly the Pink Sheets, are generally considered to be less efficient and transparent than national securities exchanges. Securities quoted on the OTC markets tend to have lower trading volumes and wider bid-ask spreads, which can result in limited liquidity and increased price volatility. As a result, the trading price of our common stock may be adversely affected, and investors may experience significant difficulty buying or selling shares or may face delays in the execution of transactions. Some investors may also be restricted from investing in our securities due to difficulty in accessing the OTC markets, policies preventing them from investing in securities not listed on a national exchange or other reasons.

Suspension of trading or delisting from Nasdaq may also have other adverse effects, including a potential loss of confidence among customers, strategic partners, vendors and employees. It may also reduce investor interest, limit our ability to raise capital on favorable terms, and diminish our capacity to engage in strategic transactions or growth opportunities and may also materially and adversely impact our credit terms with our vendors. Furthermore, our ability to attract and retain qualified personnel may be diminished, particularly where equity compensation is a key component of our employment packages.

There can be no assurance that we will be able to regain or maintain compliance with the continued listing requirements of Nasdaq or meet the standards of any other national securities exchange. If we are unable to regain or maintain a listing, our Company and stockholders could face significant material adverse consequences, including limited access to capital markets, decreased analyst coverage, reduced liquidity, increased volatility, reduced investor interest and confidence, and other material adverse effects.

Sales of substantial amounts of our common stock in the public markets by our existing stockholders, or the perception that such sales might occur, could cause the market price of our common stock to decline significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market perceives that we or our stockholders intend to sell, a substantial amount of our common stock in the public market, the market price of our common stock could decline significantly.

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The issuance of additional shares of our common stock in connection with financings, acquisitions, investments, our share incentive plans or otherwise will dilute all other stockholders.

Our certificate of incorporation authorizes us to issue up to 450,000,000 shares of our common stock and up to 50,000,000 shares of preferred stock. We may issue common stock or securities convertible into common stock from time to time in connection with a financing, acquisition, investment, our equity incentive plans or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the market price of our common stock to decline.

We do not expect to declare any dividends in the foreseeable future.

We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. Consequently, holders of our common stock may need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

Risks Relating to Regulation and Claims

Product liability or other claims could have a material adverse effect on our business.

The risk of product liability claims, product recalls and associated adverse publicity is inherent in the manufacturing, marketing and sale of all vehicles, including electric vehicles. Although we have liability insurance policies in place, that insurance may be inadequate to cover all potential product claims. Any product recall or lawsuit seeking significant monetary damages either in excess of our coverage, or outside of our coverage, may have a material adverse effect on our business and financial condition. We may not be able to secure additional liability insurance coverage on acceptable terms or at reasonable costs when needed or at all. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product recall could generate substantial negative publicity about our products and business and inhibit or prevent commercialization of other future product candidates. We cannot provide assurance that such claims and/or recalls will not be made in the future.

Regulatory requirements may have a negative effect upon our business.

All vehicles sold must comply with international, federal and state motor vehicle safety standards. In the United States, vehicles that meet or exceed all federally mandated safety standards are certified under the federal regulations. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving federal certification. Our Zeus buses and trucks are subject to substantial regulation under federal, state and local laws and standards. These regulations include those promulgated by the U.S. EPA, the National Highway Traffic Safety Administration (“NHTSA”), the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) and various state boards, and compliance certification is required for each new model year. These laws and standards are subject to change from time to time and we could become subject to additional regulations in the future. In addition, federal, state and local laws and industrial standards for electric vehicles are still developing. Compliance with these regulations could be challenging, burdensome, time consuming and expensive. If compliance results in delays or substantial expenses, our business could be adversely affected.

The unavailability, reduction or elimination of government and economic incentives could have a material adverse effect on our business, prospects, financial condition and operating results.

Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of the electric vehicle industry or other reasons may result in the diminished competitiveness of the electric vehicle industry generally. This could materially and adversely affect the growth of our business, prospects, financial condition and operating results.

While certain tax credits and other incentives for alternative energy production and electric vehicles have been available in the past, there is no guarantee these programs will be available in the future. If current tax incentives are not available in the future, our financial position could be harmed. As federal, state, or local legislation related to electric vehicles or data protection continues to develop, we will likely be required to expend significant additional resources to continue to modify or enhance our products, protective measures and internal processes to comply with such legislation.

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We may be exposed to liability for infringing upon other companies’ intellectual property rights.

Our success, in part, is dependent on our ability to operate without infringing on others’ proprietary rights. While we are not aware of any patents and trademarks which would cause our products or their use to infringe the rights of any third parties, we cannot be certain that infringement has not or will not occur. We could incur substantial costs, in addition to a great amount of time lost, in defending any patent or trademark infringement suits or in asserting any patent or trademark rights in a suit with another party.

We are subject to various environmental laws and regulations that could impose substantial costs upon us and cause delays in building our manufacturing facilities.

Our operations are and will continue to be subject to international, federal, state, and/or local environmental laws and regulations, including laws relating to water use; air emissions; use of recycled materials; energy sources; the protection of human health and the environment, natural resources and endangered species; and the use, handling, storage, disposal and human exposure to hazardous materials.

Environmental and health and safety laws and regulations can be complex, and we expect that we will be affected by future amendments to such laws or other new environmental and health and safety laws and regulations which may require us to change our operations, potentially resulting in a material adverse effect on our business, prospects, financial condition, and operating results. We have been required to obtain and comply with the terms and conditions of multiple environmental permits, certificates, or registrations, many of which are difficult and costly to obtain and could be subject to legal challenges. Violations of these laws, regulations, and permits, certificates and registrations can give rise to liability for administrative oversight and correction costs, cleanup costs, property damage, bodily injury and fines and penalties. In some cases, violations may result in suspension or revocation of permits, certificates or registrations. 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, suspension of production or a cessation of our operations, and reputational harm.

Contamination at properties we currently own or operate, will own or operate, we formerly owned or operated or to which hazardous substances were sent by us, 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 vapor intrusion and other exposure pathways or impacts to human health or the environment 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 required permits and approvals in connection with our planned production facilities that could require significant time and financial resources and delay our ability to operate these facilities, which would adversely impact our business, prospects, financial condition and operating results.

Changes in laws or regulations, or a failure to comply with any laws and regulations, or any litigation that we may be subject to or involved in may adversely affect our business, investments and results of operations.

We are subject to laws, regulations and rules enacted by national, regional and local governments and Nasdaq. In particular, we will be required to comply with certain SEC, Nasdaq and other legal and regulatory requirements. Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time consuming and costly.

Those laws, regulations and rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws, regulations or rules, as interpreted and applied, could have a material adverse effect on our business and results of operations.

We may be compelled to undertake product recalls or take other actions, which could adversely affect our business, prospects, operating results, reputation and financial condition.

Any product recall in the future may result in adverse publicity, damage our reputation and adversely affect our business, prospects, operating results and financial condition. In the future, we may, voluntarily or involuntarily, initiate a recall if any of our electric vehicles or components (including our battery packs) prove to be defective or noncompliant with applicable federal motor vehicle safety standards. Such recalls, whether caused by systems or components engineered or manufactured by us or our suppliers, would involve significant expense and diversion of management’s attention and other resources, which could adversely affect our brand image in our target market and our business, prospects, financial condition and operating results.

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We may not have adequate insurance coverage for possible claims, lawsuits, product recalls or other damages claims made against us.

The successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to any future claim. As a recently public company with limited operating history we may find it difficult to obtain and maintain certain categories of insurance such as adequate D&O insurance, product liability insurance, garage keepers insurance, cybersecurity insurance, etc.

Insufficient warranty reserves to cover future warranty claims could adversely affect our business, prospects, financial condition and operating results.

Our EVs and transit buses are sold with warranties, and as a result we need to maintain warranty reserves to cover any warranty-related claims. If our warranty reserves are inadequate to cover such future warranty claims, our business, prospects, financial condition and operating results could be materially and adversely affected. We may become subject to significant and unexpected warranty expenses. There can be no assurances that then-existing warranty reserves will be sufficient to cover all claims.

General Risk Factors

Economic conditions could adversely affect our business.

Uncertain global economic conditions could adversely affect our business. Negative global economic trends, such as decreased consumer and business spending, high unemployment levels and declining consumer and business confidence, pose challenges to our business and could result in declining revenues, profitability and cash flow. Although we continue to devote significant resources to support our brands, unfavorable economic conditions may negatively affect demand for our products.

Litigation may adversely affect our business, financial condition and results of operations.

From time to time in the normal course of our business operations, we may become subject to litigation that may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to our business operation are required. The cost to defend such litigation may be significant and may require a diversion of our resources. There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may adversely affect our business, financial condition and results of operations. Since inception, the Company has not been a party to any material litigation.

We are subject to cyber security risks. If a cyber security incident occurs, we could suffer information theft, data corruption, operational disruption and our business and results of operations could be harmed.

Our customers, and our industry generally, have become more dependent on digital and connected technologies to conduct business. We depend on digital and connected technologies to monitor our EVs, perform many of our services and to process and record financial and operating data, among other things. We also expect to increase our dependence on these technologies as we expand our offerings. Ensuring the secure and reliable processing, maintenance and transmission of this data is important to our operations and our customers. As cyber security incidents (including deliberate attacks) have increased in number, scope, and sophistication, energy assets (and related networks) may become the targets of more incidents. Our technologies, systems and networks, and those of our customers, vendors, suppliers and other business partners, may become the target of cyberattacks or information security breaches that could result in the loss or destruction of proprietary and other information, or other disruption of business operations. In addition, while we depend on certain business partners to store certain information regarding our customers and employees, these third parties may be a target of cyberattacks or information security breaches that could result in the unauthorized release, gathering, monitoring, or misuse of sensitive information. Our recourse against these business partners, if any, may be limited. In addition, we, our customers, vendors, and/or business partners may be unable to detect certain breaches (such as unauthorized surveillance) for an extended period of time. Our systems and controls for protecting against cyber security risks, and those used by our business partners, may be insufficient. The loss, misuse, destruction, unauthorized release, gathering, or monitoring of sensitive information result in significant financial losses, loss of customers and business opportunities, reputation damage, litigation (including any damages awarded), regulatory fines, penalties or intervention, reimbursement or other compensatory costs, or otherwise adversely affect our business, financial condition or results of operations. We will likely be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber security incidents. The reliability and capacity of our systems is critical to our operations. Any difficulties in implementing or integrating new systems or enhancing current systems, or any material disruption in our information technology systems or systems could have an adverse effect on our business and results of operations.

Phishing scams could compromise sensitive data, harm our reputation, and lead to financial losses.

Phishing scams involve malicious actors attempting to trick our employees into providing sensitive information or accessing malicious links, often through fraudulent emails or websites. If our employees fall victim to these scams, it could result in financial losses, damage to our brand reputation, and compromise of confidential or proprietary information. Despite implementing preventative measures and employee training, the risk of phishing scam remains, and a successful attack could cause disruption and have significant negative financial impact to our business.

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Material adverse developments in domestic and global economic conditions, or the occurrence of other world events, could materially adversely affect our revenue and results of operations.

Various factors contribute to the uncertain economic environment, including the ongoing Russia-Ukraine and Israel wars, the increase in, and volatility of, interest rates, high inflation, an actual recession or fears of a recession, trade policies and tariffs and geopolitical tensions. Our inability to offset price inflation in our materials, components, shipping, or labor through increased prices to customers with long-term fixed contracts and formula-based or long-term fixed price contracts with suppliers could adversely affect our business, financial condition and results of operations. Global supply chain and labor market challenges could also negatively affect our performance as well as the performance of our suppliers. Interest rate increases have also created financial market volatility and could further negatively impact financial markets, lead to an economic downturn or recession or have an adverse effect on our operating results. Economic slowdowns can also negatively impact municipal and state tax collections and put pressure on law enforcement budgets which may increase the risk that our customers will be unable to appropriate funds for existing or future contracts with us. In addition, geopolitical risks could affect our customers’ budgets and policies. These and other factors may adversely affect customer demand and ability to pay, cause decrease in sales, and negatively impact the realizability of our accounts and notes receivable and contract assets.

ITEM 1B. Unresolved Staff Comments

None.

ITEM 1C. Cybersecurity

Cybersecurity risk management is an integral part of our overall enterprise risk management program. We have made significant investments in processes, and technology to protect Phoenix’s connected vehicles, services, confidential business information, and employee and consumer personal data. We have implemented multiple and varied processes and technologies for the avoidance, identification, assessment, mitigation, and remediation of risks from cybersecurity threats and incidents designated to protect against the cybersecurity risk landscape. We are continuously assessing and enhancing our protection, detection, response, and recovery capabilities and regularly engage with the cybersecurity communities, third-party cybersecurity and compliance partners, internal stakeholders, and organizations leading best practices, to support our goals and objectives. At its core, our cybersecurity risk management program integrates multiple teams across the organization, including our operations team, with leadership and oversight by executive management, the Audit Committee of the Board of Directors (“Audit Committee”), and the Board of Directors (“Board”).

Governance

Board and Committee Oversight

Our Board has oversight responsibility for our overall enterprise risk management and delegates cybersecurity risk management oversight to the Audit Committee. The Audit Committee oversees Phoenix’s policies and practices with respect to risk assessment and risk management, including discussing with management (i) Phoenix’s major financial, cybersecurity, privacy and other information technology risk exposures; (ii) the steps that have been taken to monitor and control such exposures; and (iii) any material cybersecurity threats or incidents. The Audit Committee and the Board receive regular reporting from Phoenix’s management on the status of our cybersecurity program and ad hoc reporting on material cybersecurity threats and incidents.

Management’s Role

At the management level, our COO and CFO are responsible for leading our cybersecurity risk management program and enterprise cybersecurity matters. The COO and CFO monitor the prevention, detection, mitigation, and remediation of cybersecurity threats and incidents. For potentially material cybersecurity threats and incidents, we escalate these to the CEO, and would raise such threats and incidents to our Audit Committee Chair and, as appropriate, to our Board as they arise.

Management of Cybersecurity Risk

Our Cybersecurity Risk Management Processes

Our cybersecurity risk management program provides a framework for handling cybersecurity threats and incidents by escalating risks, issues, and key decisions to management, the Audit Committee, and our Board. Our program is designated to protect our products and services, confidential business information (including intellectual property), and employee and consumer data and includes steps for detecting and monitoring cybersecurity threats and incidents, assessing the severity of such threats or incidents, identifying the source of such threats or incidents, including whether such threats or incidents are associated with a third-party vendor or service provider, implementing cybersecurity countermeasures and mitigation strategies and informing management, the Audit Committee, and our Board of potentially material cybersecurity threats and incidents. In addition, our operations team provides cybersecurity training to employees during the onboarding process and periodic basis thereafter, with specialized training and tabletop exercises for our core incident response teams and executive management on at least an annual basis.

ITEM 2. Properties

Our principal executive offices are located at its headquarters comprising approximately 39,043 square feet at 1500 Lakeview Loop, Anaheim, California. The lease on the Anaheim facility expires in March 2027. We currently carry out the production of our electric transit buses from a lease facility at 1 Whitlee Ct, Greenville, South Carolina. The Greenville Facility is leased by use at a rent of $1.3 million per year and the lease on Greenville Facility expires in June 2026. We believe that our existing facilities are adequate for our current business operations and we will be able to enter into lease arrangements on commercially reasonable terms for future expansion.

ITEM 3 Legal Proceedings

As of the date of this report, there are no pending or ongoing legal proceedings that are material to the Company’s operations or financial condition. We regularly review and update our disclosure to reflect any changes in our legal exposures.

ITEM 4 Mine Safety Disclosures

Not applicable.

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PART II

ITEM 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock began trading on The Nasdaq Capital Market under the symbol “PEV” on June 8, 2022.

On April 8, 2025, we received a notice from Nasdaq stating that the staff had determined to delist our securities due to continued non-compliance with Nasdaq Listing Rule 5550(a)(2), which requires a minimum bid price of $1.00 per share, and Listing Rule 5620(a), which requires listed companies to hold an annual meeting of shareholders within one year of the end of the fiscal year. Trading of our common stock on Nasdaq was suspended at the opening of business on April 15, 2025. Our common stock is currently quoted on the OTC Pink Market under the symbol “PEVM”. Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Holders of Common Equity

As of May 20, 2025, there were 11 holders of record of our common stock. Such numbers do not include beneficial owners holding shares, rights or units through nominee names.

Dividends

We have not paid any cash dividends on our common stock to date. The payment of cash dividends in the future is dependent upon our revenues and earnings, if any, capital requirements, the terms of any indebtedness and general financial condition. The payment of any cash dividends will be within the discretion of the Board at such time. In addition, the Board is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future.

Securities Authorized for Issuance Under Equity Compensation Plans

For a description of securities authorized under our equity compensation plans, see Note 14 “Stock-based Compensation” to the consolidated financial statements included elsewhere in this annual report on Form 10-K for more information.

Recent Sales of Unregistered Securities

Any previous sales of unregistered securities by the Company have been previously disclosed in our reports on Form 8-K filed with the SEC.

Issuer Purchases of Equity Securities

None.

ITEM 6 [Reserved]

ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis in conjunction with our financial statements and the related notes appearing elsewhere in this annual report on Form 10-K. This discussion may contain forward-looking statements based on current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 1A.— Risk Factors” or in other parts of this annual report on Form 10-K.

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Basis of Presentation

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and could have a material impact on our financial condition or results of operations. We have critical accounting estimates in the areas of accounts receivable and allowance for credit loss, impairment of long-lived assets, impairment of goodwill, fair value of derivative liabilities, and product warranties.

Principal Factors Affecting Our Results of Operations

We believe that the following factors have had, and we expect that they will continue to have, a significant effect on the development of our business, financial condition and results of operations.

● BOM and Supply Chain Challenges. Purchased materials represent the largest component of cost of goods sold in our products and we continue to explore ways to improve cost structure of our products through better design, strategic alliances for sourcing, supply chain optimization, and, in some cases vertical integration. We believe that an increase in volume and additional experience as well as long term and strengthened supply chain partnerships will allow us to continue to reduce our Bill of Materials (“BOM”), labor and overhead costs, as a percentage of total revenue. By reducing material costs, driving improvement in battery performance, increasing facility utilization rates and achieving better economies of scale, we can reduce prices while maintaining or growing gross margins of our products to further lower customers’ total cost of ownership (“TCO”) and help accelerate commercial electric vehicle adoption. Because we rely on third party suppliers for the development, manufacture, and development of many of the key components and materials used in our vehicles, we have been affected by industry-wide challenges such as significant delivery delays and supply shortages of certain BOM components. While we continue to focus on mitigating risks to our operations and supply chain in the current industry environment, we expect that these industry-wide trends will continue to affect our ability and the ability of our suppliers to obtain parts and components on a timely basis for the foreseeable future, having a significant impact on our business and results of operations in 2024 and possibly thereafter.

● Availability of Funding to Develop Products and Scale Production. Our results are impacted by our ability to sell our electrification solutions and services to new and existing customers. We have had initial success with selling to our fleet customers. In order to sell additional products to new and existing customers, we will require substantial additional capital to develop our products and services, ramp up production and support expansion. Although we pursue an asset light strategy, we expect that both our capital and operating expenditures will increase significantly in connection with our ongoing activities, as we continue to invest in our technology, research and development efforts, obtain, maintain and improve our operational, financial and management information systems, hire additional personnel, obtain, maintain, expand and protect our intellectual property portfolio. Until we can generate sufficient revenue from vehicle sales, we expect to primarily finance our operations through proceeds from public or private stock offering, debt financings including but not limited to term loans, revolving line of credit and equity linked instruments, and potentially federal and state incentive funding programs. The amount and timing of our future funding requirements, will depend on many factors, including the pace and results of our research and development efforts, the lead time for various components in our supply chain, and our ability to successfully manage and control costs and scale our operations.

● Government Subsidies and Incentive Policies. With growing emphasis on improving air quality around our communities, large states like California are mandating key end user segments to switch to zero emission transportation options. Some of the key regulations driving growth in our addressable market include:

● requiring all transit buses in California to be zero emissions by 2040;

● requiring all airport shuttles in California to be all electric by 2035;

● requiring at least 50% of all medium-duty trucks sold in California to electric by 2030;

● requiring specific end user segments like drayage and yard trucks to go electric.

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Other states like New York, New Jersey and Massachusetts are also expected to bring in regulatory requirements for key end user segments, such as transit agencies and school buses to switch to all electric transportation options. Fifteen other states including Connecticut, Colorado, Hawaii, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington have committed to follow California’s Advanced Clean Trucks Regulation. Primarily driven by the urgent need to meet carbon and greenhouse gas emission reduction targets, various state and federal agencies are also supporting the switch to zero emission transportation, providing a host of funding and incentive support to develop, demonstrate and deploy zero emission transportation solutions. Some of the key funding/ incentives driving adoption of electric medium duty vehicles include:

● the California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project, which offers a minimum of $60,000 per vehicle as incentive for Class 4 electric vehicles registered and operating in the state;

● the New York Truck Voucher Incentive Program offering up to $100,000 per Class 4 electric vehicle;

● funding from federal agencies like the Federal Transit Administration, covering up to 80% of the cost of procuring electric transit buses and various funding options covering up to 100% of the cost of procuring all electric school buses across key states;

● Federal and various state agencies have established incentives for setting up both public and private charging infrastructure. Notably, the California Energy Commission and the California Public Utilities Commission have approved funding up to 100% of the cost of setting up chargers and related infrastructure. Large utilities like Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric have ‘Charge Ready’ programs that cover the entire cost of setting up charging infrastructure. Other states like New York, Chicago, North Carolina, Tennessee, Texas and Ohio have also introduced programs to support fleets with their charging infrastructure requirements.

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Results of Operations

	Year Ended			Year ended
	December 31,			December 31,
(In US$ thousands, except for share and per share data)	2024			2023
Revenues - third parties	$	31,154		$	3,011
Revenues - related parties		—			111
Total revenues		31,154			3,122
Cost of revenues		24,099			3,398
Gross profit (loss)		7,055			(276	)
Operating expenses:
Selling, general and administrative		33,752			14,902
Provision for credit loss		—			360
Impairment of long-lived assets		—			4,968
Impairment of goodwill		4,271			—
Operating loss		(30,968	)		(20,506	)
Other income (expense):
Interest expense, net		(4,531	)		(606	)
Loss on sales-type leases		—			(98	)
Loss on warrants issued for private placement		(7,432	)		—
Gain (loss) on change in fair value of derivative liability		641			(319	)
Gain on change in fair value of warrant liability		15,227			—
Employee retention credit		—			697
Bargain purchase gain		38,271			—
Others		213			209
Total other income (expense), net	$	42,389		$	(117	)
Income (loss) before income taxes		11,421			(20,623	)
Income tax expenses		(3,489	)		(22	)
Net income (loss)	$	7,932		$	(20,645	)
Net earnings (loss) per share of common stock:
Basic	$	0.22		$	(0.97	)
Diluted	$	0.21		$	(0.97	)
Weighted average common stocks outstanding
Basic		35,497,296			21,199,023
Diluted		36,548,129			21,199,023

Net Revenues

Our revenues were primarily derived from sales from transit buses, sale and lease of EVs, sales of forklifts and other revenue. Other revenue consists of engineering and maintenance service, sales of component and charging stations, shipping and delivery fees and others.

For the years ended December 31, 2024 and 2023, our revenues were $31.1 million and $3.1 million, respectively. Our total revenue increased by $28.0 million, or 897.9%, primarily due to the acquisition of Proterra Transit Business Unit. The transit business unit contributed $30.0 million of revenue to the Group for the year ended December 31, 2024. The increase was partially offset by the decline in our sales of EVs. We delivered 9 EVs during the year ended December 31, 2023 while we delivered only 3 EVs during the year ended December 31, 2024. Such decrease was mainly because we incurred cash shortage issues starting from late 2023 and also due to a shift in our operation focus to more on the transit business unit.

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Our revenue breakdown by major categories is as follows:

	Year ended		Year ended
(In US$ thousands)	December 31, 2024		December 31, 2023
Sales of transit buses	$	24,615	$	—
Sales of EVs		806		1,492
Lease of EVs		116		369
Sales of Forklifts		45		410
Sales of parts		1,583		—
Service revenue		2,645		—
Others		1,344		851
	$	31,154	$	3,122

We receive grants from government agencies related to sales of transit buses, and sales and leases of EVs. For the years ended December 31, 2024 and 2023, the amount of governmental grant recognized as revenue from transit buses sales and EV sales was $1.5 million and $0.5 million, respectively. For the years ended December 31, 2024 and 2023, the amount of governmental grant recognized as reductions of the cost of sales for EV leasing was $38 thousands and $47 thousands, respectively, and the amount of governmental grant recognized as reduction of carrying amount of sales-type leased vehicles was $72 thousands and $0.2 million, respectively. As of December 31, 2024 and 2023, the balances of government grants received were included in deferred income with amount of $0.4 million and $0.4 million, respectively.

Cost of Revenues

Cost of revenues for transit buses sales and EV sales includes direct parts, material and labor costs, manufacturing overheads, and shipping and logistics costs. Cost of revenues for EV leasing primarily includes the depreciation of operating lease vehicles over the lease term and other leasing related charges including vehicle insurance and batteries service cost. Cost of other revenue includes direct parts, material and labor costs, as well as shipping and delivery and other costs.

For the years ended December 31, 2024 and 2023, our costs of revenue were $24.1 million and $3.4 million, respectively. The increase in costs of revenues was primarily due to the increase in costs of transit buses due to the increase in transit bus sales.

Gross Margin

Gross profit (loss) is defined as revenues minus cost of revenues. Gross margin, stated as a percentage, is defined as the gross profit (loss) divided by the revenues.

For the years ended December 31, 2024 and 2023, our combined gross margin was 23.6% and negative 8.8%, respectively. The increase of gross margin was primarily due to higher margins for both EV sales and transit buses sales. The Group received gain on bargain purchase of Proterra Transit Business Unit and was able to quickly sell the inventories acquired from the acquisition with relatively higher margin. The increase in margin for EV sales was mainly because there was only three EV sold during the year ended December 31, 2024 with a relatively high selling price.

Operating Expenses

Operating expenses consist of selling, general, and administrative expenses as well as impairment on goodwill.

Our selling, general and administrative expenses consist primarily of salaries, research and development, professional service fees, rent expense, and office supplies expenses.

For the years ended December 31, 2024 and 2023, our selling, general and administrative expenses were $33.8 million and $14.9 million, respectively. The increase in selling, general and administrative expenses was largely due to an increase in salary expenses as a result of acquisition of Proterra Transit Business Unit with increased heads-count.

During the year ended December 31, 2024, we identified impairment indicator resulted from the Company’s continuous decreasing stock price since January 2024 and performed interim goodwill impairment testing. We recorded an impairment on goodwill of $4.3 million based on the difference between fair value and the carrying amount of the reporting unit.

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The provision for credit loss was nil and $0.4 million for the years ended December 31, 2024 and 2023, respectively. The provision for credit loss for 2023 was mainly due to the provision for security deposit of our previous lease of $0.2 million due to our early termination of the lease as well as provision for prepaid expenses for certain R&D projects of $0.2 million, which were suspended due to our severe cash shortage.

For the years ended December 31, 2024 and 2023, impairment loss recorded for property and equipment was nil and $0.5 million, respectively. The impairment in 2023 was due to the retirement of the vehicles.

For the years ended December 31, 2024 and 2023, impairment loss recorded for intangible assets was nil million and $1.1 million, respectively, and impairment loss recorded for our right-of-use assets was nil and $3.4 million, respectively. The impairment in 2023 was due to uncertainty to bring future economic benefit to our business.

Other Income (Expense), net

Other income (expense), net includes gain on bargain purchase, interest expense, gain on sales-type leases and other income.

Our other income for the year ended December 31, 2024, was $42.4 million, primarily due to gain on bargain purchase of Proterra Transit Business Unit of $38.3 million, gain on change in fair value of warrant liability of $15.2 million, and gain of change in fair value of derivative liability of $0.6 million, partially offset by the interest expense of $4.5 million resulted from short-term loan and debt discount amortization of convertible note, and loss on warrants issued during private placement of $7.4 million.

Our other expense for the year ended December 31, 2023, was $0.1 million, primarily due to the interest expense of $0.6 million resulted from interest expense for convertible notes and short term loan and debt discount amortization of convertible note, and loss in change in fair value of derivative liability of $0.3 million, partially offset by employee retention credit of $0.7 million, and forgiveness of long-aged payables $0.2 million. The loss in change in fair value of derivative liability was due to mark to market of derivative liability from recognition date to December 31, 2023.

Net income (loss)

As a result of the above factors, our net income for the year ended December 31, 2024, was $7.9 million. Our net loss for the year ended December 31, 2023, was $20.6 million.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates and assumptions on our own historical data and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates and assumptions on an ongoing basis.

Our expectations regarding the future are based on available information and assumptions that we believe to be reasonable and accurate, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

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The critical accounting policies, judgments and estimates that we believe to have the most significant impact on our consolidated financial statements are described below, which should be read in conjunction with our consolidated financial statements and accompanying notes and other disclosures included in this annual report. When reviewing our financial statements, you should consider:

● our selection of critical accounting policies;

● the judgments and other uncertainties affecting the application of such policies;

● the sensitivity of reported results to changes in conditions and assumptions;

Our critical accounting policies and practices include the following: (i) Revenue recognition; (ii) Impairment of long-lived assets and goodwill; (iii) Inventories; (iv) Accounts receivable and allowance for credit loss; (v) Product warranties; (vi) Derivative Instruments; and (vii) Income taxes. See Note 3—Summary of Significant Accounting Policies to our consolidated financial statements for the disclosure of these accounting policies. We believe the following accounting estimates involve the most significant judgments used in the preparation of our financial statements.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. We consider our critical accounting estimates include (i) accounts receivables and allowance for credit loss; (ii) impairment of long-lived assets; (iii) impairment of goodwill; (iv) fair value of derivative liabilities; and (v) product warranties.

Accounts receivables and allowance for credit loss

The Company grants open credit terms to credit-worthy customers. Accounts receivable are primarily related to sales of EV, EV components, and forklifts. The Company maintains allowances for doubtful accounts. The Company adopted ASC 326 Financial Instruments — Credit Losses using the modified retrospective approach through a cumulative-effect adjustment to accumulated deficit from January 1, 2020. Management used an expected credit loss model for the impairment of trading receivables as of period ends. Management believes the aging of accounts receivable is a reasonable parameter to estimate expected credit loss, and determines expected credit losses for accounts receivables using an aging schedule as of period ends. The expected credit loss rates under each aging schedule were developed on basis of the average historical loss rates from previous years, and adjusted to reflect the effects of those differences in current conditions and forecasted changes. Management measured the expected credit losses of accounts receivable on a collective basis. When an accounts receivable does not share risk characteristics with other accounts receivables, management will evaluate such accounts receivable for expected credit loss on an individual basis. Doubtful accounts balances are written off and deducted from allowance, when receivables are deemed uncollectible, after all collection efforts have been exhausted and the potential for recovery is considered remote. Provision for credit loss was $0.5 million for the year ended December 31, 2024. There was a reversal of credit loss for accounts receivable of $0.2 million during the year ended December 31, 2024.

Impairment of long-lived assets

All long-lived assets of the Company, which include tangible long-lived assets, right-of-used assets and intangible long-lived assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the assets. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount of the asset and its fair value.

The judgments and estimates involved in identifying and quantifying the impairment of long-lived assets involve inherent uncertainties, and the measurement of the fair value is dependent on the accuracy of the assumptions used in making the estimates and how those estimates compare to our future operating performance. The key assumptions and estimates include projections of future operating results and cash flows of each asset group that are based on internal budgets and strategic plans, historical performance and growth rate, and the effects of external factors and market conditions. Changes in these estimates and assumptions could materially affect the estimated fair value of each asset group that could result in an impairment charge to reduce the carrying value of long-lived assets, which could be material to our financial position and results of operations.

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We recorded nil and $5.0 million impairment of long-lived assets for the years ended December 31, 2024 and 2023, respectively.

Impairment of goodwill

We assess goodwill for impairment in accordance with ASC 350-20, Intangibles—Goodwill and Other: Goodwill (“ASC 350-20”), which requires that goodwill be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events.

We have only one reporting unit as of December 31, 2024 and 2023. We have the option to assess qualitative factors first to determine whether it is necessary to perform the quantitative test in accordance with ASC 350-20. In the qualitative assessment, we consider primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. If we believe, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates.

We performed the annual goodwill impairment assessment on December 31, 2024 by considering all qualitative factors including the comparison of market cap and the carrying amount of the reporting unit (after the impairment of long-lived assets). We recorded $4.3 million and nil impairment of goodwill for the years ended December 31, 2024 and 2023, respectively.

Fair value of derivative liabilities

The Company evaluates its convertible debt to determine if the contract or embedded component of the contract qualifies as derivatives to be separately accounted for in accordance with ASC 480, “Distinguish by Liabilities from Equity”, and ASC 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a derivative instrument. The Company recognizes the embedded component of the convertible debt as derivative liabilities at fair value and adjusts the instruments to fair value at each reporting period. The derivative liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s consolidated statements of operations.

The derivative liabilities embedded in convertible debt issued in June 2023 were initially measured at fair value using a Monte Carlo simulation (“MCS”) and the derivative liabilities embedded in convertible debt issued in October 2023 were initially measured at fair value using a binominal tree model, both derivative liabilities are subsequently re-measured at fair value using a binominal tree model as of December 31, 2023. Both MCS and binominal tree model consider all relevant assumptions current at the date of valuation (i.e., share price, exercise price, term, volatility, risk-free rate, probability of dilutive term, and expected time to conversion). The determination of the fair value of the derivative liabilities may be subject to change as more current information becomes available and accordingly the actual results could differ significantly. The selection of methodology to measure the fair value also involves judgment.

Derivative liability as of December 31, 2024 and 2023 was $33 thousands and $1.2 million, respectively, with $641 thousands of gain on change in fair value and $319 thousands loss on change in fair value recorded in the consolidated statements of operations for the years ended December 31, 2024 and 2023, respectively.

Product warranties

The Company provides warranties on all vehicles or components sold in addition to pass through warranties from third party component suppliers. The Company accrues a warranty reserve for the products sold by the Company, which includes the Company’s best estimate of the projected costs to repair or replace items under warranties. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. These estimates are inherently uncertain given the Company’s relatively short history of sales, and changes to the Company’s historical or projected warranty experience may cause material changes to the warranty reserve in the future. The Company considers the warranty provided is not providing incremental service to customers rather an assurance to the quality of the vehicle, and therefore is not a separate performance obligation and should be accounted for in accordance with ASC 460, Guarantees.

The balance of warranty reserve was $14.3 million and $289 thousands as of December 31, 2024 and 2023, respectively.

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Recent Accounting Pronouncements

See Note 3 “Summary of Significant Accounting Policies” to our consolidated financial statements for a description of recently issued or adopted accounting pronouncements that may potentially impact our financial position, results of operations or cash flows.

Liquidity and Capital Resources

We had net income of $7.9 million during the year ended December 31, 2024, mainly due to acquisition of Proterra Transit Business Unit. Excluding the one-time bargain purchase gain from acquisition of Proterra Transit Business Unit, we incurred a net loss of $30.3 million during the year ended December 31, 2024 and incurred significant recurring losses before 2024. The cash flow used in operating activities was $1.9 million and we need to raise additional funds to sustain our operations. These factors raise substantial doubt as to our ability to continue as a going concern.

We plan to continue pursuing strategies to improve liquidity and raise additional funds while implementing various measures to cut costs. Such strategies and measures include the following: 1) continue to drive for operation integration under ONE Phoenix, re-alignment operating units under ONE Goal, right sizing workforce under ONE Team; 2) re-establish the cost structure and cost base with the new integrated ERP and other operating systems; 3) expand and strengthen strategic partnership to outsource a significant portion of design and engineering work for the next generation product to third party vendors and suppliers to control overall development and supply chain costs; 4) implement working capital initiatives and negotiate better payment terms with customers and for some of the new orders, require down payments; 5) implement cash saving initiatives and tighter cash control, and calibrate capital allocation to manage liquidity; and 6) continue to proactively implement a robust capital market strategy to provide financing for the Group’s operations through proceeds from public or private stock offering, debt financings including but not limited to term loans, revolving line of credit and equity linked instruments, and potentially federal and state incentive funding programs. There is no assurance that the plans will be successfully implemented. If we fail to achieve these goals, we may need additional financing to execute our business plan, and we may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In the event that financing sources are not available, or that we are unsuccessful in increasing our gross profit margin and reducing operating losses, we may be unable to implement our current plans for expansion, or respond to competitive pressures, any of which would have a material adverse effect on our business, financial condition and results of operations and may materially adversely affect our ability to continue as a going concern.

A summary of the cash flow activities for the years ended December 31, 2024 and 2023 is as follows:

	2024			2023
	($ in thousands)
Net cash used in operating activities	$	(1,946	)	$	(3,652	)
Net cash used in investing activities		(10,113	)		(93	)
Net cash generated from financing activities		9,540			6,639
Net (decrease) increase in cash and cash equivalents		(2,519	)		2,894

Operating Activities

Net cash used in operating activities was $1.9 million for the year ended December 31, 2024, primarily as a result of a net income of $7.9 million, adjusted by non-cash items of bargain purchase gain of $38.3 million from acquisition of Proterra Transit Business Unit, impairment loss of goodwill of $4.3 million, depreciation and amortization of $1.8 million, amortization of debt discount of convertible notes of $1.5 million, loss on warrants issued during private placement of $7.4 million, gain on change in fair value of warrant liability of $15.2 million, deferred tax liability of $3.5 million, gain on change in market value of derivative liability of $0.6 million, an accrual on warranty reserve of $1.0 million and amortization of right of use of assets of $0.9 million, and changes in operating assets and liabilities including (i) increase in accounts receivable of $3.6 million due to uncollected accounts receivable from sales of transit buses, (ii) increase in inventories of $17.5 million due to certain inventories purchase from Proterra have been sold, (iii) increase in accrued liabilities of $6.6 million due to collection of partial proceeds from Zenobe as well as interest accrued for several short term loans, (iv) increase in accounts payable of $2.4 million mainly due to additional inventories purchased for upcoming manufacturing of transit buses, (v) decrease in battery lease receivables of $1.6 million due to collection of receivables from customers, (vi) increase in prepaid expenses and other assets of $1.3 million, (vii) decrease in lease liabilities of $3.6 million, and (viii) increase in advance from customers of $4.4 million mainly due to collection of downpayments from transit bus sales.

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Net cash used in operating activities was $3.7 million for the year ended December 31, 2023, primarily as a result of net loss of $20.6 million, adjusted by non-cash items of depreciation and amortization of $1.2 million mainly in relation to equipment, furniture vehicles, trademark and technology, provision for credit loss of $0.4 million related to security deposit due to our early termination of lease as well as prepaid expenses to certain R&D expenses due to project suspension resulted from our cash shortage, amortization of right-of-use assets of $0.8 million, warrants issued in connection with unclosed convertible note offering of $0.9 million, impairment of long-lived assets of $5.0 million in relation to property and equipment, intangible assets, and right-of-use assets due to uncertainty to bring future economic benefit to our business, write-down of inventories of $0.3 million to adjust our forklifts to net realizable value, loss on sales-type leases of $0.1 million and changes in operating assets and liabilities including (i) a decrease in inventories of $1.7 million due to decrease of purchase due to our cash shortage, (ii) a decrease in prepaid expenses and other assets of $1.1 million due to the receipt of previous R&D project deliveries and no additional prepaid expenses on R&D projects due to cash shortage, (iii) a decrease in accounts receivable of $1.2 million due to collection and less sales near the year end, (iv) a decrease in lease liability of $0.3 million, (v) an increase in accounts payable of $2.3 million due to our severe cash shortage, (vi) an increase in advance from customer of $1.2 million in relation to additional backlog orders with down-payments received; (vii) and increase of accrued liabilities and other liabilities of $0.4 million due to our cash shortage, and (viii) a decrease of net investment in leases of $0.3 million in relation to lease payments received from sales-type leases.

Investing Activities

Net cash used in investing activities was $10.1 million for the year ended December 31, 2024, primarily because of acquisition of Proterra for a total consideration of $10 million.

For the year ended December 31, 2023, net cash used in investing activities was $0.1 million, primarily as a result of purchases of property and equipment.

Financing Activities

Net cash generated from financing activities was $9.5 million for the year ended December 31, 2024, primarily as a result of (i) net proceeds from private placements of $11.1 million, (ii) proceeds from borrowing of $5.0 million, and (iii) proceeds of borrowings from a related party of $1.1 million. The increase was partially offset by repayment to borrowings of $4.9 million and repayment of borrowings to a related party of $1.9 million.

Net cash generated from financing activities was $6.6 million for the year ended December 31, 2023, primarily as result of proceeds from borrowing of $0.9 million, proceeds from convertible notes of $3.0 million, proceeds from related party borrowing of $2.1 million and proceeds received from standby equity purchase agreement of $1.9 million, partially offset by $1.3 million repayment of related party borrowings.

Trend information

Our operating results substantially depend on revenues derived from our sales and leasing of EVs. Other than as disclosed elsewhere in this annual report, the following trends, uncertainties, demands, commitments, or events are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause reported consolidated financial information not necessarily to be indicative of future operating results or financial conditions:

● Inflation Reduction Act. The Inflation Reduction Act of 2022, or IRA, was signed into law on August 16, 2022. The $370 billion allocated to climate and clean energy investments dramatically expands tax credits and incentives to deploy more clean vehicles, including commercial vehicles, while supporting a domestic EV supply chain and charging infrastructure buildout. IRA transportation sector provisions will accelerate the shift to zero-emission vehicles (ZEVs) by combining consumer and manufacturing policies. The IRA extends the existing tax credit for electric vehicles and establishes a new tax credit for used electric vehicles, as well as establishes a new tax credit for commercial ZEVs. Under the IRA, commercial ZEVs will be eligible for a federal tax credit of up to the lesser of 30% of the sales price or the incremental cost of a comparable ICE-engine vehicle, capped at $7,500 for vehicles under 14,000 pounds and $40,000 for all others. In addition, governmental entities may also be eligible to claim these credits. Vehicles’ final assembly must be in North America to be eligible for the federal tax credit, but commercial vehicles are exempt from the battery or mineral sourcing requirements that apply to consumer electric vehicles. The federal tax credit on charging equipment has been extended through 2032. For commercial uses, the tax credit is 6% with a maximum credit of $100,000 per unit. The equipment must be placed in a low-income community or non-urban area. The IRS has yet to release further guidance on specific aspects of the aforementioned credits. The announcement of the IRA and the delay in receiving IRS guidance as to the roll-out of the new tax credits has reduced the number of customer orders during the fourth quarter of 2022 and the first quarter of 2023, as many existing or potential customers are waiting to place orders until they are certain of the amount of tax credits available per ZEV. In addition, many customers are evaluating the size and type of ZEV they intend to purchase because the amount of the tax credit depends on the weight of the vehicle, among other factors. Furthermore, other government programs, such as the FTA’s Low- and No-Emission Vehicle Program or certain state programs, recently announced new funding and are in the process of making these funds available for eligible purchases. Until these processes are established, we believe customer orders may be delayed.

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● Supply-chain challenges. From the beginning of the COVID-19 pandemic, we started to experience chassis and raw material shortages from suppliers. The challenge continues with the current development of our new generation electric vehicles. We need to source new components from various vendors which lead to longer lead times. In addition, because of the generation advancement, large capital spending is necessary to fund the project. Lack of cash flow on hand will also trigger the supply-chain challenges. As a result of these challenges, we have engaged with vendors to negotiate better terms and lower downpayment alternatives. We contracted with new suppliers to optimize costs, minimize supply chain issues, and prepare for an increase in future production. However, adding new suppliers, especially for chassis, increases requirements for working capital and places us at the mercy of price volatility. We expect supply chain challenges will continue for the foreseeable future.

● Inflation and interest rates. We are experiencing cost increases due to inflation resulting from various supply chain disruptions and other disruptions caused by the general global economic conditions. The cost of raw materials, manufacturing equipment, labor and shipping and transportation has increased considerably. We expect higher than recent years’ levels of inflation to persist for the foreseeable future. If we are unable to fully offset higher costs through price increases or other measures, we could experience an adverse impact to our business, prospects, financial condition, results of operations and cash flows. Interest rates have also increased considerably. The increase in inflation and interest rates impacts the demand for our EVs, as customers may delay purchasing and/or have difficulty financing their purchases.

Off-Balance Sheet Arrangements

Phoenix has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition or results of operations that are material to stockholders.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

ITEM 8. Financial Statements and Supplementary Data

Consolidated Financial Statements

The information required by Item 8 appears after the signature page to this report. Please refer to F-1 to F-33 of this document.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

a) Dismissal of Independent Registered Public Accounting Firm

On March 13, 2025, upon the approval of its Audit Committee of the Board of Directors (the “Audit Committee”) of the Company, the Board approved the dismissal of Marcum Asia CPAs LLP (“Marcum Asia”) as the Company’s independent registered public accounting firm, effective as of March 7, 2025.

Marcum Asia audited the financial statements of the Company for each of the fiscal years ended December 31, 2023 and December 31, 2022 (collectively referred to as the “financial statements”). The reports of Marcum Asia on such financial statements did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles except that there was an explanatory paragraph as to the Company’s ability to continue as a going concern.

During the two most recent fiscal years ended December 31, 2024 and December 31, 2023, and the subsequent interim periods through the date of dismissal, there were (i) no disagreements (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with Marcum Asia on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Marcum Asia, would have caused them to make reference thereto in their report on the financial statements and (ii) no “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K) other than:

(1) The material weaknesses related to the Company’s internal control over financial reporting, including:

(i)	Failure to maintain an effective control environment of internal control over financial reporting;
(ii)	Failure to develop an effective risk assessment process to identify and evaluate at a sufficient level of detail all relevant risks of material misstatement, including business, operational, and fraud risks;
(iii)	Ineffective monitoring activities to assess the operation of internal control over financial reporting;
(iv)	Lack of sufficient controls designed and implemented for financial information processing and reporting and lacked resources with requisite skills for the financial reporting under U.S. GAAP.
(v)	Failure to establish adequate governance procedures, including proper authorization and communication between key executives and the Board, a well-defined approval process with sufficient documentation for significant transactions, and effective monitoring and control measures for key personnel transitions, such as the revocation of access for departed executives.

(2) On March 6, 2024, SPI Energy Co., Ltd. (“SPI”), an affiliate of the Company, entered into a Deed of Settlement with its creditor, Streeterville Capital, LLC (“Streeterville”) to settle the unpaid balances of certain convertible notes via installment payments as agreed in the Deed of Settlement. As of part of this Deed of Settlement, the Company, as the guarantor, covenants to Streeterville to pay and satisfy on demand all liabilities due from SPI to Streeterville with a total amount of $15.0 million. On September 6, 2024, Streeterville provided a Deed of Release of Guarantor to the Company, confirming that Streeterville releases and discharges the Company from all past, present and future liability to Streeterville under the guarantee to Streeterville for SPI and also from all actions, claims and demands under or in connection with this guarantee.

(b) Newly Appointed Independent Registered Public Accountant

On March 13, 2025, upon the approval of the Audit Committee, the Board approved the engagement of Yu Certified Public Accountant PC (“Yu CPA”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024, effective as of March 13, 2025.

During the two most recent fiscal years ended December 31, 2024 and December 31, 2023, and the subsequent interim period through the date of Yu CPA’s engagement, neither the Company nor anyone acting on its behalf consulted Yu CPA regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements and neither a written report nor oral advice was provided to the Company by Yu CPA that Yu CPA concluded was an important factor considered by the Company in reaching a decision as to such accounting, auditing, or financial reporting issue; or (ii) any matter that was either the subject of a “disagreement” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

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ITEM 9A. Controls and Procedures

Disclosure Controls and Procedures

(a) 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 over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), as of the end of the period covered by this Annual Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Annual Report, our disclosure controls and procedures were not effective because of material weaknesses in our internal control over financial reporting as discussed below.

Notwithstanding these material weaknesses, our Chief Executive Officer and Chief Financial Officer have concluded that the consolidated financial statements included in this Annual Report on Form 10-K present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023 and the consolidated results of operations and cash flows for each of the fiscal years presented herein in conformity with U.S. generally accepted accounting principles.

(b) Management’s Annual Report on Internal Control Over Financial Reporting

Our management assessed the effectiveness of the Company’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 5d-15(f) under the Exchange Act), as of December 31, 2024. The framework used by management in making the assessment was the criteria set forth in the document entitled “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2024, the Company’s internal control over financial reporting was not effective for the purpose for which it is intended and determine there to be a material weakness.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404(a). The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Principal Executive Officer and Principal Financial Officer and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements for external purposes in accordance with United States generally accepted accounting principles.

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with US GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In connection with management’s assessment of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we identified the following material weaknesses in our internal control over financial reporting as of December 31, 2024:

(1)	Failure to maintain an effective control environment of internal control over financial reporting;
(2)	Failure to develop an effective risk assessment process to identify and evaluate at a sufficient level of detail all relevant risks of material misstatement, including business, operational, and fraud risks;
(3)	Ineffective monitoring activities to assess the operation of internal control over financial reporting;
(4)	Lack of sufficient controls designed and implemented for financial information processing and reporting and lacked resources with requisite skills for the financial reporting under U.S. GAAP.

32

Remediation of Material Weaknesses in Internal Control over Financial Reporting

We intend to implement measures designed to improve our internal control over financial reporting to address the underlying causes of these material weaknesses, including (1) hiring more qualified staff and increasing resources with sufficient knowledge and experience to strengthen financial reporting; (2) setting up a financial and system control framework to ensure proper segregation of duty and review procedures, with formal documentation of polices and controls in place; (3) forming a task force to design and improve processes and controls to monitor operations and record financial data; and (4) devoting proper time by senior management to perform comprehensive review of procedures to assess risks and enforce effective accountability.

(c) Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the Company’s fourth fiscal quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

33

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance

The following table sets forth the names and ages of our current board of directors (the “Board”) and our named executive officers and the principal offices and positions held by each person. Our executive officers are appointed by the Board. Our directors serve until the earlier to occur of the appointment of his or her successor at the next meeting of shareholders, death, resignation or removal by the Board. There are no family relationships among our directors and our named executive officers.

Name	Age		Position
Xiaofeng Denton Peng		50	Director, Chairman of the Board, Chief Executive Officer
Michael Yung		60	Chief Financial Officer
Lewis W. Liu		62	Chief Operating Officer
HoongKhoeng Cheong		59	Director
Julia Yu		53	Independent Director
Yongmei (May) Huang		52	Independent Director
James Young		62	Independent Director

Set forth below is a brief biography of each director and named executive officer that contains information regarding the individual’s service as a director or named executive officer including business experience for the past five years. In addition, information for directors includes directorships held during the past five years, information concerning certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Board to determine that the individual should serve as a director for us.

Mr. Xiaofeng Denton Peng has served as our Chief Executive Officer since June 2023 and as our Chairman of the Board of Directors since December 2020. Mr. Peng has served as a director and the executive chairman of the board of directors of SPI Energy Co., Ltd., our largest shareholder, since January 10, 2011 and as the chief executive officer of SPI Energy Co. Ltd. since March 25, 2016. Mr. Peng founded LDK Solar Co., Ltd., or LDK, in July 2005 and is LDK’s chairman of the board and chief executive officer. Prior to founding LDK, Mr. Peng founded Suzhou Liouxin Co., Ltd., or Suzhou Liouxin, in March 1997 and was its chief executive officer until February 2006. Suzhou Liouxin is a leading manufacturer of personal protective equipment in Asia. Mr. Peng graduated from Jiangxi Foreign Trade School with a diploma in international business and from Beijing University Guanghua School of Management with an executive MBA degree.

Mr. Michael Yung has served as our CFO since April 2024. Prior to that, Mr. Yung served as Senior Vice President from 2015 and as Chief Financial Officer from 2019 to 2023 at Pingtan Marine Enterprise Ltd. (formerly Nasdaq: PME), one of the largest U.S.-listed marine services operating company in China, where he managed SEC filings, investor relations, and was instrumental in conducting financial audits and due diligence for mergers and acquisitions. Prior to that, Mr. Yung served as Managing Director of Terra Nova Natural Resources from 2008 to 2013. Mr. Yung previously served as Managing Director for Asia at European American Capital, where he initiated new regional operations and managed high-value commodity transactions. He also previously served as the Senior Vice President of UBS Paine Webber and the Vice President of Citicorp Investment Services. Mr. Yung holds a bachelor’s degree in marketing/finance from the New York Institute of Technology.

Mr. Lewis W. Liu has served as our COO since April 2024. Prior to that, Mr. Liu served as our SVP of Operations and SVP of Vehicle Program & Business Development since July 2022. Prior to that, from January 2019 to April 2022, Dr. Liu worked as VP of Business Development & Strategy, Corporate Process Executive and Quality Task Force Head at Karma Automotive, an EV manufacturer based in Irvine, CA. Dr. Liu was a founding team member at AiKar, a California based EV technology start-up. Dr. Liu served as the Head of the Global Charging Business and Head of Strategic Partnerships for Faraday Future, another California based EV start-up. In addition, Dr. Liu was the Lead Director of the automotive practice for KPMG Advisory (China) in Beijing, China. Dr. Liu served as general manager with full P&L responsibility for a business unit of a global Fortune 500 electronics manufacturer operating five plants in the region. Dr. Liu also acted as a plant manager and regional supply chain head for this global Fortune 500 company. Dr. Liu holds a Ph.D. in Automotive Engineering from Tsinghua University, an MBA in Finance from the University of Chicago, an MS in Artificial Intelligence from the University of Mississippi, and a BS in Computer Science from Beijing Polytechnic University.

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Mr. HoongKhoeng Cheong has served as our director since December 2020. Mr. Cheong has served as chief operating officer of SPI Energy Co., Ltd. since May 2014. Mr. Cheong has more than 20 years of engineering and operation experience in the solar and electronics industries. He served in various management positions in LDK from 2011 to 2014 and he was appointed as the chairman of the management board and chief executive officer of Sunways AG, a publicly-listed company in Germany. He previously served as our general manager from 2007 to 2011 and was responsible for PV system design and development as well as the manufacturing of key components for PV modules and racking systems before joining LDK. Prior to joining the solar industry in 2007, Mr. Cheong spent 16 years in the electronics industry responsible for engineering development and manufacturing of liquid crystal display products and he served as the Vice President of Engineering of an affiliate of Flextronics International Ltd. Mr. Cheong holds a Bachelor of Science degree in mechanical engineering from the University of Louisiana and obtained his Master of Science in computer integrated manufacturing from Nanyang Technology University, Singapore.

Ms. Julia Yu has served as our director since May 2024. Ms. Yu has over two decades of finance, accounting, auditing, compliance, SEC reporting, mergers & acquisitions, and business reorganization experience from her work with various publicly traded companies. Ms. Yu has served as Chief Financial Officer and Treasurer at AppTech Payments Corp. (Nasdaq: APCX) since July 2023 and held the position at AppTech of Senior Vice President of Corporate Finance and Accounting since April 2022. From 2011 to 2022, Ms. Yu was Director, CFO Management Consultant at Caladrius Biosciences, Inc. (formerly Nasdaq: CLBS). Previously, she held senior finance, accounting, and management roles at global companies, including Unilever and Exxon Mobil. Recognized as a finalist for the Best Women CFO in San Francisco by Executive Finance International, Ms. Yu’s leadership extends beyond corporate finance. She has managed large-scale operations and strategic financial planning as a treasurer and executive board member for non-profit organizations, including a prestigious school with a long history and large student body. A Certified Public Accountant, Certified Internal Auditor and Chartered Global Management Accountant, Ms. Yu earned dual MBAs from Webster University and the Shanghai University of Finance and Economics. Her deep expertise encompasses significant M&As, capital raises, and complex pre-IPO and post-IPO financial management. Ms. Yu’s robust audit experience, both external and internal, provides her with a profound understanding of regulatory and compliance frameworks, vital in the evolving EV sector.

Ms. Yongmei (May) Huang has served as our director since May 2024. Ms. Huang has significant experience serving as controller and audit partner with extensive Big Four public accounting experience serving international corporate clients, including her current role as Audit Partner at TPS Thayer since 2024. Ms. Huang served as Audit Partner at WWC, P.C. from 2022 to 2024, Controller, Accounting at King & Wood Mallesons LLP from 2021 to 2022, Senior Manager, Accounting at Taiho Oncology, Inc. from 2020 to 2021, Senior Manager, IT Audit GRC at Friedman LLP from 2019 to 2020, Global Education Product Manager at Institute of Management Accountants from 2018 to 2019, Associate Director at KPMG International from 2017 to 2018 and Financial Statement Audit Manager/IT Audit Manager/Program Manager at Deloitte & Touche, LLP from 2001 to 2017. Ms. Huang received a Master of Business in Fashion from Rutgers University and a Bachelor of Science, Accounting from Metropolitan State University, Colorado.

Mr. James Young has served as our director since May 2024. Mr. Young has expert experience in the solar and semiconductor industries, especially in industry technology and application strategy. Mr. Young has served as Founder and CEO of SunX Solar, LLC, a residential solar installation company, since 2012, and as Founder and CEO of ModuRack, Inc., a provider of solar panel installation solutions, since 2016. Mr. Young has a PhD in Physics and an M.S. in Computer Science from the State University of New York at Albany and a B.S. in Physics from the University of Science and Technology Beijing.

Family Relationships

There are no family relationships among our executive officers, directors and significant employees.

Involvement in Certain Legal Proceedings

To the best of our knowledge, there have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of our Company during the past ten years.

Board of Directors

Our board of directors currently consists of five directors, three of whom satisfy the “independence” requirements of Rule 10A-3 under the Exchange Act and Rule 5605 of the Nasdaq Listing Rules. The Board of Directors has determined that Julia Yu, Yongmei (May) Huang and James Young are independent under Rule 5605(a)(2) of the Nasdaq Listing Rules.

35

A director is not required to hold any shares in the Company by way of qualification. A director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with our company must declare the nature of his or her interest at a meeting of the directors. Subject to the Nasdaq Listing Rules and disqualification by the chairman of the relevant board meeting, a director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he or she may be interested therein and if he or she does so his or her vote shall be counted and he or she may be counted in the quorum at the relevant board meeting at which such contract or transaction or proposed contract or transaction is considered. Our board of directors may exercise all of the powers of our Company to borrow money, to mortgage or charge our undertakings, property and uncalled capital, and to issue debentures or other securities whenever money is borrowed or pledged as security for any debt, liability or obligation of our Company or of any third party.

Board Operations

One person holds the positions of principal executive officer and chairman of the Board of Company. The Board has not designated a lead director. Given the limited number of directors comprising the Board, the independent directors call and plan their executive sessions collaboratively and, between board meetings, communicate with management and one another directly. In the circumstances, the directors believe that formalizing in a lead director functions in which they all participate might detract from rather than enhance performance of their responsibilities as directors. The Chairman of the Board chairs Board and stockholder meetings and participates in preparing their agendas. The Chairman of the Board also serves as a focal point for communication between management and the Board between Board meetings, although there is no restriction on communication between directors and management. The Company believes that these arrangements afford the directors sufficient resources to supervise management effectively, without being overly engaged in day-to-day operations.

The Board plays an active role, as well as the independent committees, in overseeing the management of the Company’s risks. The Board regularly reviews reports from members of senior management and committees on areas of material risk to the Company, including operational, financial, legal, strategic and regulatory risks.

The Board of Directors held 12 meetings during 2024. During 2024, no director attended fewer than 75% of the meetings of the Board of Directors and Board committees of which the director was a member.

Committees of the Board of Directors

We have an audit committee, a compensation committee and a nominating and corporate governance committee, comprised solely of independent directors.

Audit Committee

The Audit Committee consists of Julia Yu, Yongmei (May) Huang and James Young and is chaired by Ms. Yu. The Board has determined that Julia Yu is an audit committee financial expert, as defined by the SEC rules. The audit committee assists the Board’s oversight of (1) the quality and integrity of our financial statements and related disclosure, (2) our compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications and independence, (4) the performance of our internal audit function and independent auditors and (5) related-party transactions. The audit committee is responsible for, among other things:

● appointing the independent auditors and pre-approving any non-audit services to be performed by the independent auditors;

● reviewing and approving all proposed related-party transactions;

● reviewing with the independent auditors any audit problems or difficulties and management’s response;

● discussing the audited financial statements with management and the independent auditors;

● reviewing major issues as to the adequacy of our internal controls and any significant deficiencies or material weaknesses in internal controls;

● meeting separately and periodically with management and the independent auditors;

● reviewing with the general counsel the adequacy of procedures to ensure compliance with legal and regulatory responsibilities; and

● reporting regularly to the entire board of directors.

The Audit Committee held three meetings during 2024.

36

Compensation Committee

The Compensation Committee consists of Julia Yu, Yongmei (May) Huang and James Young and is chaired by Ms. Huang. The primary purpose of the Compensation Committee is to assist the Board of Directors in discharging its responsibilities with respect to compensation of the Company’s executive officers and subsidiary presidents and to provide recommendations to the Board in connection with directors’ compensation. The Compensation Committee’s primary duties and responsibilities are to:

● develop guidelines for and determine the compensation and performance of the executive officers of the Company (in the case of the Chief Executive Officer’s compensation, without the Chief Executive Officer being present);

● recommend to the Board incentive and equity-based plans and administer such plans, oversee compliance with the requirements under the Nasdaq listing standards that stockholders of the Company approve equity incentive plans (with limited exceptions under such standards), and approve grants of equity and equity-based awards;

● review any recommendations from the Chief Executive Officer with respect to compensation for the other executive officers, including benefits and perquisites, incentive compensation plans and equity-based plans for recommendation to the Board;

● oversee risks relating to the Company’s compensation policies, practices and procedures;

● review and discuss with management the proxy disclosures regarding executive compensation required to be included in the Company’s proxy statement and periodic reports with the SEC, each in accordance with applicable rules and regulations of the SEC and other authority;

● evaluate the results of the stockholder advisory vote on executive compensation when held;

● review director compensation levels and practices, and recommend, from time to time, changes in such compensation levels and practices to Board with equity ownership in the Company encouraged.

The Compensation Committee receives input and recommendations from the Company’s executive officers (except with respect to such executive officer’s own compensation) but is not bound by such recommendations. These recommendations are generally based on each executive officer’s individual performance as well as his or her knowledge of each executive officer’s job responsibilities, seniority, expected contributions and his or her understanding of the competitive market for such executives. Each Compensation Committee member is independent and satisfies the applicable requirements for Compensation Committee membership under the Nasdaq rules and is a “non-employee director” as defined in Rule 16b-3 under the Exchange Act.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee (the “Nominating Committee”) consists of Julia Yu, Yongmei (May) Huang and James Young and is chaired by Mrs. Young. The purpose of the Nominating Committee is to:

● identify, evaluate and recommend individuals qualified to become members of the Board, consistent with criteria approved by the Board;

● select, or recommend that the Board select the director nominees to stand for election at each annual or special meeting of stockholders of the Company in which directors will be elected or to fill vacancies on the Board;

● develop and recommend to the Board a set of corporate governance principles applicable to the Company, as the Committee deems appropriate;

● oversee the annual performance evaluation of the Board and its committees and management;

● otherwise take a leadership role in shaping and providing oversight of the corporate governance of the Company, including recommending directors eligible to serve on all committees of the Board.

Each Nominating Committee member is independent under the Nasdaq rules.

Although the Nominating Committee has not formulated any specific minimum qualifications that the committee believes must be met by a director-nominee that the committee recommends to the Board, the factors it will take into account will include judgement, skill, diversity, experiences with businesses and other organizations of comparable size and scope, the interplay of the candidate’s experience with the experience of other directors, and the extent to which the candidate would be a desirable addition to the Board of Directors and any committees of the Board. The Nominating Committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees and may also seek referrals from other members of the Board, management, stockholders and other sources. Evaluations of candidates generally involve a review of background materials, internal discussions and interviews with selected candidates, as appropriate. Upon selection of a qualified candidate, the Nominating Committee recommends the candidate for consideration by the full Board.

37

Duties of Directors

Our directors owe to us fiduciary duties, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our certificate of incorporation, as amended and restated from time to time. Our Company has the right to seek damages if a duty owed by our directors is breached.

Terms of Directors and Executive Officers

The members of the Board serve until their successors are duly elected and have qualified. Our officers are appointed by and serve at the discretion of the board of directors. A director will cease to be a director if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his or her creditors; (ii) dies or is found by our company to be or becomes of unsound mind; (iii) resigns his or her office by written notice to the Company; (iv) the board resolves that his or her office be vacated; or (v) is removed from office pursuant to any other provision of our certificate of incorporation.

Material Changes to the Procedures by which Security Holders May Recommend Nominees to the Board

We do not currently have a procedure by which security holders may recommend nominees to the Board.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and ten percent shareholders are required by regulation to furnish us with copies of all Section 16(a) forms they file. We believe that, during the fiscal year ended December 31, 2024, all filing requirements Section 16(a) of the Securities Exchange Act of 1934 were not applicable to our officers, directors and greater than ten percent beneficial owners.

Code of Ethics

Our board of directors believes in strict adherence to the highest standards of business ethics and responsibility. We have thus adopted a code of business conduct and ethics that applies to us and our directors, officers, employees and advisors. Certain provisions of the code apply specifically to our chief executive officer, chief financial officer, senior operating officer and any other persons who perform similar functions for us. We have filed this code of business conduct and ethics as an exhibit to this annual report on Form 10-K. The code of business conduct and ethics is also available at our website at www.phoenixev.ai.

38

ITEM 11. Executive Compensation

Summary Compensation Table

The following Summary Compensation Table summarizes the total compensation accrued for our named executive officers in each of fiscal 2024 and 2023.

	Fiscal Year			Stock and			All other
	Ended	Salary		Options			Compensations
Name and Principal Position	December 31,	($)		Awards($)			($)		Total ($)
Xiaofeng Peng	2024		506,000		18,000	(1)		—		524,000
(Director, Executive Chairman of Board Director, Chief Executive Officer)	2023		158,877		—			—		158,877
Michael Yung	2024		131,125		8,640	(3)		—		139,765
(Chief Financial Officer)(2)	2023		—		—			—		—
Lewis W Liu	2024		145,159		45,726	(4)		—		190,885
(Chief Operating Officer)	2023		200,000		—			—		200,000

(1)	Consists of 500,000 shares of Phoenix’s common stock granted in 2024 under its 2021 Plan, which options vest over four years, provided Mr. Peng remains in continuous service with Phoenix during the vesting period, with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, exercisable at $0.34 per share and expiring 10 years from the grant date.
(2)	Mr. Yung joined the Company on April 17, 2024.
(3)	Consists of 240,000 shares of Phoenix’s common stock granted in 2024 under its 2021 Plan, which options vest over four years, provided Mr. Yung remains in continuous service with Phoenix during the vesting period, with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, exercisable at $0.34 per share and expiring 10 years from the grant date.

39

Employment Agreements

We have entered into at-will employment agreements with each of our executive officers. These employment agreements became effective on the signing date and will remain effective through 2025. We may terminate an executive officer’s employment for cause for certain acts of the officer, including, but not limited to, conviction of a felony, any act involving moral turpitude, or a misdemeanor where imprisonment is imposed; commission of any act of theft, fraud, dishonesty, or falsification of any employment or Company records; improper disclosure of the Company’s confidential or proprietary information; any action that has a detrimental effect on the Company’s reputation or business; or failure to perform agreed duties. We may also terminate an executive officer’s employment without cause. Each of us or the relevant executive officer may terminate the employment by giving advance written notice. We may renew the employment agreements with our executive officers.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth, for each named executive officer, information regarding unexercised stock options, unvested stock awards, and equity incentive plan awards outstanding as of December 31, 2024.

OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR END

OPTION AWARDS

STOCK AWARDS

Equity

Equity

Incentive Plan

Incentive Plan

Awards:

Awards:

Market or

Number

Payout

Equity

of

Value of

Incentive

Market

Unearned

Unearned

Plan

Number

Value of

Shares,

Shares,

Awards:

of Shares

Shares or

Units or

Units or

Number of

Number of

Number of

or Units

Units of

Other

Other

Securities

Securities

Securities

of Stock

Stock

Rights

Rights

Underlying

Underlying

Underlying

That

That

That

That

Unexercised

Unexercised

Unexercised

Option

Option

Have Not

Have Not

Have Not

Have Not

Options(#)

Options(#)

Unearned

exercise

Expiration

Vested

Vested

Vested

Vested

Name

Exercisable

Unexercisable

Option(#)

Price($)

Date

(#)

($)

($)

($)

Xiaofeng Denton Peng, CEO

1,050,000

—

—

1.72

1/24/2031

—

—

—

—

Xiaofeng Denton Peng, CEO

—

—

500,000

0.34

7/1/2034

—

—

—

—

Michael Yung, CFO

—

—

240,000

0.34

7/1/2034

—

—

—

—

Lewis W Liu, COO

—

50,000

50,000

1.72

9/30/2032

—

—

—

—

Lewis W Liu, COO

—

—

200,000

0.34

7/1/2034

—

—

—

—

Compensation Committee Interlocks and Insider Participation

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Pension Benefits

None of our named executive officers participate in or have account balances in qualified or nonqualified defined benefit plans sponsored by it.

Nonqualified Deferred Compensation

None of our named executive officers participate in or have account balances in nonqualified defined contribution plans or other deferred compensation plans maintained by it.

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Compensation of Directors

The following table sets forth information regarding compensation of each director, excluding our executive director, Xiaofeng Denton Peng, who does not receive compensation in his capacity as executive director, for fiscal 2024.

FISCAL 2024 DIRECTOR COMPENSATION
	Fees							Non-Equity		Nonqualified
	Earned or		Stock		Option			Incentive Plan		Deferred		All Other
	Paid in		Awards		Awards			Compensation		Compensation		Compensation
Name	Cash ($)		($)		($)			($)		Earnings ($)		($)		Total ($)
Julia Yu		30,479		—		1,800	(1)		—		—		—		32,279
Yongmei Huang		24,384		—		2,160	(2)		—		—		—		26,544
James Young		24,384		—		1,800	(3)		—		—		—		26,184
HoongKhoeng Cheong		—		—		1,800	(4)		—		—		—		1,800
John F. Perkowski (Former Director)		6,250		—		—			—		—		—		6,250
Steven E. Stivers (Former Director)		5,000		—		—			—		—		—		5,000
Sam Van (Former Director)		5,000		—		—			—		—		—		5,000
Zhenxing Fu (Former Director)		5,000		—		—			—		—		—		5,000

(1)	Consists of 50,000 shares of Phoenix’s common stock granted in 2024 under its 2021 Plan, which options vest over four years, provided Ms. Yu remains in continuous service with Phoenix during the vesting period, with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, exercisable at $0.34 per share and expiring 10 years from the grant date.
(2)	Consists of 60,000 shares of Phoenix’s common stock granted in 2024 under its 2021 Plan, which options vest over four years, provided Ms. Huang remains in continuous service with Phoenix during the vesting period, with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, exercisable at $0.34 per share and expiring 10 years from the grant date.
(3)	Consists of 50,000 shares of Phoenix’s common stock granted in 2024 under its 2021 Plan, which options vest over four years, provided Mr. Young remains in continuous service with Phoenix during the vesting period, with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, exercisable at $0.34 per share and expiring 10 years from the grant date.
(4)	Consists of 50,000 shares of Phoenix’s common stock granted in 2024 under its 2021 Plan, which options vest over four years, provided Mr. Cheong remains in continuous service with Phoenix during the vesting period, with 25% vesting on each of the first, second, third and fourth anniversary of the grant date, exercisable at $0.34 per share and expiring 10 years from the grant date.

Stock Incentive Plans

2021 Equity Incentive Plan

Our board of directors and stockholders have adopted and approved the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”). The 2021 Plan is a comprehensive incentive compensation plan under which we can grant equity-based and other incentive awards to our officers, employees, directors, consultants and advisers. The purpose of the 2021 Plan is to help us attract, motivate and retain such persons with awards under the 2021 Plan and thereby enhance shareholder value.

Administration. The 2021 Plan is administered by the compensation committee of the Board, which compensation committee consists of two of more members of the board, each of whom is a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act and independent” for purposes of any applicable listing requirements. Among other things, the committee has complete discretion, subject to the express limits of the 2021 Plan, to determine the directors, employees and nonemployee consultants to be granted an award, the type of award to be granted the terms and conditions of the award, the form of payment to be made and/or the number of shares of common stock subject to each award, the exercise price of each option and base price of each stock appreciation right (“SAR”), the term of each award, the vesting schedule for an award, whether to accelerate vesting, the value of the common stock underlying the award, and the required withholding, if any. The compensation committee may amend, modify or terminate any outstanding award, provided that the participant’s consent to such action is required if the action would impair the participant’s rights or entitlements with respect to that award. The compensation committee is also authorized to construe the award agreements, and may prescribe rules relating to the 2021 Plan. Notwithstanding the foregoing, the compensation committee does not have any authority to grant or modify an award under the 2021 Plan with terms or conditions that would cause the grant, vesting or exercise thereof to be considered nonqualified “deferred compensation” subject to Code Section 409A.

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Grant of Awards; Shares Available for Awards. The 2021 Plan provides for the grant of stock options, SARs, performance share awards, performance unit awards, distribution equivalent right awards, restricted stock awards, restricted stock unit awards and unrestricted stock awards to non-employee directors, officers, employees and nonemployee consultants of Phoenix or its affiliates. The aggregate number of shares of common stock that may be issued under the 2021 Plan shall be equal to ten percent (10%) of the issued and outstanding shares of common stock on a fully diluted basis. Shares shall be deemed to have been issued under the 2021 Plan solely to the extent actually issued and delivered pursuant to an award. If any award expires, is cancelled, or terminates unexercised or is forfeited, the number of shares subject thereto is again available for grant under the 2021 Plan.

Stock Options. The 2021 Plan provides for either “incentive stock options” (“ISOs”), which are intended to meet the requirements for special federal income tax treatment under the Code, or “nonqualified stock options” (“NQSOs”). Stock options may be granted on such terms and conditions as the compensation committee may determine; provided, however, that the per share exercise price under a stock option may not be less than the fair market value of a share of common stock on the date of grant and the term of the stock option may not exceed 10 years (110% of such value and five years in the case of an ISO granted to an employee who owns (or is deemed to own) more than 10% of the total combined voting power of all classes of capital stock of our Company or a parent or subsidiary of our Company). ISOs may only be granted to employees. In addition, the aggregate fair market value of common stock covered by one or more ISOs (determined at the time of grant), which are exercisable for the first time by an employee during any calendar year may not exceed 100,000. Any excess is treated as a NQSO.

Stock Appreciation Rights. A SAR entitles the participant, upon exercise, to receive an amount, in cash or stock or a combination thereof, equal to the increase in the fair market value of the underlying common stock between the date of grant and the date of exercise. SARs may be granted in tandem with, or independently of, stock options granted under the 2021 Plan. A SAR granted in tandem with a stock option (i) is exercisable only at such times, and to the extent, that the related stock option is exercisable in accordance with the procedure for exercise of the related stock option; (ii) terminates upon termination or exercise of the related stock option (likewise, the common stock option granted in tandem with a SAR terminates upon exercise of the SAR); (iii) is transferable only with the related stock option; and (iv) if the related stock option is an ISO, may be exercised only when the value of the stock subject to the stock option exceeds the exercise price of the stock option. A SAR that is not granted in tandem with a stock option is exercisable at such times as the compensation committee may specify.

Performance Shares and Performance Unit Awards. Performance share and performance unit awards entitle the participant to receive cash or shares of common stock upon the attainment of specified performance goals. In the case of performance units, the right to acquire the units is denominated in cash values.

Distribution Equivalent Right Awards. A distribution equivalent right award entitles the participant to receive bookkeeping credits, cash payments and/or common stock distributions equal in amount to the distributions that would have been made to the participant had the participant held a specified number of shares of common stock during the period the participant held the distribution equivalent right. A distribution equivalent right may be awarded as a component of another award under the 2021 Plan, where, if so awarded, such distribution equivalent right will expire or be forfeited by the participant under the same conditions as under such other award.

Restricted Stock Awards and Restricted Stock Unit Awards. A restricted stock award is a grant or sale of common stock to the participant, subject to our right to repurchase all or part of the shares at their purchase price (or to require forfeiture of such shares if issued to the participant at no cost) in the event that conditions specified by the compensation committee in the award are not satisfied prior to the end of the time period during which the shares subject to the award may be repurchased by or forfeited to us. Our restricted stock unit entitles the participant to receive a cash payment equal to the fair market value of a share of common stock for each restricted stock unit subject to such restricted stock unit award, if the participant satisfies the applicable vesting requirement.

Unrestricted Stock Awards. An unrestricted stock award is a grant or sale of shares of our common stock to the participant that is not subject to transfer, forfeiture or other restrictions, in consideration for past services rendered to Phoenix or an affiliate or for other valid consideration.

Change-in-Control Provisions. In connection with the grant of an award, the compensation committee may provide that, in the event of a change in control, such award will become fully vested and immediately exercisable.

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Amendment and Termination. The compensation committee may adopt, amend and rescind rules relating to the administration of the 2021 Plan, and amend, suspend or terminate the 2021 Plan, but no such amendment or termination will be made that materially and adversely impairs the rights of any participant with respect to any award received thereby under the 2021 Plan without the participant’s consent, other than amendments that are necessary to permit the granting of awards in compliance with applicable laws. We have attempted to structure the 2021 Plan so that remuneration attributable to stock options and other awards will not be subject to the deduction limitation contained in Code Section 162(m).

ITEM 12. Security Ownership of Certain Beneficial Owners, Management and Related Stockholder Matters

The Company has one class of stock outstanding, its common stock. The holders of the common stock are entitled to one vote per share of common stock held on all matters submitted to a vote of stockholders. In the event of liquidation, holders of our common stock are entitled to share ratably in our net assets available for distribution to stockholders.

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of May 20, 2025 for:

● each of our named executive officers;

● each of our directors;

● all of our executive officers and directors as a group; and

● each stockholder known by us to be the beneficial owner of more than 5% of our outstanding common stock.

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days and shares of common stock underlying restricted stock units that may be settled within 60 days of May 20, 2025.

The percentage ownership columns in the table is based on 49,280,432 shares of our common stock issued and outstanding as of May 20, 2025.

We have determined beneficial ownership in accordance with the rules and regulations of the SEC. Except as indicated in the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all common stock that they beneficially own, subject to applicable community property laws.

Except as otherwise set forth below, the address of each of the persons listed below is Phoenix Motor Inc., 1500 Lakeview Loop, Anaheim, CA 92807. Unless otherwise indicated, the common stock beneficially owned by a holder includes shares owned by a spouse, minor children and relatives sharing the same home, as well as entities owned or controlled by the named person, and also includes options to purchase shares of our common stock exercisable within 60 days that have been granted under our incentive stock plans.

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			Shares			Total Amount
	Vested		Issued and			Beneficially			% Beneficially
Name of Beneficial Owner	Options(12)		Outstanding			Owned)(1)			Owned
More than 5% Stockholders:
Palo Alto Clean Tech Holding Limited		—		12,000,000			12,000,000	(2)		24.4	%
EdisonFuture, Inc.		—		5,500,000			5,500,000	(3)		11.2	%
Sherman Development LLC(10)		—		868,261			4,341,305	(4)		8.8	%
ATI Chemicals LLC(10)		—		870,000			4,350,000	(5)		8.8	%
EXO Commodity Solution LLC(10)		—		870,000			4,350,000	(6)		8.8	%
WWJ Group, Inc.(10)		—		870,000			4,350,000	(7)		8.8	%
World Trade Technology LLC(10)		—		2,173,913			4,347,826	(8)		8.8	%
Barton Global LLC(10)		—		1,478,260			2,956,520	(9)		6.0	%
Named Executive Officers and Directors
Xiaofeng Denton Peng		1,050,000		12,150,000	(2)		13,200,000	(11)		26.2	%
Michael Yung		—		—			—			*
Lewis W. Liu		50,000		—			50,000			*
HoongKhoeng Cheong		18,750		—			18,750			*
Julia Yu		—		—			—
Yongmei (May) Huang		—		—			—
James Young		—		—			—
All Directors and Named Executive Officers as a group (7 persons)		1,118,750		12,150,000			13,268,750	(13)		26.3	%

* Less than 1%.

(1) The number of shares of common stock beneficially owned includes (i) shares issued and outstanding and (ii) stock options exercisable (including options that will be exercisable within 60 days after May 20, 2025) and includes any shares of common stock that may be issued upon exercise of the warrants issued in 2023 and 2024 that are exercisable within 60 days after May 20, 2025.

(2) Palo Alto Clean Tech Holding Ltd (“PACT”) is an exempted limited company organized under the laws of the British Virgin Islands. The principal address of PACT is 740 Mayview Avenue, Palo Alto, CA 94303. Mr. Xiaofeng Denton Peng, a natural person, who is also the Chairman and CEO of the Company, and his spouse Tracy Zhou are the sole directors of PACT.

(3) Includes shares owned by EdisonFuture, Inc., a Delaware corporation wholly owned by SPI Solar, Inc., a wholly owned subsidiary of SPI Energy Co., Ltd., a Cayman Islands company listed on Nasdaq. The principal address of SPI Solar, Inc. is at 4677 Old Ironsides Drive #190, Santa Clara, CA 95054. Our Chairman and CEO, Xiaofeng Denton Peng, is also the sole director of EdisonFuture, Inc., and is the chairman and principal stockholder of SPI Energy Co., Ltd.

(4) Sherman Development LLC purchased 868,261 shares and 3,473,044 warrants, with each warrant exercisable at $2.00 per share of common stock, and has a principal address of 58 Sherman Lumber Company Rd., Stacyville, ME 04777. The number of shares beneficially owned assumes the exercise of all outstanding warrants exercisable within 60 days of May 20, 2025 (also see Note 10).

(5) ATI Chemicals LLC purchased 870,000 shares and 3,480,000 warrants, with each warrant exercisable at $2.00 per share of common stock, and has a principal address of 38 Spruce Meadows Dr., Monroe, NJ 08831. The number of shares beneficially owned assumes the exercise of all outstanding warrants exercisable within 60 days of May 20, 2025 (also see Note 10).

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(6) EXO Commodity Solution LLC purchased 870,000 shares and 3,480,000 warrants, with each warrant exercisable at $2.00 per share of common stock, and has a principal address at Suite 106, 195 US 9 South, Manalapan, NJ 07726. The number of shares beneficially owned assumes the exercise of all outstanding warrants exercisable within 60 days of May 20, 2025 (also see Note 10).

(7) WWJ Group, Inc. purchased 870,000 shares and 3,480,000 warrants, with each warrant exercisable at $2.00 per share of common stock, and has a principal address at 83-07 Queens Blvd, Elmhurst, New York 11373. The number of shares beneficially owned assumes the exercise of all outstanding warrants exercisable within 60 days of May 20, 2025 (also see Note 10).

(8) World Trade Technology LLC purchased in the registered direct public offering 2,173,913 shares of common stock and 2,173,913 warrants, with each warrant exercisable at $2.00 per share of common stock, and has a principal address at 81A Hampshire Rd, Great Neck, NY 11023. The number of shares beneficially owned assumes the exercise of all outstanding warrants exercisable within 60 days of May 20, 2025 (also see Note 10).

(9) Barton Global LLC purchased in the registered direct public offering 1,478,260 shares of common stock and 1,478,260 warrants, with each warrant exercisable at $2.00 per share of common stock, and has a principal address at 240 East Shore Road, Great Neck, NY 11023. The number of shares beneficially owned assumes the exercise of all outstanding warrants exercisable within 60 days of May 20, 2025 (also see Note 10).

(10) The number of shares beneficially owned assumes the full exercise of all outstanding warrants of each individual investor exercisable within 60 days of May 20, 2025.

(11) Includes shares owned beneficially or deemed to be owned beneficially by Xiaofeng Denton Peng as follows: (a) 12,150,000 shares of common stock directly and with respect to which he as sole voting and investment power, including 12,000,000 shares owned by PACT; and (b) 1,050,000 shares of common stock underlying stock options. Does not include Mr. Peng’s indirect beneficial ownership of shares through his equity ownership in SPI Energy Co., Ltd.

(12) Represents shares of common stock underlying stock options owned beneficially or deemed to be owned beneficially.

(13) See notes (1), (2), (3) and (12).

We cannot ascertain the exact number of beneficial shareholders with addresses in the United States.

None of our shareholders has different voting rights from other shareholders as of the date of this annual report. We are currently not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company.

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Transactions

During the year ended December 31, 2024, the Group borrowed $1.0 million from SPI. The loan is due on demand and bears 12% interest per annum. Including the loan payable due to SPI as of December 31, 2023 of $0.9 million, a total of $1.9 million loan principal was repaid by the Group and there was no balance due to SPI as of December 31, 2024.

During the year ended December 31, 2024, the Group collected $130 thousand from SolarJuice Co., Ltd for sales of electric forklift during 2023. During the year ended December 31, 2024, SolarJuice Co., Ltd billed the Group storage fee of $128 thousand which is paid in full as of December 31, 2024. At December 31,2024, there was no balance due to SolarJuice Co., Ltd.

During the year ended December 31, 2024, SPI borrowed $316 thousand from the Group, and the loan principal was paid in full as of December 31, 2024. During the year ended December 31, 2024, SPI billed the Group $794 thousand for legal, human resources and IT services provided by SPI employees and $766 thousand was paid, remaining $28 thousand was outstanding at of December 31, 2024.

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On June 22, 2024, the Group entered into a loan agreement with SPI. In the agreement, the Group agreed to lend up to an aggregate amount of $3.0 million to SPI at a rate of 12% per annual. SPI must repay each loan along with the unpaid and accrued interest within the year from the date the loan was received. On June 25, 2024 and July 15, 2024, the Group lent $0.5 million and $1.7 million, respectively, to SPI under the loan agreement. On August 9, 2024, $2.2 million of loan principal was repaid in full by SPI and on December 31, 2024, $22 thousand of interest was paid in full by SPI. On October 1, 2024, both parties agreed to terminate the loan agreement between the Group and SPI.

On March 6, 2024, SPI entered into a Deed of Settlement with its creditor, Streeterville Capital, LLC (“Streeterville”) to settle the unpaid balances of certain convertible notes via installment payments as agreed in the Deed of Settlement. As of part of this Deed of Settlement, the Group, as the guarantor, covenants to Streeterville to pay and satisfy on demand all liabilities due from SPI to Streeterville with a total amount of $15.0 million. On September 6, 2024, Streeterville provided a Deed of Release of Guarantor to the Group, confirming that Streeterville releases and discharges the Group from all past, present and future liability to Streeterville under the guarantee to Streeterville for SPI and also from all actions, claims and demands under or in connection with this guarantee.

Related Party Policy

Our Audit Committee has adopted an internal policy regarding the identification, review, consideration and oversight of any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any “related party” are participants. Transactions involving compensation for services provided to us as an employee, director, consultant or similar capacity by a related person are not covered. A related party is any executive officer, director or a holder of more than five percent of our shares of common stock, including any of their immediate family members and any entity owned or controlled by such persons.

Under our policy, where a transaction has been identified as a related party transaction, management must present information regarding the proposed related party transaction to the Audit Committee of our Board of Directors for review. The presentation must include a description of, among other things, the material facts, the direct and indirect interests of the related parties, the benefits of the transaction to us and whether any alternative transactions are available. To identify related party transactions in advance, we rely on information supplied by our executive officers, directors and certain significant shareholders. In considering related party transactions, the Audit Committee of our Board of Directors takes into account the relevant available facts and circumstances including, but not limited to the risks, costs and benefits to us; the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated; the terms of the transaction; the availability of other sources for comparable services or products; and the terms available to or from, as the case may be, unrelated third parties or to or from our employees generally. In the event a director has an interest in the proposed transaction, the director must excuse himself or herself from the deliberations and approval.

Director Independence

The Board has determined that Julia Yu, Yongmei (May) Huang, and James Young are “independent” under the current independence standards of Rule 5605(a)(2) of the Nasdaq Rules and meet the criteria set forth in Rule 10A(m)(3) under the Exchange Act.

ITEM 14. Accountant Fees and Services

The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Yu Certified Public Accountant PC, our current principal external auditor, and Marcum Asia CPAs LLP, our former principal external auditor for the periods indicated.

	2024		2023
Audit fees (1) – Marcum Asia CPAs LLP	$	250,000	$	350,000
Audit fees (1) – Yu Certified Public Accountant PC		280,000		—
Audit-related fees (2)		—		—
Tax fees		—		—
All other fees		—		—
Total	$	530,000	$	350,000

(1)	Audit fees consist of fees billed for professional services rendered for the audit and review of our financial statements and services that are normally provided by the above auditors in connection with statutory and regulatory fillings or engagements.
(2)	Audit related fees consist of assurance and related services that are reasonably related to the performance of audit or review of our financial statements related to our SEC filings.

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Consistent with the rules of the SEC regarding auditor independence, our Board of Directors is responsible for the appointment, compensation and oversight of the work of our independent registered public accounting firm. Our Board asks our independent registered public accounting firm to provide a detailed description of its services each year as a basis for its decision-making. The Board evaluates the proposals based on four categories: audit services, audit-related services, tax services, and other services; and determines the proper arrangement for each service according to its judgment as to our needs over the coming year. Our Board pre-approves all audit and non-audit services to be performed by our independent registered public accounting firm. The Board pre-approved 100% of the audit and audit-related services performed by the independent registered public accounting firms described above in fiscal years 2024 and 2023.

Pre-Approval of Services

In accordance with the SEC’s auditor independence rules, the Audit Committee has established the following policies and procedures by which it approves in advance any audit or permissible non-audit services to be provided to the Company by its independent auditor.

Prior to the engagement of the independent auditor for any fiscal year’s audit, management submits to the Audit Committee for approval lists of recurring audit, audit-related, tax and other services expected to be provided by the auditor during that fiscal year. The Audit Committee adopts pre-approval schedules describing the recurring services that it has pre-approved, and is informed on a timely basis, and in any event by the next scheduled meeting, of any such services rendered by the independent auditor and the related fees.

The fees for any services listed in a pre-approval schedule are budgeted, and the Audit Committee requires the independent auditor and management to report actual fees versus the budget periodically throughout the year. The Audit Committee will require additional pre-approval if circumstances arise where it becomes necessary to engage the independent auditor for additional services above the amount of fees originally pre-approved. Any audit or non-audit service not listed in a pre-approval schedule must be separately pre-approved by the Audit Committee on a case-by-case basis. Every request to adopt or amend a pre-approval schedule or to provide services that are not listed in a pre-approval schedule must include a statement by the independent auditors as to whether, in their view, the request is consistent with the SEC’s rules on auditor independence.

The Audit Committee will not grant approval for:

● any services prohibited by applicable law or by any rule or regulation of the SEC or other regulatory body applicable to the Company;

● provision by the independent auditor to the Company of strategic consulting services of the type typically provided by management consulting firms; or

● the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the tax treatment of which may not be clear under the Internal Revenue Code and related regulations and which it is reasonable to conclude will be subject to audit procedures during an audit of the Company’s financial statements.

Tax services proposed to be provided by the auditor to any director, officer or employee of the Company who is in an accounting role or financial reporting oversight role must be approved by the Audit Committee on a case-by-case basis where such services are to be paid for by the Company, and the Audit Committee will be informed of any services to be provided to such individuals that are not to be paid for by the Company.

In determining whether to grant pre-approval of any non-audit services in the “all other” category, the Audit Committee will consider all relevant facts and circumstances, including the following four basic guidelines:

● whether the service creates a mutual or conflicting interest between the auditor and the Company;

● whether the service places the auditor in the position of auditing his or her own work;

● whether the service results in the auditor acting as management or an employee of the Company; and

● whether the service places the auditor in a position of being an advocate for the Company.

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PART IV

ITEM 15 Exhibits, Financial Statements and Schedules

(a) 1. Financial Statements

The following are contained in this Annual Report on Form 10-K:

● Reports of Independent Registered Public Accounting Firm.

● Consolidated Balance Sheets as of December 31, 2024 and 2023.

● Consolidated Statements of Operations for the years ended December 31, 2024 and 2023.

● Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2024 and 2023.

● Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023.

● Notes to the Consolidated Financial Statements.

The Consolidated Financial Statements, Notes to the Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm listed above are filed as part of this Annual Report and are set forth on pages F-1 through F-33 immediately following the signature page of this Annual Report.

(a) 2. Financial Statement Schedules

None.

(a) 3. Exhibits

Exhibit Number
3.1	Certificate of Incorporation of the Registrant, as amended (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
3.2	Certificate of Amendment of Certificate of Incorporation of Phoenix Motor Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
3.3	Bylaws of the Registrant (incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
3.4	Certificate of Amendment to Amended Certificate of Incorporation of Phoenix Motor Inc. (incorporated by reference to Exhibit 3.4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
3.5	Second Certificate of Amendment to Amended Certificate of Incorporation of Phoenix Motor Inc. (incorporated by reference to Exhibit 3.5 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261384), filed with the SEC on April 20,2022).
3.6	Certificate of Correction to the Second Certificate of Amendment to the Amended Certificate of Incorporation (incorporated by reference to Exhibit 3.7 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on May 17, 2022).
3.7	Third Certificate of Amendment to Certificate of Incorporation of Phoenix Motor Inc. (incorporated by reference to Exhibit 3.6 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261384), filed with the SEC on May 17, 2022).
4.1	Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
4.2	Stock Option Agreement dated January 24, 2021 between the Company and Xiaofeng Peng. (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
4.3**	Description of Securities
10.1	Phoenix Motor Inc. Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
10.2	Form of Phoenix Motor Inc. Incentive Stock Option Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
10.3	Employment Agreement between Jose Paul Plackal and Phoenix Car, LLC dated September 27, 2021 (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-261384), filed with the SEC on May 17, 2022).
10.4	Sublease Agreement between Phoenix Cars LLC and NMNC Group dated June 24, 2021 (incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
10.5	SBA EIDL Loan Agreement dated May 26, 2020 (incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
10.6	PPP Loan Agreement dated Jan 21, 2021 (incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
14.1	Code of Ethics of Phoenix Motor Inc. (incorporated by reference to Exhibit 14.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
21.1	Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-261384), filed with the SEC on November 29, 2021).
31.1*	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial and Accounting Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Principal Executive Officer and Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97*	Phoenix Motor Inc. Clawback Policy
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File - The cover page iXBRL tags are embedded within the inline XBRL document.

*	Filed herewith
**	Furnished herewith

ITEM 16 Form 10-K Summary

None.

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SIGNATURES

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.

Date: May 30, 2025	By:	/s/ Xiaofeng Peng
	Name:	Xiaofeng Peng
	Title:	Chief Executive Officer and Chairman
Date: May 30, 2025	By:	/s/ Michael Yung
	Name:	Michael Yung
	Title:	Chief Financial Officer

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 and in the capacities and on the dates indicated.

Dated: May 30, 2025	By:	/s/ Xiaofeng Peng
	Name:	Xiaofeng Peng
	Title:	Chief Executive Officer and Chairman
		(Principal Executive Officer)

Date: May 30, 2025	By:	/s/ Michael Yung
	Name:	Michael Yung
	Title:	Chief Financial Officer
		(Principal Accounting and Financial Officer)

Dated: May 30, 2025	By:	/s/ Julia Yu
	Name:	Julia Yu
	Title:	Director
Dated: May 30, 2025	By:	/s/ Yongmei Huang
	Name:	Yongmei Huang
	Title:	Director

Dated: May 30, 2025	By:	/s/ James Young
	Name:	James Young
	Title:	Director

Dated: May 30, 2025	By:	/s/ HoongKhoeng Cheong
	Name:	HoongKhoeng Cheong
	Title:	Director

49

Index to Financial Statements

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 5910)	F-2
Report of Independent Registered Public Accounting Firm (PCAOB ID 5395)	F-3
Consolidated Balance Sheets as of December 31, 2024 and 2023	F-4
Consolidated Statements of Operations for the years ended December 31, 2024 and 2023	F-5
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2024 and 2023	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023	F-7
Notes to the Consolidated Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of

Phoenix Motor Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Phoenix Motor Inc. (the “Company”) and its subsidiaries (collectively referred to as the “Group”), as of December 31, 2024, the related consolidated statement of operations, consolidated statement of changes in stockholders’ equity (deficit), and consolidated statement of cash flows, for the year ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2024, and the results of its operations and its cash flows, for the year ended December 31, 2024, in conformity with generally accepted accounting principles in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Group will continue as a going concern. As discussed in Note 2 of the consolidated financial statements, the Group has incurred operating losses, and negative cash flows from operating activities. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plan regarding these matters is 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 consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s consolidated financial statements based on our audit. 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 Group 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 audit 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 consolidated financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit 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 Group’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Yu Certified Public Accountant, P.C. (PCAOB ID: 5910)

We have served as the Group’s auditor since 2025.

New York, New York

May 30, 2025

F-2

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Phoenix Motor Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Phoenix Motor Inc. (the “Company”) as of December 31, 2023, the related consolidated statement of operations, changes in stockholders’ equity (deficit) and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the 2023 financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has a significant working capital deficit, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in 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 audit. 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 audit 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 audit 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 audit 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 audit 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 audit provide a reasonable basis for our opinion.

/s/ Marcum Asia CPAs LLP

Marcum Asia CPAs LLP

We have served as the Company’s auditor from 2021 to 2025.

New York, New York

April 15, 2024

F-3

PHOENIX MOTOR INC.

CONSOLIDATED BALANCE SHEETS

(In US$ thousands, except for share and per share data)

	December 31,			December 31,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	764		$	31
Restricted cash, current		—			3,252
Accounts receivable, net		4,015			451
Inventories		40,760			1,796
Prepaid expenses and other current assets, net		1,699			356
Amount due from a related party		—			130
Battery lease receivables		4,767			—
Total current assets		52,005			6,016
Property and equipment, net		3,784			1,119
Operating lease right-of-use assets		1,724			—
Net investment in leases		64			230
Goodwill		—			4,271
Total assets	$	57,577		$	11,636
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	4,265		$	3,529
Accrued liabilities		6,685			926
Advance from customers, current		4,713			167
Deferred income		1,494			362
Warranty reserve, current		4,380			289
Lease liabilities, current		1,845			1,303
Amounts due to a related party		28			863
Short-term borrowing		1,010			961
Derivative liability		33			1,156
Warrant liability		1,278			—
Convertible notes, current		485			1,320
Long-term borrowing, current		3			5
Total current liabilities		26,219			10,881
Lease liabilities, noncurrent		1,239			2,696
Warranty reserve, noncurrent		9,909			—
Advance from customers, noncurrent		2,036			2,214
Convertible notes, noncurrent		—			540
Long-term borrowings		138			144
Deferred tax liabilities		7,716			—
Total liabilities		47,257			16,475
Commitments and contingencies (Note 21)
Equity:
Common stock, par $0.0004, 450,000,000 shares authorized, 42,674,864 and 21,900,918 shares issued and outstanding as of December 31, 2024 and 2023, respectively		17			9
Additional paid-in capital		51,578			44,359
Accumulated deficit		(41,275	)		(49,207	)
Total stockholders’ equity (deficit)		10,320			(4,839	)
Total liabilities and stockholders’ equity (deficit)	$	57,577		$	11,636

The accompanying notes are an integral part of these consolidated financial statements.

F-4

PHOENIX MOTOR INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In US$ thousands, except for share and per share data)

	Year Ended			Year ended
	December 31,			December 31,
	2024			2023
Revenues - third parties	$	31,154		$	3,011
Revenues - related parties		—			111
Total revenues		31,154			3,122
Cost of revenues		24,099			3,398
Gross profit (loss)		7,055			(276	)
Operating expenses:
Selling, general and administrative		33,752			14,902
Provision for credit loss		—			360
Impairment of long-lived assets		—			4,968
Impairment of goodwill		4,271			—
Operating loss		(30,968	)		(20,506	)
Other income (expense):
Interest expense, net		(4,531	)		(606	)
Loss on sales-type leases		—			(98	)
Loss on warrants issued for private placement		(7,432	)		—
Gain (loss) on change in fair value of derivative liability		641			(319	)
Gain on change in fair value of warrant liability		15,227			—
Employee retention credit		—			697
Bargain purchase gain		38,271			—
Others		213			209
Total other income (expense), net	$	42,389		$	(117	)
Income (loss) before income taxes		11,421			(20,623	)
Income tax expenses		(3,489	)		(22	)
Net income (loss)	$	7,932		$	(20,645	)
Net earnings (loss) per share of common stock:
Basic	$	0.22		$	(0.97	)
Diluted	$	0.21		$	(0.97	)
Weighted average common stocks outstanding
Basic		35,497,296			21,199,023
Diluted		36,589,071			21,199,023

The accompanying notes are an integral part of these consolidated financial statements.

F-5

PHOENIX MOTOR INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(In US$ thousands, except for share and per share data)

					Additional
			Common		Paid-In		Accumulated
	Shares*		Stock		Capital		Deficit			Total
Balance as of December 31, 2022		20,277,046	$	8	$	40,836	$	(28,562	)	$	12,282
Net loss		—		—		—		(20,645	)		(20,645	)
Issuance of common stock per standby equity purchase agreement		1,546,545		1		1,914		—			1,915
Issuance of Warrants in connection with convertible notes		—		—		1,471		—			1,471
Issuance of restricted shares to TJ capital to repay consulting fee		77,327		—		100		—			100
Stock-based compensation		—		—		38		—			38
Balance as of December 31, 2023		21,900,918	$	9	$	44,359	$	(49,207	)	$	(4,839	)
Net income		—		—		—		7,932			7,932
Issuance of common stock for convertible note conversion		8,937,923		3		2,675		—			2,678
Issuance of common stock for settlement with vendors		1,365,261		1		1,692		—			1,693
Issuance of restricted shares to Wisdom Financial to repay loan interest (Note 16)		180,202		—		270		—			270
Issuance of common stock for private placements		10,290,560		4		2,027		—			2,031
Reclass of derivative liability upon conversion of related convertible notes		—		—		482		—			482
Stock-based compensation		—		—		73		—			73
Balance as of December 31, 2024		42,674,864	$	17	$	51,578	$	(41,275	)	$	10,320

The accompanying notes are an integral part of these consolidated financial statements.

F-6

PHOENIX MOTOR INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In US$ thousands)

	Years ended December 31,
	2024			2023
Cash flows from operating activities:
Net income (loss)		7,932			(20,645	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		1,836			1,191
Loss on disposal of fixed assets		284			84
Provision for credit loss		—			360
Write-down of inventories		—			289
Amortization of debt discount of convertible notes		1,490			327
(Gain) loss on change in fair value of derivative liability		(641	)		319
Gain on change in fair value of warrant liability		(15,227	)		—
Loss on warrants issued during private placements		7,432			—
Gain on forgiveness of long-aged payables		—			(137	)
Impairment of long-lived asset		—			4,968
Impairment of goodwill		4,271			—
Warranty reserve		(994	)		(36	)
Loss on sales-type leases		—			98
Amortization of right-of-use assets		938			816
Bargain purchase gain		(38,271	)		—
Share-based compensation		73			38
Warrants issued in connection with unclosed convertible note offering		—			881
Deferred tax liability		3,489			—
Changes in operating assets and liabilities:
Accounts receivable		(3,564	)		1,153
Inventories		17,456			1,748
Battery lease receivable		1,633			—
Prepaid expenses and other assets		(1,343	)		1,075
Accounts payable		2,429			2,332
Accrued liabilities and other liabilities		6,584			393
Deferred revenue		1,132			(45	)
Advance from customer		4,368			1,151
Lease liability		(3,577	)		(349	)
Net investment in leases		166			282
Amount due to a related party		—			17
Amount due from a related party		158			38
Net cash used in operating activities		(1,946	)		(3,652	)
Cash flows from investing activities:
Purchase of property, plant and equipment		(113	)		(93	)
Loan to a related party		(2,566	)		—
Proceeds from repayment from a related party		2,566			—
Acquisition of Proterra		(10,000	)		—
Net cash used in investing activities		(10,113	)		(93	)
Cash flows from financing activities:
Repayment of borrowings		(4,939	)		(1	)
Proceeds from borrowings		4,980			961
Proceeds from issuance of convertible notes		—			2,960
Repayment of a related party borrowing		(1,914	)		(1,336	)
Proceeds from a related party borrowing		1,051			2,140
Proceeds received from private placements		11,104			—
Proceeds received from standby equity purchase agreement		—			1,915
Repayment of convertible notes		(742	)		—
Net cash generated from financing activities		9,540			6,639
(Decrease) increase in cash, cash equivalents and restricted cash		(2,519	)		2,894
Cash, cash equivalents and restricted cash at beginning of year		3,283			389
Cash, cash equivalents and restricted cash at end of year		764			3,283
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents		764			31
Restricted cash, current		—			3,252
Total cash, cash equivalents, and restricted cash		764			3,283
Supplemental cash flow information:
Interest paid		2,011			153
Income tax paid		—			22
Non-cash activities:
Right of use assets obtained in exchange for operating lease obligations		2,641			404
Derivative liabilities recorded as debt discount		—			837
Warrants recorded as debt discount		—			590
Inventories transferred to property and equipment		434			727
Issuance of common stock for convertible note conversion		2,678			—
Reclass of derivative liability to additional paid-in capital upon conversion of related convertible notes		482			—
Issuance of common stock to Wisdom Financial to repay the consulting fee		270			—
Issuance of common stock for settlement with vendors		1,693			—

The accompanying notes are an integral part of these consolidated financial statements.

F-7

PHOENIX MOTOR INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US$ thousands, except share and per share data)

1. Description of Business and Organization

Description of Business

Phoenix Motor Inc. (“Phoenix Motor” or the “Company”) and its subsidiaries (collectively the “Group”) is engaged in design, assembly, and integration of electric drive systems for medium duty electric vehicles (“EVs”).

Phoenix Cars, LLC (“PCL”), a subsidiary of Phoenix Motor, designs and manufactures zero- emission electric drivetrain systems for integration in medium to heavy-duty commercial fleet vehicles in United States. PCL also sells a range of material handling products including all-electric lithium-ion forklifts and pallet jacks. Phoenix Motorcars Leasing, LLC (“PML”), a subsidiary of Phoenix Motor, serves as a sales and leasing dealership for PCL in United States.

Phoenix Motor was incorporated in the state of Delaware on October 20, 2020. EdisonFuture, Inc. (“EdisonFuture”), a subsidiary of SPI Energy Co., Ltd (“SPI”), was the parent company of Phoenix Motor. On November 12, 2020, EdisonFuture acquired 100% of the membership interests of PCL and PML. Simultaneously, EdisonFuture effected the transfer of 100% of the membership interests of PCL and PML to Phoenix Motor.

The Company’s third operating subsidiary, EdisonFuture Motor, Inc., was established in July 2021 to focus on development of its pickup trucks and last mile utility vans business.

On September 26, 2023, EdisonFuture sold shares of the Company’s common stock owned by it, representing 56.36% of the outstanding shares of the Company, to Palo Alto Clean Tech Holding Limited (“Palo Alto”), an entity owned and controlled by Mr. Xiaofeng Denton Peng, the Company’s Chairman of the Board of Directors and CEO. After this transaction, SPI was no longer the Group’s ultimate parent company but still considered as a related party of the Group as SPI owns over 20% of the Company’s outstanding shares through EdisonFuture, and it is an affiliated company controlled by Mr. Peng.

In November 2023, the Group participated in two court auctions and emerged as the highest bidder for two asset packages, one for Proterra transit business unit and one for the Proterra battery lease contracts, with total consideration of $10,000 in cash. As part of the acquisition, the Group assumed estimated warranty liability of $14,994. On January 11, 2024, the Group completed the acquisition of the Proterra transit business unit and on February 7, 2024, the Group completed the acquisition of Proterra battery lease contracts. After the acquisition, the Group engages in the business that designs, develops and sells electric transit buses as an original equipment manufacturer for North American public transit agencies, airports, universities and other commercial transit fleets and the Group was assigned with the right to collect certain leasing receivables which Proterra was a party as the lessor thereunder, used in connection with deployed Proterra electric transit buses. On June 24, 2024, the Group entered into an asset purchase agreement with Zenobe. In the agreement, the Group sold the battery lease receivables to Zenobe in two batches while retaining the warranty liability associated with leased batteries. The aggregate purchase price for Batch 1 transferred assets is made of: (i) $3,575, minus (ii) any payments received by the Group from March 1, 2024 to the Batch 1 closing date, plus (iii) the assumption of the assumed liabilities incurred after the applicable closing date related to the Batch 1 transferred assets. The aggregate purchase price for Batch 2 transferred assets is made of: (i) $2,175, minus (ii) any payments received by the Group from March 1, 2024 to the Batch 2 closing date, plus (iii) assumption of the assumed liabilities incurred after the applicable closing date related to the Batch 2 transferred assets. During the year ended December 31, 2024, the Group collected a total of $872 lease receivables from leasing customers and received a total of $3,813 customer deposits from Zenobe. In February 2025, The Group received $832 from Zenobe after closing the entire sale.

2. Going Concern

The Group has net income of $7,932 during the year ended December 31, 2024, mainly due to the bargain purchase gain from the acquisition of Proterra transit business unit. Excluding the one-time bargain purchase gain, the Group incurred a net loss of $30,339 during the year ended December 31, 2024 and has incurred significant recurring losses before 2024. The cash flow used in operating activities was $1,946 and the Group needs to raise additional funds to sustain its operations. In addition, the Group was in default on a number of obligations, which could result in the Group being forced to cease operations if the Group is unable to reach satisfactory settlement with the counterparties. These factors raise substantial doubt as to the Group’s ability to continue as a going concern.

F-8

For the next 12 months from the issuance date of the consolidated financial statements, the Group plans to continue pursuing strategies to improve liquidity and raise additional funds while implementing various measures to control costs and improve efficiency. Such strategies and measures include the following: 1) continue to drive for operation integration and efficiency under ONE Phoenix, re-alignment operating units under ONE Goal, right sizing workforce under ONE Team; 2) re-establish the cost structure and cost base to increase operation efficiency with the new integrated ERP and other operating systems; 3) expand and strengthen strategic partnership to outsource a significant portion of design and engineering work for the next generation product to third party vendors and suppliers to control overall development and supply chain costs; 4) implement working capital initiatives and negotiate better payment terms with customers and for some of the new orders, require down payments; 5) implement cash saving initiatives and tighter cash control, and calibrate capital allocation to manage liquidity; and 6) continue to proactively implement a robust capital market strategy to provide financing for the Group’s operations through proceeds from private stock offering, debt financings including but not limited to term loans, revolving line of credit and equity linked instruments, and potentially federal and state incentive funding programs.

There is no assurance that the plans will be successfully implemented. If the Group fails to achieve these goals, the Group may need additional financing to repay debt obligations and execute its business plan, and the Group may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In the event that financing sources are not available, or that the Group is unsuccessful in increasing its gross profit margin and reducing operating losses, the Group may be unable to implement its current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on the Group’s business, financial condition and results of operations and may materially adversely affect its ability to continue as a going concern.

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Group be unable to continue as a going concern.

3. Summary of Significant Accounting Policies

(a) Basis of Presentation

The accompanying consolidated financial statements of the Group are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

(b) Principles of Consolidation

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.

The consolidated financial statements include the financial statements of the Group and its subsidiaries. All material intercompany transactions and balances have been eliminated upon consolidation.

(c) Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires the Group to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Group’s consolidated financial statements include the allowance for credit losses, impairment of goodwill, impairment of long-lived assets, warranty reserves, and fair value of derivative liabilities. Changes in facts and circumstances may result in revised estimates. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.

F-9

(d) Fair Value of Financial Instruments

The Group measures at fair value certain of its financial and non-financial assets and liabilities by using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are:

● Level 1 — Quoted market prices in active markets for identical assets or liabilities.

● Level 2 — Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable, such as interest rate and yield curves, and market-corroborated inputs).

● Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting unit to develop its own assumptions.

The Group uses quoted market prices to determine the fair value when available. If quoted market prices are not available, the Group measures fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates.

The carrying values of the Group’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payables, accrued liabilities and advance from customers, approximate their fair values due to the short-term nature of these instruments.

(e) Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash accounts, interest bearing savings accounts and all highly liquid investments with original maturities of three months or less, which are unrestricted as to withdrawal and use. There were no cash equivalents as of December 31, 2024 and 2023.

(f) Restricted cash

Restricted cash represents bank deposits with designated use, which cannot be withdrawn without certain approval or notice. As of December 31, 2024, there was no restricted bank deposit. As of December 31, 2023, The Group had restricted bank deposits of $3,252, including: 1) $250 restricted cash deposited in an escrow account for part of the proceeds received from the Group’s IPO for two years from the date of IPO; and 2) $3,002 restricted cash deposited in an escrow account which was established to secure the acquisition of the transit business of Proterra Inc (see Note 4).

(g) Accounts Receivable, net

The Group grants open credit terms to credit-worthy customers. Accounts receivable are primarily related to sales of transit buses, sales of EV, EV components and electric forklifts. The Group maintains allowances for credit loss. The Group adopted ASC 326 Financial Instruments — Credit Losses using the modified retrospective approach through a cumulative-effect adjustment to accumulated deficit from January 1, 2020. Management used an expected credit loss model for the impairment of trading receivables as of period ends. Management believes the aging of accounts receivable is a reasonable parameter to estimate expected credit loss, and determines expected credit losses for accounts receivables using an aging schedule as of period ends. The expected credit loss rates under each aging schedule were developed on basis of the average historical loss rates from previous years, and adjusted to reflect the effects of those differences in current conditions and forecasted changes. Management measured the expected credit losses of accounts receivable on a collective basis. When an accounts receivable does not share risk characteristics with other accounts receivables, management will evaluate such accounts receivable for expected credit loss on an individual basis. Doubtful accounts balances are written off and deducted from allowance, when receivables are deemed uncollectible, after all collection efforts have been exhausted and the potential for recovery is considered remote.

(h) Inventories

Inventories are stated at the lower of cost or net realizable value. The cost of inventories is determined on the basis of first in first out method. The cost of finished transit buses, vehicles or kits comprises direct materials, direct labor and an appropriate proportion of overhead. The cost of forklifts comprises purchase price paid to the manufacturer, tariff and shipping costs. Net realizable value is based on estimated selling prices less selling expenses and any further costs expected to be incurred for completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances and are included in the cost of revenue in the consolidated statements of operations.

F-10

(i) Property and Equipment, net

The Group accounts for its property and equipment at cost, less accumulated depreciation and impairment, if any. Cost includes the prices paid to acquire or construct the assets and any expenditure that substantially extends the useful life of an existing asset. The Group expenses repair and maintenance costs when they are incurred. Depreciation is recorded on the straight-line method based on the estimated useful lives of the assets as follows:

Furniture, fixtures and equipment	3 to 10 years
Automobile	3 to 7 years
Leased automobile	3 years
Leasehold improvements	The shorter of the estimated life or the lease term

(j) Intangible Assets other than Goodwill, net

Intangible assets consist of technology, tradename and others. Amortization is recorded on the straight-line method based on the estimated useful lives of the assets.

(k) Impairment of Long-lived Assets

The Group’s long-lived assets include property and equipment, intangible assets with finite lives and right-of-use assets. The Group evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Group first compares undiscounted cash flows expected to be generated by that asset or asset group from their use and their eventual disposition to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Any impairment write-downs would be treated as permanent reductions in the carrying amounts of the assets and a charge to operations would be recognized. As described in Note 10, Note 11 and Note 22, the Group recorded impairment on intangible assets, property and equipment and right of use assets for a total amount of nil and $4,968 for the years ended December 31, 2024 and 2023.

(l) Impairment of Goodwill

The Group assess goodwill for impairment on annual basis in accordance with ASC 350-20, Intangibles – Goodwill and Other: Goodwill, which permits the Group to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test. If this is the case, the quantitative goodwill impairment test is required. If it is more likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the quantitative goodwill impairment test is not required.

Quantitative goodwill impairment test is used to identify both the existence of impairment and the amount of impairment loss, compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired. If the fair value of the reporting unit is less than its carrying amount, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

The Group performs the annual goodwill impairment assessment on December 31, 2024 and recorded impairment on goodwill for a total amount of $4,271 for the year ended December 31, 2024.

(m) Income Taxes

The Group accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized.

F-11

The Group recognizes in the consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, management presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. In addition, a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The Group’s tax liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of the tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The Group records interest and penalties related to an uncertain tax position, if and when required, as part of income tax expense in the consolidated statements of operations. No reserve for uncertain tax positions was recorded for the years ended December 31, 2024 and 2023. The Group does not expect that the assessment regarding unrecognized tax positions will materially change over the next 12 months. The Group is not currently under examination by an income tax authority, nor have been notified that an examination is contemplated.

(n) Revenue Recognition

The Group’s accounting practices under Accounting Standards Codification (“ASC”) No. 606, “Revenue from Contracts with Customers” (“ASC 606” or “Topic 606”) are as followings:

Sales of Transit Buses

The Group recognizes revenue on sales of transit buses at a point in time following the transfer of control of such products to the customer, which typically occurs upon the delivery to the customer when the Company can objectively demonstrate that the criteria specified in the contractual acceptance provisions are achieved prior to delivery. In cases where the Company cannot objectively demonstrate that the criteria specified in the contractual acceptance provisions have been achieved prior to delivery, revenue is recognized upon acceptance by the customer. The Group determined that the government grants should be considered as part of the transaction price because it is granted to the transit buses buyer and the buyer remains liable for such amount in the event the grants were not received by the Group or returned due to the buyer violates the government grant terms and conditions.

Sales of EVs and kits

The Group generates revenue from sales of EVs and kits, which are electric drive system kits that are integrated into shuttle buses sold to the customers. EV buyers in California are entitled to government grants when they purchase EVs that qualify for certain government grant project. The Group applies for and collects such government grants on behalf of the customers. Accordingly, customers only pay the amount after deducting government grants.

The Group recognizes revenue on sales of EVs and kits at a point in time following the transfer of control of such products to the customer, which typically occurs upon the delivery to the customer. The Group determined that the government grants should be considered as part of the transaction price because it is granted to the EV buyer and the buyer remains liable for such amount in the event the grants were not received by the Group or returned due to the buyer violates the government grant terms and conditions.

During the year ended December 31, 2023, the Group reassessed the estimates of variable consideration regarding government grant and noted a change in estimated transaction price resulting from the Group’s inability to timely deliver required number of EVs due to the Group’s significant cash shortage. Therefore, the Group recorded a reduction of $366 revenue during the year ended December 31, 2023 in the period in which the transaction price changes.

Lease of EVs

EV leasing revenue includes revenue recognized under lease accounting guidance for direct leasing programs. The Group accounts for most of the leasing transactions as operating leases under ASC 842 Leases, and revenues are recognized on a straight-line basis over the contractual term.

Sales of forklifts

Revenue on sale of forklifts is recognized at a point in time following the transfer of control of such products to the customer, which typically occurs upon delivery or acceptance of the customer depending on the terms of the underlying contracts.

F-12

Sales of parts

Revenue on sale of parts for transit buses or EVs is recognized at a point in time following the transfer of control of such products to the customer, which typically occurs upon delivery or acceptance of the customer depending on the terms of the underlying contracts.

Service revenue

Service revenue consists of maintenance, warranty, training and other services. For maintenance and warranty services, revenues are recognized on a straight-line basis over the contractual term. For training and other service revenue, the Group recognizes revenue at a point in time following the transfer of control of such services to the customer, which typically occurs upon the delivery to the customer.

Other revenue

Other revenue consists of sales of component and charging stations, shipping and delivery fees and others For sales of component and charging stations, shipping and delivery fees and others, the Group recognizes revenue at a point in time following the transfer of control of such products or services to the customer, which typically occurs upon the delivery to the customer.

Disaggregation of revenues

The Group disaggregates its revenue by seven primary categories: sales of transit buses, sales of EVs, lease of EVs, sales of forklifts , sales of parts, service revenue and others.

The following is a summary of the Group’s disaggregated revenues by revenue streams:

	Year ended		Year ended
	December 31, 2024		December 31, 2023
Sales of transit buses	$	24,615	$	—
Sales of EVs		806		1,492
Lease of EVs		116		369
Sales of Forklifts		45		410
Sales of parts		1,583		—
Service revenue		2,645		—
Others		1,344		851
	$	31,154	$	3,122

The following is a summary of the Group’s disaggregated revenues by timing of revenue recognition:

	Year ended		Year ended
	December 31, 2024		December 31, 2023
Over time		1,383		854
Point of time		29,771		2,268
	$	31,154	$	3,122

A contract liability is the Group’s obligation to transfer goods or services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer. As of December 31, 2024 and 2023, the balances of contract liability were included in advance from customer (current and noncurrent) with amount of $6,749 and $2,381, respectively. During the years ended December 31, 2024 and 2023, the Group recognized $323 and $466 as revenue that was included in the balance of advance from customers at January 1, 2024 and 2023, respectively.

F-13

Lessor Accounting

During the year ended December 31, 2023, the Group amended agreements with certain customers related to the leased EVs to renew the lease term. Since there was no grant of additional right-of-use assets, the Group did not account for the modified lease agreements as new leases but accounted for the original lease and the modified lease agreements as a combined lease. The Group reviewed the combined lease agreements and considered that (i) the lease term represents for the major part (greater than 75%) of the economic life of the underlying equipment; or (ii) the present value of the sum of lease payments and any residual value guaranteed by the lessee that has not already been included in lease payments equals or exceeds substantially (greater than 90%) all of the fair value of the underlying asset.

The modified EV lease agreements are thus accounted for as sales-type leases. Under sales-type lease accounting, at the commencement date, the lessor recognizes a net investment in the lease, based on the estimated fair value of the underlying leased assets at contract inception, and derecognizes the underlying assets with the difference recorded as selling profit or loss arising from the lease, and interest income from the lease is recognized over the lease term.

The net investment in leases was $230 and $479, respectively, as of December 31, 2024 and 2023, in which current portion of $166 and $249, respectively, was included in prepaid expenses and other current assets, net on the balance sheet. During the year ended December 31, 2024 and 2023, loss on sales-type leases was nil and $98, respectively.

(o) Business Combination

Business combinations are recorded using the acquisition method of accounting and, accordingly, the acquired assets and liabilities are recorded at their fair market value at the date of acquisition. Any excess of acquisition cost over the fair value of the acquired assets and liabilities, including identifiable intangible assets, is recorded as goodwill. The Group charges acquisition-related costs that are not part of the purchase price consideration to general and administrative expenses as they are incurred. Those costs typically include transaction and integration costs, such as legal, accounting, and other professional fees.

According to Business Combination (Topic 805) the Group performs a screen test to evaluate whether a transaction should be accounted for as an acquisition and/or disposal of a business versus assets. In order for a purchase to be considered an acquisition of a business, and receive business combination accounting treatment, the set of transferred assets and activities must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the set of transferred assets and activities is not a business.

(p) Cost of Revenues

Cost of revenues for transit buses sales and EV sales includes direct parts, material and labor costs, manufacturing overheads, and shipping and logistics costs. Cost of revenues for EV leasing primarily includes the depreciation of operating lease vehicles over the lease term and other leasing related charges including vehicle insurance and batteries service cost. Cost of revenues from forklift sales primarily includes purchase price paid to manufacturer, tariff, as well as shipping and delivery costs. Cost of other revenue includes direct parts, material and labor costs, as well as shipping and delivery and other costs.

(q) Segment Reporting

ASC 280, Segment Reporting, establishes standards for companies to report in their financial statements information about operating segments, products, services, geographic areas, and major customers.

In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The Group adopted this ASU commencing January 1, 2024 and the adoption of the ASU does not have a material effect on its consolidated financial statements.

F-14

Based on the criteria established by ASC 280, the Group’s CODM has been identified as the Chief Executive Officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole and hence, the Group has only one operating segment. The Group does not distinguish between markets or segments for the purpose of internal reporting. The CODM considers year-over-year fluctuations and budget-to-actual variances of these consolidated results when assessing performance and making operating decisions. The Group manages assets on a consolidated basis as reported on the consolidated balance sheets. As the Group’s long-lived assets are all located in the U.S. and substantially all the Group’s revenue is derived from within the U.S., no geographical segments are presented.

The Group’s CODM uses consolidated net income or loss as the measures of segment profit or loss. Significant segment expenses are consistent with those reported on the consolidated statements of operations including cost of revenues, and selling, general and administrative expenses. For significant segment expenses incurred during the years ended December 31, 2023, and 2024, refer to consolidated statements of operations.

(r) Product Warranties

Products Warranties on EVs and Kits

The Group provides warranties on all vehicles or components sold in addition to pass through warranties from third party component suppliers. The Group accrues a warranty reserve for the products sold by the Group, which includes the Group’s best estimate of the projected costs to repair or replace items under warranties. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. These estimates are inherently uncertain given the Group’s relatively short history of sales, and changes to the Group’s historical or projected warranty experience may cause material changes to the warranty reserve in the future. The Group considers the warranty provided is not an incremental service to customers rather an assurance to the quality of the vehicle, and therefore is not a separate performance obligation and should be accounted for in accordance with ASC 460, Guarantees.

Products Warranties on transit buses and batteries

The Group provides a limited warranty to customers on vehicles, battery systems and components. The limited warranty ranges from one to 12 years depending on the components. Pursuant to these warranties, the Group will repair, replace, or adjust the parts on the products that are defective in factory supplied materials or workmanship. The Group records a warranty reserve for the products sold at the point of revenue recognition, which includes the best estimate of the projected costs to repair or replace items under the limited warranty. These estimates are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. These estimates are inherently uncertain given the relatively short history of sales. Changes to the historical or projected warranty experience may cause material changes to the warranty reserve in the future. The portion of the warranty reserve expected to be incurred within the next 12 months is included within warranty reserve - short term liabilities while the remaining balance is included within warranty reservice - long term liabilities on the balance sheets.

Warranty expense is recorded as a component of cost of sales in the consolidated statements of operations. The balance of warranty reserves was $14,289 and $289, respectively, as of December 31, 2024 and 2023.

(s) Government Grant

The Group receives grants from government agencies related to sales of transit buses and EVs, and leases of its EVs. The government grants related to the sales of transit buses and EVs should be considered as part of the transaction price because it is granted to the transit buses or EV buyers and the Group receives such on behalf of the buyers to settle part of the transit buses or EVs purchase price. The government grant received before the Group’s delivery of the transit buses or EVs are recorded as deferred income and recognized as revenue when the transit buses or EVs are delivered to the buyers, for the government grants the Group is entitled upon delivery of the transit buses or EVs to buyers but not yet received, the Group records accounts receivable. For government grants associated with leased vehicles under operating leases, the grants are recorded in deferred income when received and are recognized to reduce the cost of sales during useful life of leased vehicles.

F-15

For the years ended December 31, 2024 and 2023, the amount of governmental grant recognized as revenue from sales of transit buses, EVs and chargers was $1,541 and $521, respectively.

For the years ended December 31, 2024 and 2023, the amount of governmental grant recognized as reductions of the cost of sales for EV leasing was $79 and $47, respectively.

For the years ended December 31, 2024 and 2023, the amount of governmental grant recognized as deduction of carrying amount of sales - type leased vehicles was nil and $180, respectively.

As of December 31, 2024 and 2023, the balances of government grants received were included in deferred income with amount of $418 and $362, respectively.

(t) Stock-Based Compensation

The Group granted employees and directors stock-based incentive awards. These awards are in the form of options and unrestricted stock units. The Group measures stock-based compensation expense for all stock-based awards granted based on the estimated fair value of those awards on their grant date and expenses over the period on a straight-line basis during which an employee is required to provide service in exchange for the award (the vesting period). As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

(u) Derivative Instruments

The Group evaluates its convertible debt to determine if the contract or embedded component of the contract qualifies as derivatives to be separately accounted for in accordance with ASC 480, “Distinguish by Liabilities from Equity”, and ASC 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked - to - market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the consolidated statement of operations. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

(v) Earnings or loss per Share

Basic earnings or loss per share is computed by dividing net income or loss attributable to shareholders of common stock by the weighted average common stocks outstanding during the periods. Diluted earnings or loss per share is calculated by dividing net income or loss attributable to shareholders of common stock by the weighted average common stocks outstanding during the period adjusted for the effect of dilutive share of common stock equivalent (computed using the treasury stock or if converted method). Potential common stocks that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted loss per share. During the year ended December 31, 2024, 3,937,875 potentially dilutive shares are excluded from the computation as their effects are anti-dilutive. During the year ended December 31, 2023, 4,946,097 potentially dilutive shares are excluded from the computation as their effects are anti-dilutive.

(w) Leases

The Group adopted Leases (ASC Topic 842), using the modified retrospective transition method effective January 1, 2022. The Group categorizes leases with contractual terms longer than twelve months as either operating or finance lease. The Group has no finance leases for any of the periods presented.

Right-of-use (“ROU”) assets represent the Group’s rights to use underlying assets for the lease term and lease liabilities represent the Group’s obligation to make lease payments arising from the lease. Lease liabilities are recognized at the present value of the future lease payments at the lease commencement date and ROU assets are recognized at amount of lease liabilities and any prepaid lease payments. The interest rate used to determine the present value of the future lease payments is the Group’s incremental borrowing rate because the interest rate implicit in the leases is not readily determinable. The incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The lease terms include periods under options to extend or terminate the lease when it is reasonably certain that the Group will exercise that option. The Group generally uses the base, non-cancelable, lease term when determining the ROU assets and liabilities.

F-16

Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Group determines if an arrangement is a lease at inception. The lease payments under the lease arrangements are fixed. Non-lease components include payments for building management, utilities and property tax. It separates the non-lease components from the lease components to which they relate. The Group recorded right-of-use assets and operating lease liabilities of $2,641 and $404 in the consolidated balance sheets upon the initial recognition during the years ended December 31, 2024 and 2023, respectively.

(x) Commitments and contingencies

In the normal course of business, the Group is subject to commitments and contingencies, including operating lease commitments, legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.

(y) Related parties

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence, such as a family member or relative, shareholder, or a related corporation.

(z) Reclassification

Certain prior year amounts in the consolidated financial statements have been reclassified to conform with the current year presentation. These reclassifications have not changed the results of operations or statement of cash flow of prior year.

(aa) Recent Accounting Pronouncements

Recently Adopted Accounting Standards

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Group adopted the ASU on January 1, 2024, which did not have a material impact on the Group’s financial results or financial position.

Recently Issued Accounting Standards, not yet Adopted

The ASU 2025-01: Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40) issued in January 2025 clarified the effective date of ASU 2024-03 published on November 4, 2024. ASU 2024-03 expanded the disclosure of financial statements under ASC 220-40 and requires public business entities (“PBE”) to provide a disaggregated disclosure of certain expense captions into specified categories in disclosure within the footnote to the financial statements while it does not change the expense captions on the face of the income statement. In the footnote to the financial statements, PBEs are required to disaggregate, in a tabular presentation, each relevant expense caption on the face of the income statement that includes any of the following natural expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization (DD&A) recognized as part of oil- and gas-producing activities or other types of depletion expenses. The tabular disclosure would also include certain other expenses, when applicable. This ASU will be effective for PBEs for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is allowed. The Company is evaluating the impact of the adoption of this guidance in its consolidated financial statements.

The ASU 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures enhances existing income tax disclosures primarily related to the rate reconciliation and income taxes paid information. With regard to the improvements to disclosures of rate reconciliation, a public business entity is required on an annual basis to (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. Similarly, a public entity is required to provide the amount of income taxes paid (net of refunds received) disaggregated by (1) federal, state, and foreign taxes and by (2) individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received). The ASU also includes certain other amendments to improve the effectiveness of income tax disclosures, for example, an entity is required to provide (1) pretax income (or loss) from continuing operations disaggregated between domestic and foreign, and (2) income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. The ASU will be effective for annual periods beginning after December 15, 2024. Entities are required to apply the ASU on a prospective basis. The adoption of ASU 2023-09 is not expected to materially impact the Company’s consolidated balance sheets, statements of income and comprehensive income, cash flows or disclosures.

Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial statements.

4. Business Combination

In November 2023, the Group participated in two auctions conducted by the United States Bankruptcy Court and emerged as the highest bidder for two asset packages, one for Proterra transit business unit and one for the Proterra battery lease contracts, with total consideration of $10,000 in cash. On January 11, 2024, the Group completed the acquisition of the Proterra transit business unit and on February 7, 2024, the Group completed the acquisition of Proterra battery lease contracts. The transaction costs were $553 and the Group assumed estimated warranty liability of $14,994. In addition, the Group also assumed the responsibility to provide Proterra transit business unit employees job offers at closing date and keep those employees for at least one year. The cash consideration has been fully paid as of December 31, 2024.

The acquisition was accounted for as a business combination. Accordingly, the acquired assets and liabilities were recorded at their fair value at the date of acquisition. The purchase price allocation was based on a valuation analysis that utilized and considered generally accepted valuation methodologies such as the market and cost approach. The Group determines the fair value of the assets acquired and the liabilities assumed in this business combination with the assistance of a third-party valuation firm. The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed are based on various assumptions and valuation methodologies requiring considerable judgment from management. The amount of the identifiable net assets acquired exceeds the fair value of the consideration transferred and the allocation of negative goodwill to reduce the tax bases of acquired net assets causes the book bases to exceed their respective tax bases, resulting in the recognition of deferred tax liabilities. The Group measures the bargain purchase gain from Proterra acquisition as follows:

Inventories.	$	56,854
Right-of-use assets		2,663
Property and equipment		4,238
Battery lease receivable		6,400
Lease liabilities		(2,663	)
Warranty liabilities		(14,994	)
Deferred tax liabilities		(4,227	)
Identifiable net assets acquired (a)		48,271
Less: Fair value of the consideration transferred (b)		10,000
Gain on bargain purchase (b-a)	$	38,271

F-17

During the year ended December 31, 2024 measurement period since the acquisition date, the Group adjusted the fair value of the inventories acquired for an amount of $3,197 and deferred tax liabilities for an amount of $8,560, with the net offset recorded as a $5,363 increase to bargain purchase gain. These adjustments including impairment of such identifiable assets were made as the Group obtained new information about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.

The gain on bargain purchase from the Proterra acquisition was generated from the acquisition of a bankrupt company and the Group was the only bidder who would continue to run the transit business and keep all transit business employees for at least a one-year period. Other bidders would liquidate the transit assets and terminate the transit business employees. The Group’s bidding was accepted by the Bankruptcy Court.

5. Battery lease receivables

On January 11, 2024, the Group completed the acquisition of the Proterra battery lease contracts, by which the Group was assigned with the right to collect certain leasing receivables which Proterra was a party as the lessor thereunder, used in connection with deployed Proterra electric transit buses. The fair value of the lease receivables as of the acquisitions date was determined to be $6,400 (Note 4) and the Group also assumed warranty obligations associated with the purchased Proterra battery lease contracts of $994.

On June 24, 2024, the Group entered into an asset purchase agreement with Zenobe Americas EV Assetco LLC (Zenobe). In the agreement, the Group sells the battery lease receivables to Zenobe in two batches while retains the warranty liability associated with leased batteries. The aggregate purchase price for Batch 1 transferred assets is made of: (i) $3,575, minus (ii) any payments received by the Group from March 1, 2024 to the Batch 1 closing date, plus (iii) the assumption of the assumed liabilities incurred after the applicable closing date related to the Batch 1 transferred assets. The aggregate purchase price for Batch 2 transferred assets is made of: (i) $2,175, minus (ii) any payments received by the Group from March 1, 2024 to the Batch 2 closing date, plus (iii) assumption of the assumed liabilities incurred after the applicable closing date related to the Batch 2 transferred assets. In addition, the Group would receive $750 if the Group can successfully secure Mitsui leases deal for Zenobe.

F-18

6. Accounts Receivable, Net

The accounts receivable, net as of December 31, 2024 and 2023 consisted of the following:

	December 31,			December 31,
	2024			2023
Accounts receivable, customers	$	3,014		$	171
Accounts receivable, governmental incentive		1,026			305
Less: Allowance for credit loss		(25	)		(25	)
Accounts receivable, net	$	4,015		$	451

The movements of allowance for credit losses are as follows:

	2024			2023
Balance as of January 1	$	(25	)	$	(35	)
Addition		—			(25	)
Reversal		—			35
Balance as of December 31	$	(25	)	$	(25	)

For the years ended December 31, 2024 and 2023, reversal of credit loss for doubtful accounts receivable was nil and $10, respectively.

7. Inventories

Inventories as of December 31, 2024 and 2023 consisted of the following:

	December 31,		December 31,
	2024		2023
Raw materials	$	35,515	$	865
Work in process		4,735		108
Finished goods		510		823
Total inventories	$	40,760	$	1,796

During the years ended December 31, 2024 and 2023, nil and $289 of inventories were written down to reflect the lower of cost or net realizable value, respectively.

F-19

8. Prepaid Expenses and Other Current Assets, Net

Prepaid expenses and other current assets, net as of December 31, 2024 and 2023 consist of the following:

	December 31,		December 31,
	2024		2023
Prepaid expenses	$	164	$	100
Sales-type lease receivable (Note 9)		166		249
Vendor deposits		1,349		131
Others		20		38
Total prepaid and other current assets		1,699		518
Less: Provision for credit loss		—		(162	)
Total prepaid and other current assets, net	$	1,699	$	356

During the years ended December 31, 2024 and 2023, provision for credit loss of prepaid expenses and other current assets was nil and $162, respectively.

The Group also provided for credit loss of security deposit of $208 during the year ended December 31, 2023, which was recorded as non-current assets as of December 31, 2022. There was no credit loss provided for non-current assets in the year ended December 31, 2024.

9. Net Investment in Leases

The Group entered into a total of ten vehicle lease agreements with certain customers during the year ended December 31, 2023 and the Group delivered vehicles under sales-type leases.

Loss on sales-type leases recognized for the years ended December 31, 2024 and 2023 was nil and $98, respectively.

Sales-type lease receivables-short term as of December 31, 2024 and 2023 was $166 and $249, respectively, and sales-type lease receivables-long term as of December 31, 2024 and 2023 was $64 and $230, respectively.

Interest income recognized for sales-type leases for the year ended December 31, 2024 and 2023 were $52 and $35, respectively.

	As of December
	31, 2024
Lease receivables-long term		64
Lease receivables-short term		166
Total lease receivables		230
Unguaranteed residual assets		—
Net investment in leases		230
Recorded in Prepaid expenses and other current assets		166
Recorded in Net investment in leases- non-current		64

Annual minimum undiscounted lease payments under the Group’s leases were as follows as of December 31, 2024:

	Sales-type
Years Ending December 31,
2025		184
2026		54
2027		15
Total lease receipt payments		253
Less: Imputed interest		(23	)
Total lease receivables (1)		230
Unguaranteed residual assets		—
Net investment in leases (1)		230

(1) Current portion of $166 of total lease receivables included in prepaid expenses and other current assets, net on the consolidated balance sheet.

F-20

10. Intangible Assets, Net

Intangible assets, net as of December 31, 2024 is nil. Intangible assets, net as of December 31, 2023 consisted of the following:

	Useful Life			Accumulated			Accumulated
	(in months)	Gross		Amortization			Impairment			Net
As of December 31, 2023
Technology	60	$	1,574	$	(996	)	$	(578	)	$	—
Tradename	60		1,400		(887	)		(513	)		—
Other	84		168		(168	)		—			—
		$	3,142	$	(2,051	)	$	(1,091	)	$	—

The tradename and developed technology were contributed by the acquisition of PCL and PML in the year 2020. The balance is amortized over the useful life of 5 years. For the year ended December 31, 2023, amortization expense for intangible assets was $613.

For the year ended December 31, 2023, the impairment loss recorded for intangible assets was $1,091.

11. Property and Equipment, Net

Property and equipment, net, consisted of the following:

	December 31,			December 31,
	2024			2023
Furniture, fixtures and equipment	$	2,414		$	1,409
Automobile		3,205			524
Automobile for lease		1,463			1,463
Leasehold improvements		397			77
Construction in progress		—			326
		7,479			3,799
Less: accumulated depreciation		(3,695	)		(2,188	)
Less: accumulated impairment		—			(492	)
	$	3,784		$	1,119

For the years ended December 31, 2024 and 2023, impairment loss recorded for property and equipment was nil and $492, respectively. For the years ended December 31, 2024 and 2023, depreciation expense for property and equipment was $1,836 and $578, respectively.

12. Short-term Borrowings

Financing with Nations Bus

On February 27, 2024, the Group entered into a financing agreement with Nations Bus Corp. (“Nations Bus”). In the agreement, it stated that the Group had purchased certain assets of Proterra Transit, including 6 buses in inventory. Raleigh-Durham International Airport (“RDU”) has inspected the buses and has executed a contract to purchase them for $652 each for a total consideration of $3,909. Nations Bus lent and wired $1,900 to the Group on February 28, 2024. The Group agrees to wire Nations Bus $2,800 ($467 per bus) within 24 hours of receipt of payment for each bus from RDU. If payment is made separately by bus, then the Group will wire $467 within 24 hours of receipt. If payment is received in one lump sum of $3,909, the Group will wire $2,800 within 24 hours of receipt. The Group received a total of $3,909 from RDU in March 2024. The Group will be entitled to keep the remaining $1,109 received from RDU after payment is made to Nations Bus. The Group has repaid $2,800 to Nations Bus in April and May 2024, including $900 accrued interest.

F-21

Financing with Agile Capital

On March 12, 2024, the Group entered into a Subordinated Business Loan and Security Agreement (“Term Loan”) with Agile Capital Funding, LLC (“Agile Capital”) as collateral agent, and Agile Lending, LLC, a Virginia limited liability company (“Lead Lender”) and each assignee that becomes a party to this agreement (each individually with the Lead Lender, a “Lender” and collectively with the Lead Lender, the “Lenders”).

The total principal amount of the Term Loan is $2,363, including the administrative agent fee remitted to Agile Capital of $113. The net proceeds to the Group is $2,250. The total repayment amount of the Term Loan, including all interest, lender fees, and third-party fees, assuming all payments are made on time is $3,402, including the interest charge of $1,039, assuming all payments are made on time weekly, and the default interest rate is otherwise applicable thereto plus five percentage points (5.00%).

The collateral of the Term Loan consists of all of the Group’s right, title and interest in and to the following property:

All of the Group’s goods, accounts, equipment, inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, general intangibles (including Intellectual Property), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts and other collateral accounts, all certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and all of the Group’s books and records relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

If changes in business or management, ownership occur, or the Term Loan is accelerated following the occurrence of an Event of Default (as defined in the Term Loan), the Group shall immediately pay to Lenders, payable to each Lender in accordance with its respective pro rata share, an amount equal to the sum of: (i) all outstanding principal of the Term Loans plus accrued and unpaid interest thereon accrued through the prepayment date, (ii) the prepayment fee (equal to the aggregate and actual amount of interest that would be paid through the maturity date), plus (iii) all other obligations that are due and payable, including, without limitation, interest at the default rate with respect to any past due amounts.

As of December 31, 2024, the loan principal balance to Agile was $718. In March 2025, the Group paid $950 including $718 loan principal balance and $232 accrued interest and other fees to pay off the loan balance according to a settlement agreement made between the Group and Agile.

Financing with Wisdom

The Group entered into a short-term loan agreement with total principal amount of $961 on December 11, 2023 with Wisdom Financial holdings Company Ltd (“Wisdom”). The short-term loan was used to pay deposit to purchase Proterra assets (see Note 4). The principal amount of the loan was fully paid off on January 8, 2024 by cash. Total interest expense of the loan was $279, in which $9 was paid off in January 2024 by cash, and $270 was settled by issuance of 180,202 shares of common stock of the Company in January 2024.

Financing with Dynasty Capital 26, LLC

On July 25, 2024, the Group entered into a Future Receivables Sale and Purchase Agreement with Dynasty Capital 26, LLC (“Dynasty”). In the agreement, the Group irrevocably assigns, transfers and conveys onto Dynasty all of the Group’s right, title and interest in the specified percentage of the future receipts until the purchased amount shall have been delivered by the Group to Dynasty (“Dynasty Purchased Future Receipts”). This sale of the Dynasty Purchased Future Receipts is made without express or implied warranty to Dynasty of collectability of the Dynasty Purchased Future Receipts and without recourse against the Group and/or guarantor, except as specifically set forth in the agreement. By virtue of the agreement, the Group transfers to Dynasty full and complete ownership of the Dynasty Purchased Future Receipts and the Group retains no legal or equitable interest therein.

F-22

The total purchase price is $500, including all initial costs and fees remitted to Dynasty of $50. The net proceeds to the Group is $450. The total amount of receivables sold is $750. On July 31, 2024, an addendum was made between the Group and Dynasty to specify that the payment in the first week would be $22 and weekly payment of $47 for every following week. The Group made the first weekly payment of $22 and two weekly payments of $47 in August 2024. On August 29, 2024, a settlement agreement was made between the Group and Dynasty to reduce the Group’s obligation for payment to $600, with the first payment of $100 in August and twenty (20) consecutive weekly installments of $25. On December 4, 2024, another settlement agreement was made between the Group and Dynasty to reduce the Group’s obligation for payment to $350, with the first two payments of $22 and $28, respectively, in December and twelve (12) consecutive weekly installments of $25.

As of December 31, 2024, the loan principal balance to Dynasty was $161. In March 2025, the Group paid $245 including $161 loan principal balance and $84 accrued interest and other fees to pay off the loan balance according to a settlement agreement made between the Group and Dynasty.

Financing with Parkview Advance LLC

On July 31, 2024, the Group entered into a Future Receivables Sale and Purchase Agreement with Parkview Advance LLC (“Parkview”). In the agreement, the Group irrevocably assigns, transfers and conveys onto Parkview all of the Group’s right, title and interest in the specified percentage of the future receipts until the purchased amount shall have been delivered by the Group to Parkview (“Parkview Purchased Future Receipts”). This sale of the Parkview Purchased Future Receipts is made without express or implied warranty to Parkview of collectability of the Parkview Purchased Future Receipts and without recourse against the Group and/or guarantor, except as specifically set forth in the agreement. By virtue of the agreement, the Group transfers to Parkview full and complete ownership of the Parkview Purchased Future Receipts and the Group retains no legal or equitable interest therein.

The total purchase price is $400, including all initial costs and fees remitted to Parkview of $20. The net proceeds to the Group is $380. The total amount of receivables sold is $600. Pursuant to the original agreement, if the borrower fails to pay any principal or interest on its due date, or fails to pay any other obligation within three business days after it becomes due and payable, it constitutes a payment default. During the continuation of an Event of Default, the Group shall agree to pay reasonable damage which is 25% of the undelivered portion of the purchased amount. The entire sum due shall bear simple interest from the default date until it is paid in full, at a rate of 9% per annum, with interest accruing daily. The lender may declare the entire unpaid principal balance of the loan, together with all accrued interest thereon and any other charges or fees payable thereunder, immediately due and payable by providing written notice to the borrower.

As of December 31, 2024, the loan principal balance to Parkview was $131. On March 13, 2025, the Group paid $196 including $131 loan principal balance and $65 accrued interest and other fees to pay off the loan balance according to a settlement agreement made between the Group and Parkview.

13. Long-term Borrowings, current and non-current

	December 31,		December 31,
	2024		2023
Current portion of long-term borrowings	$	3	$	5
Long-term borrowings, excluding current portion		138		144
Total long-term borrowings	$	141	$	149

F-23

As of December 31, 2024, the maturities of the long-term borrowings are as follows:

	USD
For the year ending December 31,
2025		9
2026		9
2027		9
2028		9
2029		9
Thereafter		178
Total long-term borrowing payments		223
Less: Amount representing interests		(82	)
Present value of long-term borrowings	$	141

EIDL Loan

On May 26, 2020, the Group was granted a loan from the U.S. Small Business Association in the aggregate amount of $150, pursuant to the Economic Injury Disaster Loan under Section 7(b) of the Small Business Act, as amended (the “EIDL Loan”).

The EIDL Loan, which was in the form of a promissory note (the “EIDL Note”) dated May 26, 2020, matures on May 26, 2050 and bears interest at a rate of 3.75% per annum, payable monthly commencing on May 26, 2021. The EIDL Note may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the EIDL Loan may only be used for working capital purposes to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter cause by the coronavirus pandemic. The Group has used the entire EIDL Loan amount for what management believes to be qualifying expenses.

14. Related Party Transactions

During the year ended December 31, 2023, SPI Energy Co., Ltd. (“SPI”), an affiliated entity under the common control of the Group, lent a loan with principal amount of $2,140 to the Group to support the Group’s operation and to purchase Proterra assets (see Note 22) and the Group made repayment of $1,336 to SPI. During the year ended December 31, 2023, SPI paid bills on behalf of the Company with total amount of $42. The amount due to SPI is due on demand and bears 12% interest per annum. As of December 31, 2023, the Company had a remaining outstanding principal balance of $846 and unpaid interest expense of $17.

At December 31, 2023, the amount of $130 due from related parties is receivable from SolarJuice Co., Ltd., a subsidiary of SPI, for sales of electric forklift during 2023.

At December 31, 2023, the amount of $863 due to related parties is loan principal due to SPI, an affiliate of the Group.

During the year ended December 31, 2024, the Group borrowed $1,051 from SPI. The loan is due on demand and bears 12% interest per annum. Including the loan payable due to SPI as of December 31, 2023 of $863, a total of $1,914 loan principal was repaid by the Group and there was no balance due to SPI as of December 31, 2024.

During the year ended December 31, 2024, the Group collected $130 from SolarJuice Co., Ltd for sales of electric forklift during 2023. During the year ended December 31, 2024, SolarJuice Co., Ltd billed the Group storage fee of $128 which is paid in full as of December 31, 2024. At December 31,2024, there was no balance due to SolarJuice Co., Ltd.

During the year ended December 31, 2024, SPI borrowed $316 from the Group, and the loan principal was paid in full as of December 31, 2024.

On June 22, 2024, the Group entered into a loan agreement with SPI. In the agreement, the Group agreed to lend up to an aggregate amount of $3,000 to SPI at a rate of 12% per annual. SPI must repay each loan along with the unpaid and accrued interest within the year from the date the loan was received. On June 25, 2024 and July 15, 2024, the Group lent $500 and $1,750, respectively, to SPI under the loan agreement. On August 9, 2024, $2,250 of loan principal was repaid in full by SPI and on September 30, 2024, $22 of interest was paid in full by SPI. On October 1, 2024, both parties agreed to terminate the loan agreement between the Group and SPI.

During the year ended December 31, 2024, SPI billed the Group $794 for legal, human resources and IT services provided by SPI employees and $766 was paid, remaining $28 was outstanding at of December 31, 2024.

F-24

On March 6, 2024, SPI entered into a Deed of Settlement with its creditor, Streeterville Capital, LLC (“Streeterville”) to settle the unpaid balances of certain convertible notes via installment payments as agreed in the Deed of Settlement. As of part of this Deed of Settlement, the Group, as the guarantor, covenants to Streeterville to pay and satisfy on demand all liabilities due from SPI to Streeterville with a total amount of $14,980. On September 6, 2024, Streeterville provided a Deed of Release of Guarantor to the Group, confirming that Streeterville releases and discharges the Group from all past, present and future liability to Streeterville under the Guarantee to Streeterville for SPI and also from all actions, claims and demands under or in connection with this Guarantee.

15. Private placements

On January 4, 2024, the Company entered into a Securities Purchase Agreement with an accredited investor, relating to a private placement by the Company pursuant to which the Company issued 600,000 shares of the Company’s common stock at a purchase price of $1.13 per share, and a common stock purchase warrant to purchase up to 600,000 shares of common stock of the Company, exercisable at $1.13 per share. The warrant is immediately exercisable, in whole or in part, for a term of one year following issuance and may be exercised on a cashless basis if a registration statement is not then effective and available for the resale of the warrant shares. The exercise price and number of warrant shares issuable upon exercise of the warrant are subject to adjustment upon the occurrence of certain events, such as stock splits, stock dividends, split-ups, recapitalizations, reclassifications or the like. The private placement closed on January 25, 2024 and the Company received gross proceeds from the private placement of $678, before deducting offering expenses payable by the Company. The Group determined that the warrant met the definition of liability instrument and estimated a fair value of the warrants using the Black-Scholes pricing model at the date of issuance at $464.

On January 11, 2024, the Company entered into separate Securities Purchase Agreements with four accredited investors, relating to a private placement by the Company of an aggregate of 3,478,260 shares of the Company’s common stock at a purchase price of $1.15 per share, and common stock purchase warrants to purchase up to 13,913,043 shares of common stock of the Company, exercisable at $2.00 per share. The Company received gross proceeds from the private placement of $4,000, before deducting offering expenses payable by the Company. The Group determined that the warrant met the definition of liability instrument and estimated a fair value of the warrants using the Black-Scholes pricing model at the date of issuance at $11,432. The Group recorded a loss on warrants issued of $7,432 on the date of issuance, which is the excess amount of fair value of the warrants issued over the net proceeds received.

On January 29, 2024, the Company entered into a Securities Purchase Agreement with certain accredited investors, to issue and sell in a registered direct offering an aggregate of 4,196,370 shares of the Company’s common stock. The purchase agreement also provides that the Company will issue to the investors warrants to purchase up to 4,196,370 shares of common stock of the Company in a concurrent private placement. The common stock and accompanying warrants were offered at a combined offering price of $1.15 per share. Each warrant is exercisable for one share of common stock. The warrants have an initial exercise price of $2.00 per share and are exercisable at any time on or after the date of issuance and will expire on the fifth anniversary of the date on which the warrants were issued. The offering closed on February 2, 2024 and the proceeds from the offering were $4,826, before offering expenses. The Group determined that the warrants met the definition of liability instrument and estimated a fair value of the warrants using the Black-Scholes pricing model at the date of issuance at $3,519.

On February 7, 2024, the Company entered into another Securities Purchase Agreement with certain accredited investors, to issue and sell in a registered direct offering an aggregate of 1,415,929 shares of the Company’s common stock. The purchase agreement also provides that the Company will issue to the investors warrants to purchase up to 1,415,929 shares of common stock of the Company in a concurrent private placement. The common stock and accompanying warrants were offered at a combined offering price of $1.13 per share. The warrants have an initial exercise price of $2.00 per share, are exercisable at any time on or after the date of issuance and will expire on the fifth anniversary of the date on which the warrants were issued. The offering closed on February 9, 2024, and the proceeds from the offering were $1,600, before offering expenses. The Group determined that the warrant met the definition of liability instrument and estimated a fair value of the warrants using the Black-Scholes pricing model at the date of issuance at $1,090.

The Group recorded a gain on change in fair value of warrant liability of $15,227 and nil during the year ended December 31, 2024 and 2023, respectively.

16. Equity

During the year ended December 31, 2024, the Group issued 180,202 restricted common stock of the Company to a consulting company to repay $270 consulting fee.

During the year ended December 31, 2024, the Group issued 769,099 shares of the Company’s common stock, to a vendor for settlement of payables of $954, and issued 596,162 shares of the Company’s common stock, to another vendor for settlement of payables of $739.

F-25

17. Stock-based Compensation

On July 1, 2024, options to purchase 2,391,215 shares of the Company were granted to a group of managements and employees with the Company, which are subject to an annual vesting schedule that vests 25% of granted options over the next four years. The exercise price was $0.34 per share. The fair value of the options as of the grant day is $0.30 per share, with a total fair value of the options granted amounting to $717.

During the year ended December 31, 2023, 200,000 options were granted to a group of management of the Group, which are subject to an annual vesting schedule that vests 25% of granted options over the next four years. The exercise price was $0.82- $1.57 per share.

The Group measures employee stock-based compensation expense for all stock-based compensation awards based on the grant-date fair value and recognizes the cost in the financial statements over the employee requisite service period. As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. During the years ended December 31, 2024 and 2023, the stock-based compensation expense was $73 and $38, respectively.

Determining Fair Value

Valuation and Amortization Method — The Group estimates the fair value of service-based stock options granted using the Black-Scholes option pricing formula. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. Service-based options typically have a ten-year life from date of grant and vesting periods of four years.

Expected Term — The Group’s expected term represents the period that the Group’s share-based awards are expected to be outstanding.

Expected Volatility — The Group uses the average historical volatility of the Company to calculate the volatility for its granted options.

Expected Dividend — The Group has never paid dividends on its common stock and currently does not intend to do so, and accordingly, the dividend yield percentage is zero for all periods.

Risk-Free Interest Rate — The Group bases the risk-free interest rate used in the Black-Scholes valuation model upon the implied yield curve currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model.

Assumptions

Assumptions used in the determination of the fair value of share-based payment awards using the Black- Scholes model for stock option grants for the years ended December 31, 2024 and 2023 were as follows:

	2024			2023
Expected term		6.25 years			6.25 years
Risk-free interest rate		4.48	%		3.88%-3.97	%
Expected volatility		121.9	%		132.4%-135.4	%
Expected dividend yield		0	%		0	%

F-26

The following table summarizes the Group’s stock option activities:

				Weighted-		Weighted-
				Average		Average		Aggregate
				Exercise		Remaining		Intrinsic
				Price		Contractual		Value
	Shares			Per Share		Term		($000)
Outstanding as of December 31, 2023		2,216,750			1.66		8.26 years	$	39
Granted		2,391,215			0.34		—		—
Exercised		—			—		—		—
Forfeited/expired		(827,318	)		1.31		—		—
Outstanding as of December 31, 2024		3,780,647			0.94		8.94 years	$	—
Exercisable as of December 31, 2024		1,437,875			1.72		6.75 years	$	—
Expected to vest as of December 31, 2024		2,342,772			0.46		9.3 years	$	—

Changes in the Group’s non-vested stock awards are summarized as follows:

				Weighted Average
	Shares			Exercise Price Per Share
Non-vested as of December 31, 2023		775,312			1.58
Granted		2,391,215			0.34
Vested		(291,053	)		—
Forfeited/Expired		(532,702	)		1.00
Non-vested as of December 31, 2024		2,342,772			0.46
Unrecognized share-based compensation expenses at December 31, 2024		737,096
Weighted-average period of share-based compensation to be recognized		2.93 years

18. Convertible Note Payable

On June 23, 2023, the Company entered into a Securities Purchase Agreement (the “Original SPA”) with an accredited investor named therein, to issue and sell, subject to the satisfaction of certain closing conditions, up to $5,100 aggregate principal amount of the Company’s unsecured senior convertible promissory notes (the “June 2023 Notes”). The June 2023 Notes are subject to an original issue discount of 8.5%, and each June 2023 Note matures on the date that is 18 months after the date of issuance at each applicable closing. The June 2023 Notes accrue interest at the Prime Rate (as defined in the June 2023 Notes) plus 4.75% per annum in cash, or the Prime Rate plus 7.75% per annum if interest is paid in shares of common stock. The Company may, from time to time, prepay the principal amount owing under the June 2023 Notes, subject to a 30% prepayment premium, so long as the Company provides at least 30 business days’ prior written notice to the holder of such prepayment.

The June 2023 Notes are convertible into shares of common stock of the Company, at a conversion price equal to the greater of (x) $0.60 (the “Floor Price”) and (y) 87.5% of the lowest daily VWAP (as defined in the SPA) in the seven (7) trading days prior to the applicable conversion date (the “Variable Price”), subject to certain adjustments including full ratchet anti-dilution price protection, as set forth in the June 2023 Notes. Notwithstanding the foregoing, automatically following an Event of Default (as defined in the June 2023 Notes), without the requirement of the holder to provide notice to the Company, and subject to the provisions relating to the stockholder approval requirements under Nasdaq rules for the issuance of shares in a private placement at a price above the market price (the “Nasdaq 19.99% Cap”), the conversion price is equal to the lesser of the (x) Floor Price and (y) the Variable Price. In respect of any conversion where the Variable Price is less than the Floor Price (the “Alternative Conversion”), the Company will pay to the holder either in cash, or subject to the Nasdaq 19.99% Cap, in shares of common stock equal to such conversion amount or interests, divided by the applicable Variable Price. So in essence, there is no floor price for the conversion and Alternative Conversion together.

Thus, the Group determined that the conversion feature and the alternative conversion features embedded within the June 2023 Notes met the definition of embedded derivatives and the Group estimated a fair value of the derivative liability using the Monte Carlo Simulation Model at the date of issuance. As the fair value of the derivative liability is less than the face value of the June 2023 Notes, the fair value of the derivative liability of $294 was recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The original issue discount of the June 2023 Notes of $136 was recorded as a debt discount as well.

F-27

On October 26, 2023, the Company entered into the First Amendment (the “Amendment”) to the Original SPA, with the same accredited investor. Pursuant to the Amendment, the “Funding Amount” under the Original SPA was increased to an aggregate principal amount equal to no greater than $9,667 while other terms remain unchanged. On October 26, 2023, the Company agreed to issue and sell, in a private placement, an additional $1,750 of principal amount (the “October 2023 Notes”) of the Company’s unsecured senior convertible promissory note.

In connection with the Amendment, the Company issued a warrant (the “October Warrant”) to the investor to purchase up to 1,500,000 shares of the Company’s common stock, with an exercise price equal to $1.30 per share, subject to full ratchet anti-dilution protection and other adjustments as stated in the warrant, which warrant is exercisable for six years on a cash basis or, if the shares of common stock issuable upon exercise of the warrant are not registered within 12 months after the closing, on a cashless basis. The Group determined that the October Warrant met the definition of liability instrument and estimated a fair value of the October Warrant using the Black Scholes pricing model at the date of issuance.

The October 2023 Notes are convertible into shares of common stock of the Company, at a conversion price equal to the greater of (x) $0.60 (the “Fixed Price”) and (y) 87.5% of the lowest daily VWAP (as defined in the SPA) in the seven (7) trading days prior to the applicable conversion date (the “Variable Price”), subject to certain adjustments including full ratchet anti-dilution price protection, as set forth in the October 2023 Notes. Notwithstanding the foregoing, automatically following an Event of Default (as defined in the October 2023 Notes), without the requirement of the holder to provide notice to the Company, and subject to the provisions relating to the Nasdaq 19.99% Cap, the conversion price is equal to the lesser of the (x) Fixed Price and (y) the Variable Price. In respect of any conversion where the Variable Price is less than the Fixed Price (the “Alternative Conversion”), the Company will pay to the holder either in cash, or subject to the Nasdaq 19.99% Cap, in shares of common stock equal to such conversion amount or interests, divided by the applicable Variable Price. So in essence, there is no floor price for the conversion and Alternative Conversion together.

The Group determined that the conversion feature and alternate conversion feature within the October 2023 Notes met the definition of embedded derivatives and the Group estimated a fair value of the derivative liability using the Binominal Tree Model at the date of issuance. In addition, the Group considered that the October Warrants were issued in a bundled transaction with the October 2023 Notes, and the proceeds received from the transaction should be first allocated to the warrants as debt discounts based on the fair value of the warrants on the issuance date.

On November 10, 2023, the Company entered into Second Securities Purchase Agreement (the “Second SPA”) with the same accredited investor, which the Company agreed to issue and sell, in a private placement, subject to the satisfaction of certain closing conditions, a $12,000 of principal amount of the Company’s secured senior convertible promissory notes. As of December 31, 2023, the closing conditions have not been met and Company has not issued any convertible notes pursuant to the Second SPA. Upon execution of the Second SPA, the Company also issued a warrant (the “Execution Warrant”) to the investor to purchase up to 1,000,000 shares of the Company’s common stock, with an exercise price equal to $1.30 per share, subject to full ratchet anti-dilution protection and other adjustments as stated in the warrant, which warrant is exercisable for six years on a cash basis or, if the shares of common stock issuable upon exercise of the warrant are not registered within 12 months after the closing, on a cashless basis. The Execution Warrants can be exercisable no matter whether the Second SPA would be closed or not in the future.

The Group determined that the Execution Warrant met the definition of liability instrument, and the Group estimated a fair value of Execution Warrant using the Black Scholes pricing model at the date of issuance. The Group considered that the Execution Warrant was issued in a bundled transaction with a future convertible note offering, and the Execution Warrant was considered as issuance costs associated with the future convertible note offering and should be deferred and charged against the gross proceeds of the future offering as debt discount based on the fair value of the warrants. However, this future convertible note offering (Second SPA) is to be closed subject to certain closing conditions. On April 5, 2024, the Group entered into a waiver letter by and between the Company and the above investor to which the investor waived its right to require the Company to sell $12,000 principal amount of the Company’s secured senior convertible promissory note as previously agreed under Second SPA. However, the Execution Warrant survived the cancellation and is effective.

F-28

On March 29, 2024, the Group noted that an event of default has occurred under the June 2023 Notes and October 2023 Notes, due to a failure to observe or perform in a material respect the following covenants: 1) under the Registration Rights Agreement dated on November 10, 2023, the Company agreed to use all commercially reasonable efforts to cause a registration statement relating to the registrable securities to become effective and to keep such registration statement effective until the earlier to occur of the date on which (A) the investor shall have sold all the registrable securities; or (B) the investor has no right to acquire any additional shares of common stock under the purchase agreement or the warrants; and 2) under the Securities Purchase Agreement dated as of June 23, 2023 and a covenant under the notes, as determined on the first of every calendar month, the Company agreed at all times to keep on hand unencumbered, unrestricted cash in an amount greater than or equal to $200,000. The default was not fully cured within five (5) business days of such failure. As a result, the interest rate of the June 2023 Notes and October 2023 Notes was automatically increased to 18% per annum, starting from the date of occurrence of the Event of Default. In addition, the Group is obligated to pay to the holder of the June 2023 Note and October 2023 Note all of the outstanding principal amount and accrued interest on the date of occurrence of the Event of Default. As of the date of issuance of the consolidated financial statements, the noteholder has not declared that an Event of Default has occurred and that the notes are due and payable. As a result of the default, the carrying amount of both June 2023 Note and October 2023 Note were classified as convertible notes, current and all the remaining unamortized debt discounts were amortized into interest expense immediately.

During the year ended December 31, 2024, the Group issued a total of 8,937,924 shares of common stock of the Company to the investor to convert a total principal amount of $1,600 under the June 2023 Notes and $1,265 under the October 2023 Notes, respectively, and accrued interest of $130 under the June 2023 Notes and $102 under the October 2023 Notes, respectively. The Group also repaid $520 principal amount of convertible notes in cash during the year ended December 31, 2024.

The Group recorded interest expenses from debt discount amortization in interest expense, net in the statements of operations of $1,490 and $327 for the years ended December 31, 2024 and 2023, respectively. Among which $1,287 of the debt discount were amortized directly into interest expense due to the occurrence of Event of Default.

The Group recorded accrued interest of convertible notes in interest expense, net in the statements of operations of $130 and $147 for the years ended December 31, 2024 and 2023, respectively. The fair values of warrants issued with convertible notes at the issuance date and the change of fair value of warrant liability after issuance are not material for each period presented.

As of December 31, 2024 and 2023, the carrying amounts of the Group’s convertible notes are $485 and $1,860, net of unamortized debt discount of nil and $1,490, respectively.

As of December 31, 2024, there was no warrant exercised.

19. Fair Value Measurement

The Group identified derivative instruments arising from embedded conversion features in the convertible promissory note issued to an accredited investor (see Note 18). The following tables present the quantitative information about the Group’s Level 3 fair value measurements of derivative liability on a recurring basis in 2023, which utilize significant unobservable internally-developed inputs.

As of June 23, 2023, the derivative liability of conversion feature and the alternative conversion features embedded within the June 2023 Notes was measured at fair value on their initial recognition using Monte Carlo Simulation model, which were classified in Level 3 of the fair value hierarchy.

Valuation techniques	Unobservable inputs	Rates
Monte Carlo Simulation	Expected term		0.5 years
	Risk-free interest rate		4.86	%
	Expected volatility		114.4	%
	Expected dividend yield		0

F-29

As of October 26, 2023, the derivative liability of conversion feature and the alternative conversion features embedded within the October 2023 Notes was measured at fair value on their initial recognition using Binomial Tree model. In addition, the derivative liabilities recognized from both June 2023 Note and October 2023 Note were measured on a recurring basis in periods subsequent to their initial recognition. As of December 31, 2024 and 2023, these derivative liabilities were measured at fair value using Binominal Tree model, which were classified in Level 3 of the fair value hierarchy. The valuation techniques were changed from Monte Carlo Simulation to Binominal Tree model because the Group considered that the Binomial Tree Model can incorporate changes in dividends and interest rates over time, and can accommodates the option of early exercise by evaluating it at every node, which is more applicable to the Group’s convertible notes.

		For the year ended December 31, 2024			For the year ended December 31, 2023
Valuation techniques	Unobservable inputs	Range of rates			Range of rates
Binominal Tree model	Expected term		0.23-1.07 years			0.98-1.50 years
	Risk-free interest rate		4.32%-5.34	%		4.61%-5.21	%
	Expected volatility		105.62%-129.02	%		117.15%-127.38	%
	Expected dividend yield		0			0

Derivative liability as of December 31, 2024 and 2023 is $33 and $1,156 respectively, with a gain on change in fair value of derivative liability of $641 and a loss of $319 recorded in the consolidated statements of operations for the years ended December 31, 2024 and 2023, respectively.

The following method and assumptions were used to estimate the fair value of October Warrant and Execution Warrant (Note 18) on a non-recurring basis:

On October 26, 2023, the Group issued to certain convertible note investor the October Warrant to purchase a total of 1,500,000 ordinary shares and Execution Warrant to purchase a total of 1,000,000 ordinary shares. Both warrants were valued using Black-Scholes option pricing model. The following table presents the quantitative information about the Group’s Level 3 fair value measurements of warrants, which utilize significant unobservable internally-developed inputs:

		For the year ended December 31, 2024			For the year ended December 31, 2023
Valuation techniques	Unobservable inputs	Range of rates			Range of rates
Black-Scholes model	Expected term		4.82-6.00 years			6.00 years
	Risk-free interest rate		3.90%-4.28	%		4.67%-4.83	%
	Expected volatility		75.27	%		127.38%-128.66	%
	Expected dividend yield		0			0

On January 11, 2024, January 25, 2024, February 2, 2024 and February 9, 2024 , the warrant liability from the warrants issued with private placements were measured at fair value on their initial recognition using Black Scholes model. In addition, these warrant liabilities were measured on a recurring basis in periods subsequent to their initial recognition using Black Scholes model, which were classified in Level 3 of the fair value hierarchy.

Valuation techniques	Unobservable inputs	Range of rates
Black-Scholes model	Expected term		1.07-5.00 years
	Risk-free interest rate		3.90%-4.28	%
	Expected volatility		79.09%-99.01	%
	Expected dividend yield		0

Assets measured at fair value on a nonrecurring basis:

The Group measures its property, equipment, intangible assets, and other long-lived assets at fair value on a nonrecurring basis whenever events or changes in circumstances indicate that the carrying value may no longer be recoverable. Goodwill is evaluated for impairment annually or more frequently if events or conditions indicate the carrying value of a reporting unit may be greater than its fair value. Impairment testing compares the carrying amount of the reporting unit with its fair value.

20. Income Taxes

Deferred income taxes are recognized for the tax consequences in future years for differences between the tax bases of assets and liabilities and their financial reporting amounts at each year end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the combination of the tax payable for the year and the change during the year in deferred tax assets and liabilities.

Income (loss) before provision for income taxes is attributable to the following geographic locations for the years ended December 31:

	2024		2023
United States		11,421		(20,623	)
Foreign		—		—
Total income(loss) before income taxes		11,421		(20,623	)

F-30

The provision for income taxes consists of the following for the years ended December 31, 2024 and 2023:

	2024		2023
Current tax:
Federal tax	$	—	$	—
State tax		2		22
Total current tax		2		22
Deferred tax:		—		—
Federal tax	$	2,386	$	—
State tax		1,101		—
Total deferred tax		3,487		—
Total provision for income taxes	$	3,489	$	22

The reconciliation between the actual income tax expense and income tax computed by applying the statutory U.S. Federal income tax rate for the years ended December 31, 2024 and 2023 is as follows:

	2024			2023
Provision for income taxes at U.S. Federal statutory rate		21.00	%		21.00	%
State taxes, net of federal benefit		(7.56	)%		7.20	%
Non-deductible expenses		(96.00	)%		0.72	%
Credits		0.00	%		1.98	%
Change in valuation allowance		82.59	%		(30.90	)%
Other		109.53	%		0.00	%
		109.56	%		(0.00	)%

Deferred income taxes reflect the net tax effects of loss carry forwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Presented below are the significant components of the Group’s deferred tax assets and liabilities for federal, state and foreign income taxes as of December 31:

	2024			2023
Deferred tax assets:
Net operating loss carry forwards	$	17,123		$	11,320
Credits and Incentives		—			1,507
Research and development expense		1,623			1,542
ASC 842 Lease liability and Right-of-use Asset		314			1,119
Accruals and reserves		3,920			587
Property and equipment		176			(44	)
Other temporary differences		(4,112	)		390
Less: valuation allowance		(19,044	)		(16,421	)
Total deferred tax assets	$	—		$	—

As of December 31, 2024, the Group had net operating loss carry forwards for federal income tax purposes of approximately $12,823, which will never expire. The federal net operating loss carry forwards are limited to 80% of taxable income. The Group had a total state net operating loss carry forwards of approximately $4,300, which will begin to expire after the year 2041 to 2042.

Utilization of the federal and state net operating losses may be subject to certain annual limitations under IRC Section 382 due to the “change in ownership” provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Group has a full valuation allowance against US federal and state net operating losses.

The Group recognizes deferred tax assets if it is more likely than not that those deferred tax assets will be realized. Management reviews deferred tax assets periodically for recoverability and makes estimates and judgments regarding the expected geographic sources of taxable income in assessing the need for a valuation allowance to reduce deferred tax assets to their estimated realizable value. Realization of the Group’s deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Because of the Group’s lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance in the U.S. The valuation allowance increased by $2,632 and $6,600 during the years ended December 31, 2024 and 2023, respectively.

F-31

The Group had no unrecognized tax benefits as of December 31, 2024 and 2023, respectively. The Group currently files income tax returns in the U.S., as well as California and Delaware. The Group is currently not the subject of any income tax examinations. The Group’s tax returns generally remain open for tax years after 2021.

The Coronavirus Aid, Relief and Economy Security (CARES) Act (“the CARES Act, H.R. 748”) was signed into law on 27 March 2020. The CARES Act temporarily eliminates the 80% taxable income limitation (as enacted under the Tax Cuts and Jobs Act of 2017) for NOL deductions for 2018-2020 tax years and reinstated NOL carrybacks for the 2018-2020 tax years. Moreover, the CARES Act also temporarily increases the business interest deduction limitations from 30% to 50% of adjusted taxable income for the 2019 and 2020 taxable year. Lastly, the Tax Act technical correction classifies qualified improvement property as 15-year recovery period, allowing the bonus depreciation deduction to be claimed for such property retroactively as if it was included in the Tax Act at the time of enactment.

The Tax Cuts and Jobs Act included a sunset provision such that Research and Experimental Expenses incurred after December 31, 2021 are capitalized and amortized. US R&E expenses are amortized over five years and non-US R&E expenses are amortized over fifteen years. As part of the December 31, 2024 tax provision calculation, the Group added back to taxable income, research expenditures of $3,979. These expenses were incurred in the U.S. and amortized over 5 years for U.S. tax purposes.)

21. Commitments and Contingencies

Guarantee for SPI

On March 6, 2024, the Group’s related party, SPI entered into a Deed of Settlement with its creditor, Streeterville, to settle the unpaid balances of certain convertible notes via installment payments as agreed in the Deed of Settlement. As of part of this Deed of Settlement, the Company, as the guarantor, covenants to Streeterville to pay and satisfy on demand all liabilities due from SPI to Streeterville with a total amount of $14,980. The Group assessed the accounting treatment of this guarantee under ASC 460 and ASC 450 and considered that the possibility for the Group to incur actual liability under this guarantee is remote so there is no guarantee liabilities accrued as of December 31, 2024. On September 6, 2024, the guarantee was released and canceled without any actual liabilities incurred by the Group.

Commitments — As of December 31, 2024, the Group had other commitments of approximately $265. These commitments were solely related to contracts signed with vendors by the Group and are expected to be paid in one year.

Contingency — In the ordinary course of business, the Group may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Group records contingent liabilities resulting from such claims, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. In April 2024, there was a dispute with the landlord of Folsom warehouse which the landlord seeks to recover damages in excess of $250. However, the lawsuit is in its early stage and the final outcome, including the potential amount of any losses, is uncertain. As a result, no reasonable estimate on the loss can be made as of December 31, 2024 and the Group is currently negotiating on settlement with the landlord. In December 2024, there was a breach of contract regarding payment to a formal employee. However, the lawsuit is in its early stage and the final outcome, including the potential amount of any losses, is uncertain.

In the opinion of management, there were no other material pending or threatened claims and litigation as of December 31, 2024 and through the issuance date of these consolidated financial statements.

F-32

22. Operating Leases

The Group has operating leases for office facilities. The Group’s leases have remaining terms of more than 1 year to less than 3 years. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Group recognizes lease expense for these leases on a straight-line basis over the lease term. The operating lease expenses were $1,276 and $1,126 for the years ended December 31, 2024 and 2023, respectively.

Right-of-use assets, along with other long-lived assets, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. For the year ended December 31, 2024, there were no impairment charges related to long-lived assets. The Group recorded an impairment charge of $3,385 in impairment on long-lived assets in the Group’s consolidated statements of operation related to its right-of-use assets for the year ended December 31, 2023. The lease agreement for one of leased office facilities was essentially terminated due to non-payment, and related lease liability of $987 was reclassified to accrued liability as of December 31, 2024 (see Note 21).

Maturities of operating lease liabilities as of December 31, 2024 were as follow:

Maturity of Lease Liabilities	Operating Leases
2025	$	1,812
2026		1,189
2027		134
Thereafter		—
Total lease payments		3,135
Less: interest		(51	)
Present value of lease payments	$	3,084
Operating lease liabilities, current	$	1,845
Operating lease liabilities, noncurrent	$	1,239

Supplemental information related to operating leases was as follows for the year ended December 31, 2024:

Cash paid for amounts included in the measurement of lease liabilities	$	1,140
Operating lease assets obtained in exchange for operating lease liabilities	$	2,641
Weighted average remaining lease term		1.8 years
Weighted average discount rate		10.9	%

23. Concentration Risk

Concentration of Credit Risk

Assets that potentially subject the Group to significant concentrations of credit risk primarily consist of cash and cash equivalents, and accounts receivable. As of December 31, 2024 and 2023, the cash and cash equivalents are deposits with federally insured banks, which are typically in excess of insured limits.

Concentration of Customers and Vendors

For the year ended December 31, 2024, there was three customers representing 39.3%, 13.5% and 12.5%, respectively, of total net revenues. For the year ended December 31, 2023, there was no customer representing 10% or more of total net revenues. As of December 31, 2024, there was no customer of which the accounts receivable accounted for 10% or more of total accounts receivable. As of December 31, 2023, there was one customer of which the accounts receivable accounted for 10.0% or more of total accounts receivable.

For the year ended December 31, 2024, there were no vendor representing 10% or more of total purchase. For the year ended December 31, 2023, there were two vendors representing 11.0% and 10.6% of total purchase.

F-33

24. Net Earnings (loss) Per Share

The following is a reconciliation of the numerator and denominator used to calculate basic earnings (loss) per share and diluted earnings (loss) per share for the years ended December 31, 2024 and 2023:

	For years ended December 31,
	2024			2023
Basic earnings (loss):
Basic earnings (loss)	$	7,932		$	(20,645	)
Diluted earnings (loss):
Net income (loss)	$	7,932		$	(20,645	)
Chang in fair value of derivative liability		(640	)		—
Interest expense from convertible notes		369			—
Diluted earnings (loss)	$	7,661		$	(20,645	)
Basic weighted average shares		35,497,296			21,199,023
Potentially diluted shares		1,050,833			—
Diluted shares		36,548,129			21,199,023
Earnings (loss) per share
Basic	$	0.22		$	(0.97	)
Diluted	$	0.21		$	(0.97	)

During the years ended December 31, 2024 and 2023, stock options to purchase 1,437,875 and 1,441,438 shares of common stock, respectively, and warrants to purchase 20,125,342 and nil shares of common stock, respectively, were not considered in calculating diluted earnings (loss) per share because the options and warrants are considered out-of-money. In addition, the year ended December 31, 2023, convertible notes that are convertible to a total of 4,946,097 shares of common stock were excluded when calculating diluted loss per share as the inclusion would have been anti-dilutive.

25. Subsequent Events

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing

On April 8, 2025, the Company received a notice from the staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the Company’s continued non-compliance with Listing Rule 5550(a)(2), which requires the Company to maintain a minimum bid price of its listed securities of at least $1 per share, and Listing Rule 5620(a), which requires listed companies to hold an annual meeting of shareholders within one year of the end of the fiscal year, the staff has determined to delist the Company’s common stock from The Nasdaq Capital Market. Trading of the Company’s common stock on Nasdaq was suspended at the opening of business on April 15, 2025. The Company’s common stock is currently quoted on the OTC Pink Market under the symbol “PEVM”.

In addition, on April 30, 2025, the Company received a notice from the staff indicating that the Company was no longer in compliance with Listing Rule 5250(c)(1) due to its failure to file its Annual Report on Form 10-K for the year ended December 31, 2024. This matter serves as an additional basis for delisting.

On May 20, 2025, the Company appealed the staff’s delisting determination before a Nasdaq Hearings Panel (the “Panel”). While the Company’s appeal is pending, trading of its common stock on Nasdaq remains suspended and continues to be quoted on the over-the-counter (“OTC”) market.

On April 18, 2025, the Company held its 2024 annual meeting of stockholders. As a result, the Company believes it has regained compliance with Listing Rule 5620(a). As a result of the filing of this Annual Report on Form 10-K, the Company believes it has regained compliance with Listing Rule 5250(c)(1).

The Company is diligently working to evidence compliance with all applicable requirements for continued listing on Nasdaq, including effecting a reverse stock split of the Company’s common stock with a ratio in the range between and including 1-for-1.5 and 1-for-5, with such ratio to be determined by the Company’s Board of Directors, for the primary purpose of maintaining the Company’s listing on Nasdaq. The Company has submitted a plan to regain compliance to that effect to the Panel as part of the hearing process; however, there can be no assurance the Panel will grant any request for continued listing or that the Company will be able to regain compliance with the applicable listing criteria within the period of time that may be granted by the Panel.

Entry into a Material Definitive Agreement

On March 14, 2025, the Company entered into a loan agreement (the “Loan Agreement”) with J.J. Astor & Co. (the “Lender”) pursuant to which the Lender agreed to loan the Company the sum of up to $6,000, in two tranches of $4,000 and $2,000, in consideration for a senior secured convertible promissory note in the original principal amount of $5,300 (the “Initial Note”), and if the second tranche of $2,000 is requested by the Company and funded by the Lender, an additional senior secured convertible promissory note in the original principal amount of $2,650 (the “Additional Note,” and together with the Initial Note, the “Notes”). The net proceeds of the loan are to be used to repay existing senior debt in the aggregate principal amount of approximately $1,200 and for general working capital purposes. On March 14, 2025, the Company closed the first tranche of notes and received net proceeds of $2,680 after paying off existing senior debts and fees. On May 23, 2025, the Company closed the second tranche of notes and received net proceeds of $1,910.

The Group has evaluated subsequent events through the date of issuance of the audited consolidated financial statements and determined there were no other subsequent events that occurred that would require recognition or disclosure in the consolidated financial statements.

F-34