0001213900-21-026994.txt : 20210517 0001213900-21-026994.hdr.sgml : 20210517 20210517161031 ACCESSION NUMBER: 0001213900-21-026994 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 64 CONFORMED PERIOD OF REPORT: 20210331 FILED AS OF DATE: 20210517 DATE AS OF CHANGE: 20210517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Arcimoto Inc CENTRAL INDEX KEY: 0001558583 STANDARD INDUSTRIAL CLASSIFICATION: MOTORCYCLES, BICYCLES & PARTS [3751] IRS NUMBER: 261449404 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38213 FILM NUMBER: 21930634 BUSINESS ADDRESS: STREET 1: 2034 WEST 2ND AVENUE CITY: EUGENE STATE: OR ZIP: 97402 BUSINESS PHONE: 541-683-6293 MAIL ADDRESS: STREET 1: 2034 WEST 2ND AVENUE CITY: EUGENE STATE: OR ZIP: 97402 10-Q 1 f10q0321_arcimotoinc.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2021

 

OR

 

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

 

For the transition period from ______________ to ______________

 

Commission File Number 001-38213

 

ARCIMOTO, INC.

(Exact name of registrant as specified in its charter)

  

Oregon   26-1449404
(State or other jurisdiction of
incorporation or organization) 
  (IRS Employer
Identification No.) 

 

2034 West 2nd Avenue, Eugene, OR 97402

(Address of principal executive offices and zip code)

 

(541) 683-6293

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class   Trading Symbol(s)   Name of Each Exchange on Which
Registered
Common stock, no par value   FUV   Nasdaq Capital Market

  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 (Section 232.405 of this chapter) during the preceding 12 months (or 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

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

 

As of May 17, 2021, there were approximately 35,783,000 shares of the registrant’s common stock issued and outstanding. 

  

 

 

 

 

ARCIMOTO, INC.

  

FORM 10-Q

For the Quarterly Period Ended March 31, 2021

  

TABLE OF CONTENTS

  

    Page
PART I. FINANCIAL INFORMATION 1
     
Item 1. Financial Statements (Unaudited) 1
  Condensed Balance Sheets as of March 31, 2021 and December 31, 2020 1
  Condensed Statements of Operations for the Three Months Ended March 31, 2021 and 2020 2
  Condensed Statements of Stockholders’ Equity for the Three Months Ended March 31, 2021 and 2020 3
  Condensed Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 4
  Condensed Notes to Financial Statements 5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures about Market Risk 24
Item 4. Controls and Procedures 24
     
PART II. OTHER INFORMATION 25
     
Item 1. Legal Proceedings 25
Item 1A. Risk Factors 25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
Item 3. Defaults Upon Senior Securities 25
Item 4. Mine Safety Disclosures 25
Item 5. Other Information 25
Item 6. Exhibits 25
     
  SIGNATURES 26

  

i

 

PART I - FINANCIAL INFORMATION

  

ARCIMOTO, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

 

Item 1. Financial Statements (Unaudited)

 

   March 31,
2021
   December 31,
2020
 
ASSETS        
Current assets:        
Cash and cash equivalents  $46,650,143   $39,451,401 
Accounts receivable, net   13,882    17,117 
Inventory   5,642,824    5,104,068 
Prepaid inventory   946,119    1,029,617 
Other current assets   990,608    900,827 
Total current assets   54,243,576    46,503,030 
           
Property and equipment, net   6,949,160    6,645,230 
Intangible assets, net   10,517,319     
Goodwill   6,824,209     
Security deposits   125,771    101,688 
           
Total assets  $78,660,035   $53,249,948 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Liabilities:          
Current liabilities:          
Accounts payable  $1,060,267   $205,133 
Accrued liabilities   529,173    431,166 
Customer deposits   616,173    605,532 
Current portion of capital lease obligations   264,220    246,524 
Notes payable   231,597    478,928 
Current portion of warranty reserve   177,659    161,607 
Current portion of deferred revenue   281,509    127,219 
Current portion of equipment financing notes payable   306,551    237,069 
Current portion of note payable to bank       421,076 
Total current liabilities   3,467,149    2,914,254 
           
Capital lease obligations, net of current portion   330,272    534,624 
Warranty reserve   126,500    66,500 
Long-term deferred revenue   43,750    50,000 
Equipment financing notes payable, net of current portion   1,525,026    1,352,930 
Note payable to bank, net of current portion   1,068,686    647,610 
Total long-term liabilities   3,094,234    2,651,664 
           
Total liabilities   6,561,383    5,565,918 
           
Commitments and contingencies (Note 12)          
           
Stockholders’ equity:          
Series A-1 Preferred Stock, no par value, 1,500,000 authorized; none issued and outstanding as of March 31, 2021 and December 31, 2020, respectively        
Class C Preferred Stock, no par value, 2,000,000 authorized; none issued and outstanding as of March 31, 2021 and December 31, 2020, respectively        
Preferred Stock, no par value, 1,500,000 authorized, none issued and outstanding as of March 31, 2021 and December 31, 2020, respectively        
Common Stock, no par value, 60,000,000 shares authorized; 35,758,090 and 34,187,555 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively   128,855,849    100,236,178 
Additional paid-in capital   4,413,966    3,876,503 
Accumulated deficit   (61,171,163)   (56,428,651)
Total stockholders’ equity   72,098,652    47,684,030 
           
Total liabilities and stockholders’ equity  $78,660,035   $53,249,948 

   

See accompanying notes to condensed financial statements.

 

1

 

 

ARCIMOTO, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months Ended
March 31,
 
   2021   2020 
Revenue:        
Product sales  $1,246,363   $598,035 
Other revenue   147,612    18,760 
Total revenues   1,393,975    616,795 
Cost of goods sold   3,244,507    1,689,518 
Gross loss   (1,850,532)   (1,072,723)
           
Operating expenses:          
Research and development   2,407,695    448,974 
Sales and marketing   964,447    336,898 
General and administrative   2,420,613    1,496,845 
Total operating expenses   5,792,755    2,282,717 
           
Loss from operations   (7,643,287)   (3,355,440)
           
Other expense (income):          
Interest expense   52,227    246,834 
Other income   (14,154)   (7,500)
           
Loss before benefit for income taxes   

(7,681,360

)   

(3,594,774

)
           
Income tax benefit   2,938,848     
           
Net loss  $(4,742,512)  $(3,594,774)
           
Weighted average common shares - basic and diluted   35,327,316    24,480,445 
Net loss per common share - basic and diluted  $(0.13)  $(0.15)

 

See accompanying notes to condensed financial statements.

 

2

 

 

ARCIMOTO, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

   

   Series A-1
Preferred Stock
   Class C
Preferred Stock
   Common Stock             
   Number
of Shares
   Amount   Number
of Shares
   Amount   Number
of Shares
   Amount   Additional
Paid-In
Capital
   Accumulated
Deficit
   Total Stockholders’
Equity
 
Balance at December 31, 2019      $       $    24,436,389   $43,573,529   $2,344,751   $(38,308,162)  $7,610,118 
                                              
Issuance of common stock for settlement of payable                   32,749    56,328            56,328 
Offering costs                       (3,619)           (3,619)
Stock-based compensation                           304,965        304,965 
Net loss                               (3,594,774)   (3,594,774)
Balance at March 31, 2020      $       $    24,469,138   $43,626,238   $2,649,716   $(41,902,936)  $4,373,018 
                                              
Balance at December 31, 2020      $       $    34,187,555   $100,236,178   $3,876,503   $(56,428,651)  $47,684,030 
                                              
Issuance of common stock for settlement of payable                   11,000    146,300            146,300 
Issuance of common stock for cash, net of offering costs of $543,523                   581,782    13,526,512            13,526,512 
Issuance of common stock for the acquisition of TMW                   436,339    13,038,355            13,038,355 
Exercise of warrants                   486,429    1,714,663    (57,162)       1,657,501 
Exercise of stock options                   54,985    193,841    (65,854)       127,987 
Stock-based compensation                           660,479        660,479 
Net loss                               (4,742,512)   (4,742,512)
Balance at March 31, 2021      $       $    35,758,090   $128,855,849   $4,413,966   $(61,171,163)  $72,098,652 

 

See accompanying notes to condensed financial statements.

 

3

 

 

ARCIMOTO, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Three Months Ended
March 31,
 
   2021   2020 
OPERATING ACTIVITIES        
Net loss  $(4,742,512)  $(3,594,774)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   429,561    207,551 
Amortization of debt discount       153,748 
Stock-based compensation   660,479    304,965 
Deferred income tax benefit   (2,938,848)    
Changes in operating assets and liabilities:          
Accounts receivable   3,235    228,225 
Inventory   (196,362)   (1,461,051)
Prepaid inventory   83,498    70,505 
Other current assets   (85,698)   47,542 
Accounts payable   1,001,434    742,691 
Accrued liabilities   98,007    (50,355)
Customer deposits   (81,108)   (145,100)
Warranty reserve   76,052    20,874 
Deferred revenue   148,040    (11,674)
Net cash used in operating activities   (5,544,222)   (3,486,853)
           
INVESTING ACTIVITIES          
Purchase of property and equipment   (598,461)   (198,993)
Security deposits   (24,083)   (47,100)
Cash paid for acquisition of Tilting Motor Works   (1,754,083)    
Net cash used in investing activities   (2,376,627)   (246,093)
           
FINANCING ACTIVITIES          
Proceeds from the sale of common stock   14,070,035     
Payment of offering costs   (543,523)   (3,619)
Proceeds from exercise of warrants   1,657,501     
Proceeds from the exercise of stock options   127,987     
Proceeds from equipment notes   204,661    69,740 
Repayment of notes payable   (247,331)   (167,847)
Repayment of equipment notes   (88,583)   (58,146)
Payment on capital lease obligations   (61,156)   (49,954)
Net cash provided by (used in) financing activities   15,119,591    (209,826)
           
Net cash increase (decrease) for period   7,198,742    (3,942,772)
Cash at beginning of period   39,451,401    5,832,489 
Cash at end of period  $46,650,143   $1,889,717 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION          
Cash paid during the period for interest  $   $42,015 
Cash paid during the period for income taxes  $

   $

 
           
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES          
Common shares issued for Tilting Motor Works acquisition  $13,038,355   $ 
Issuance of common stock for settlement of accounts payable  $146,300   $56,328 

 

See accompanying notes to condensed financial statements.

  

4

 

 

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1: NATURE OF OPERATIONS

 

Arcimoto, Inc. (the “Company”) was incorporated in the State of Oregon on November 21, 2007. The Company’s mission is to catalyze the global shift to a sustainable transportation system. Over the past 13 years, the Company has developed a new vehicle platform designed around the needs of everyday drivers. Having approximately one-third the weight and one-third of the footprint of the average car, the Arcimoto platform’s purpose is to bring the joy of ultra-efficient, pure electric driving to the masses. To date, the Company has introduced five vehicle products built on this platform that target specific niches in the vehicle market: our flagship product, the Fun Utility Vehicle® (“FUV®”), for everyday consumer trips; the Deliverator® for last-mile delivery and general fleet utility; the Rapid Responder™ for emergency services and security; the Cameo™ for film, sports and influencers; and the Arcimoto Roadster, an unparalleled pure-electric on-road thrill machine.

 

Risks and Uncertainties

 

We started retail production in the third quarter of 2019 at one FUV per build day and ramped to two per build day in the first quarter of 2020 before suspending production in response to the COVID-19 pandemic. We restarted production and resumed deliveries to customers in the third quarter of 2020. As a result of the suspension, revenues from 2020 were negatively impacted. Revenues from subsequent quarters may be negatively impacted based on the length and severity of the pandemic. Production in the first quarter of 2021 achieved three FUV per build day and successfully tested to validate four per day.

 

Further, Arcimoto does not have a history of higher-scale production and may encounter delays or inefficiencies in its sales and manufacturing processes, which may prevent or delay achieving higher-scale production within anticipated timeliness. In order to achieve higher-scale production, the Company may need to raise additional capital, and there can be no assurance such capital will be available upon reasonable terms, if at all.

 

Additionally, the Company’s business and operations are sensitive to governmental policies on importation and exportation, as well as the availability of vehicle components from suppliers, which themselves may be impacted by pandemics and such, as well as the ever-shifting general landscape of governmental policy related to cars and motorcycles.

 

The Company’s industry is characterized by rapid changes in technology and customer demands. The Company’s future success will depend on its ability to adapt to technological advances, its nimble reaction to customer demands, its development of well-considered new products and services, and the enhancement of its current products and services on a timely and cost-effective basis.

 

Finally, the Company may not have the capital resources necessary to further the development of existing and/or new products.

 

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Going Concern

 

The accompanying financial statements have been prepared on a basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred significant losses since inception and management expects losses to continue for the foreseeable future. The Company had approximately $46,650,000 of cash as of March 31, 2021, which is in excess of cash needed for the next twelve months.

 

5

 

 

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

Unaudited Interim Financial Information

 

The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q promulgated by the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all information and disclosures required by GAAP for complete financial statement presentation. In the opinion of management, the accompanying condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of March 31, 2021, and the results of its operations for the three months ended March 31, 2021 and 2020 and its cash flows for the three months ended March 31, 2021 and 2020. Results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2021.

 

Business Combinations

 

The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the acquired assets and liabilities and results of operations are consolidated beginning at the acquisition date.

 

Inventory

 

Inventory is stated at the lower of cost (using the first-in, first-out method (“FIFO”) or market value. Inventories consist of purchased electric motors, electrical storage and transmission equipment, and component parts.

 

   March 31,
2021
   December 31,
2020
 
Raw materials  $4,892,827   $4,667,780 
Work in progress   59,078    65,210 
Finished goods   690,919    371,078 
Total  $5,642,824   $5,104,068 

 

The Company is required to remit partial prepayments for some purchases of its inventories acquired from overseas vendors which are included in prepaid inventories. The Company is currently selling vehicles below the base cost of a finished unit. Accordingly, the Company expensed all labor and overhead as period costs, and recorded an allowance to reduce inventories to net realizable value of approximately $593,000 and $550,000 as of March 31, 2021 and December 31, 2020, respectively.

 

Customer Deposits

 

Non-refundable customer deposits are comingled with operating funds. Refundable customer deposits are held in a separate deposit account. Revenue is not recognized on customer deposits until the deposit is applied to a non-refundable vehicle order, the vehicle manufacturing process is completed, the vehicle is picked up by or delivered to the customer and the appropriate revenue recognition criteria have been met.

 

Intangible Assets

 

Intangible assets primarily consist of trade names/trademarks, proprietary technology, and customer relationships. They are amortized using the straight-lined method over a period of 10 to 14 years. The Company assesses the recoverability of its finite-lived intangible assets when there are indications of potential impairment. Indefinite-lived intangible assets are evaluated for impairment annually.

 

6

 

  

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

Goodwill

 

The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.

 

The Company calculates the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables. The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations.

 

Net Earnings or Loss per Share

 

The Company’s computation of earnings (loss) per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common shareholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., common stock warrants and common stock options) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares 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 EPS.

 

Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented because all common stock warrants and common stock options outstanding were anti-dilutive.

 

At March 31, 2021 and 2020, the Company excluded the outstanding Employee Equity Plans (“EEP”) and other securities summarized below calculated using the Treasury Stock Method, which entitled the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.

  

   Three Months Ended
March 31,
 
   2021   2020 
Options and other instruments under the 2012, 2015, and 2018 Plans to purchase common stock   3,094,548    431,746 
Underwriters and investors warrants issued outside of an EEP   76,402     
Total   3,170,950    431,746 

  

Recent Accounting Pronouncements

  

The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financial statements properly reflect the change.

 

7

 

  

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) which supersedes ASC Topic 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all the leases with terms greater than 12 months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. In November 2019, the FASB delayed the effective date for Topic 842 to fiscal years beginning after December 15, 2020 for private companies and emerging growth companies, and interim periods within those years, with early adoption permitted. In June 2020, the FASB issued ASU No 2020-05 that further delayed the effective date of Topic 842 to fiscal years beginning after December 15, 2021. We will adopt this new standard on January 1, 2022. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” that allows entities to apply the provisions of the new standard at the effective date, as opposed to the earliest period presented under the modified retrospective transition approach and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon its adoption of Topic 842, which will increase the total assets and total liabilities that the Company reports relative to such amounts prior to adoption.

 

Adoption of Recent Accounting Pronouncements

 

In October 2020, the FASB issued ASU 2020-10, “Codification Improvements” (“ASU 2020-10”), which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations. The effective date of the standard will be for interim and annual reporting periods beginning after December 15, 2020 for public entities. The new guidance was effective upon issuance of this final accounting standards update. The Company has adopted this standard and the adoption did not have a material impact on its condensed consolidated financial statements or disclosures.

 

NOTE 3: TMW ACQUISITION

 

On January 23, 2021, the Company entered into an Asset Purchase Agreement (the “Agreement”) with Tilting Motor Works, Inc. (“TMW”), a Washington corporation (the “Seller”) and its owner. Pursuant to the terms and conditions of the Agreement, the Company paid cash of $1,754,083 and issued 436,339 shares of Company common stock as consideration for substantially all of the TMW’s assets and certain assumed liabilities. The common shares issued were unregistered and are subject to sales restrictions under the Securities Act of 1933. The Company valued the shares issued in the transaction at the average of opening and closing price on the date of acquisition with a 12.5% discount for lack of marketability. The acquisition closed on February 4, 2021 and was recorded as a business combination as the set of assets and activities acquired met the definition of a business.

 

The purchase price is allocation is as follows:

 

Cash  $1,754,083 
Add: Fair value of shares issued   13,038,355 
Total consideration  $14,792,438 

 

8

 

 

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

Description  Fair value 
Assets acquired:    
Inventory  $342,394 
Prepaid expenses and other current assets   4,083 
Property, plant, and equipment   4,349 
Trade name   2,052,000 
Proprietary technology   7,010,000 
Customer relationships   1,586,000 
Goodwill   6,824,209 
Total assets acquired  $17,823,035 
      
Liabilities assumed:     
Customer deposits  $91,749 
Deferred tax liability   2,938,848 
Total liabilities assumed   3,030,597 
Estimated fair value of net assets acquired  $14,792,438 

 

The following unaudited pro-forma financial information presents the consolidated results of operations of the Company and TMW for the three months ended March 31, 2021 and 2020, as if the acquisition had occurred as of the beginning of the first period presented instead of on February 4, 2021. The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.

 

The pro-forma financial information for the Company and TMW is as follows:

 

   For the Three Months Ended
March 31,
 
   2021   2020 
Revenues  $1,403,954   $828,660 
Net loss attributable to common stockholders  $(7,911,783)  $(3,860,541)
Net loss per basic and diluted common share  $(0.22)  $(0.15)
Weighted average common shares outstanding:          
Basic and diluted   35,327,316    24,916,784 

 

9

 

 

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 4: PROPERTY AND EQUIPMENT

 

As of March 31, 2021 and December 31, 2020, our property and equipment consisted of the following:

 

   March 31,
2021
   December 31,
2020
 
Machinery and equipment  $5,245,534   $5,245,534 
Fixed assets in process   2,105,561    1,993,760 
Leasehold improvements   983,522    983,522 
FUV fleet   520,354    336,730 
FUV rental fleet   115,124     
Computer equipment and software   188,984    94,384 
Vehicles   97,661     
Furniture and fixtures   52,007    52,007 
Total property and equipment   9,308,747    8,705,937 
Less: Accumulated depreciation   (2,359,587)   (2,060,707)
Total  $6,949,160   $6,645,230 

 

Fixed assets in process is comprised primarily of tooling and equipment related to the manufacturing of our vehicles. Completed assets are transferred to their respective asset class and depreciation begins when the asset is ready for its intended use. FUV fleet consists of marketing and other non-revenue generating vehicles. FUV rental fleet is comprised of rental revenue generating vehicles.

 

Depreciation expense was approximately $299,000 and $208,000 during the three months ended March 31, 2021 and 2020, respectively.

 

On December 23, 2020, the Company entered into an agreement to purchase certain buildings totaling approximately 187,000 square feet, and approximately 6.6 acres of real estate located within the City of Eugene, Oregon. The Company has agreed to purchase the properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue, from RLA Holdings, LLC for the total purchase price of $10,250,000. The Company pledged $80,000 as earnest money for the transaction. During the first quarter of 2021, an additional 4.1 acres and 33,000 square feet of buildings to the south were added to the purchase agreement totaling $2,500,000. The total sales price was increased to $12,750,000. The purchase was contingent upon the Company’s complete and unconditional approval of: (i) the property and its physical condition, zoning and land use restrictions, and all systems, utilities, and access rights pertaining to the property; (ii) the seller’s documents; (iii) securing financing; (iv) a Phase I environmental assessment and all appropriate inquiries investigation so as to protect the Company under CERCLA; and (v) anything else the Company deems necessary. On March 15, 2021, the due diligence was complete and the Company paid the $80,000 earnest money. On April 19, 2021, the Company closed and completed the purchase of the properties described above. RLA Holdings, LLC will be permitted to rent back the 311 Chambers St property after closing for up to six (6) months at a rate of $50,000 per month plus all utilities, taxes, insurance, and maintenance expenses. $25,000 was deduced from the purchase price at the closing to cover the tenant’s security deposit. $1,250,000 was deducted at the closing and will be paid in one year from the closing date. This sum is secured by a zero interest note. The Company intends to utilize these properties to improve its production capabilities. The new facility is expected to be operational by the end of 2022.

 

10

 

 

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 5: INTANGIBLE ASSETS

 

The following table summarizes the Company’s intangible assets:

 

      March 31, 2021 
   Estimated
Useful Life
(Years)
  Gross
Carrying
Amount at December 31,
2020
   Assets
Acquired
Pursuant to
Business
Combination
(1)
   Accumulated
Amortization
   Net Book
Value
 
Tradename and trademarks  14 years  $   $2,052,000   $(22,684)  $2,029,316 
Proprietary technology  13 years       7,010,000    (83,452)   6,926,548 
Customer relationships  10 years       1,586,000    (24,545)   1,561,455 
      $   $10,648,000   $(130,681)  $10,517,319 

 

(1)On January 23, 2021 the Company acquired various assets of Tilting Motor Works, Inc. (See Note 3)

 

NOTE 6: GOODWILL

 

The following table summarizes the Company’s goodwill as of March 31, 2021:

 

   Total
Goodwill
 
Balance as of January 1, 2021  $ 
Goodwill additions through Tilting Motor Works acquisition   6,824,209 
Less: impairment charge recorded    
Balance as of March 31, 2021  $6,824,209 

 

NOTE 7: CAPITAL LEASE OBLIGATIONS

 

As of March 31, 2021, the Company has financed through lease agreements a total of approximately $1,250,000 of its capital equipment purchases with monthly payments ranging from $437 to $8,582, repayment terms ranging from 48 to 60 months, and effective interest rates ranging from 4.52% to 9.52%. Total monthly capital lease payments as of March 31, 2021 are $25,223. These lease obligations mature ranging from December 2021 through November 2023 and are secured by approximately $1,427,000 in underlying assets which have approximately $475,000 in accumulated depreciation as of March 31, 2021. The balance of capital lease obligations was approximately $594,000 and approximately $781,000 as of March 31, 2021 and December 31, 2020, respectively.

 

NOTE 8: NOTES PAYABLE

 

On May 5, 2020, the Company received a Paycheck Protection Program (“PPP”) loan in the amount of $1,068,686, referred to on the balance sheet as Note payable to bank. The loan has an interest rate of 1% and monthly payments of $60,154 for 18 months beginning December 5, 2020. This loan is eligible for the limited loan forgiveness provisions of Section 1102 of the CARES Act, and the SBA Interim Final Rule dated April 2, 2020. As of March 31, 2021, the balance on the loan was $1,068,686. As of April 27, 2021 all of the outstanding principal and interest of $1,068,686 and $10,568 were forgiven. The entire loan balance was presented as noncurrent on the balance sheet as of March 31, 2021.  

 

As of March 31, 2021, the Company has financed a total of approximately $2,440,000 of its capital equipment purchases with monthly payments ranging from $362 to $11,749, repayment terms ranging from 60 to 72 months, and effective interest rates ranging from 1.99% to 9.90%. Total monthly payments as of March 31, 2021 are $47,376. These equipment notes mature ranging from January 2023 through October 2026. The balance of equipment financing notes payable was approximately $1,832,000 and $1,590,000 as of March 31, 2021 and December 31, 2020, respectively.

 

11

 

 

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 9: STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

The Company is authorized to issue 5,000,000 shares of preferred stock, no par value, of which 1,500,000 shares were designated as Series A-1 Preferred Stock and 2,000,000 are designated as Class C Preferred Stock.

 

The Series A-1 Preferred Stock is convertible at any time after issuance at the option of the holder into shares of common stock at the original issue price of the Series A-1 Preferred Stock. The Series A-1 Preferred Stock was also subject to mandatory conversion provisions upon an initial public offering raising $15 million or more and is not redeemable. To prevent dilution, the conversion price of the Series A-1 Preferred Stock is to be adjusted for any issuance of securities, excluding exempt securities, which change the number of shares of common stock outstanding. The Series A-1 Preferred Stockholders are entitled to equal voting rights to common stockholders on an as-converted basis and receive preference to the common stockholders upon liquidation.

 

Except as otherwise required by law or expressly provided in the Company’s Second Amended and Restated Articles of Incorporation, as amended, each share of Class C Preferred Stock has one vote for the election of directors and on all matters submitted to a vote of shareholders of the Company. The Company is not obligated to redeem or repurchase any shares of Class C Preferred Stock. Shares of Class C Preferred Stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions.

 

Common Stock

 

The Company has reserved a total of 4,876,580 shares of its common stock pursuant to the equity incentive plans (see Note 10). The Company has 3,938,824 and 4,058,791 stock units, options and warrants outstanding under these plans as of March 31, 2021 and December 31, 2020, respectively.

 

The Company has 122,238 and 593,667 shares of its common stock reserved for warrants issued outside of the equity incentive plans as of March 31, 2021 and December 31, 2020, respectively.

 

Issuance of common stock for settlement of payable

 

The Company issued 11,000 common shares for investor relations consulting services with a fair value of $146,300 during the three months ended March 31, 2021. During the three months ended March 31, 2020, the Company issued 32,749 common shares for services with a fair value of $56,328. The shares were valued based on the stock price at the time of the grant when the performance commitment was complete. The shares issued during the three months ended March 31, 2021 and 2020 were to settle existing accounts payable.

 

Exercise of Stock Options and Warrants

 

A total of 54,985 employee options, with exercise prices ranging from $1.71 to $4.52 per share were exercised for total proceeds to the Company of $127,987 during the three months ended March 31, 2021. During the three months ended March 31, 2020, no employee options were exercised for cash.

 

A total of 15,000 employee warrants, with an exercise prices of $0.50 per share were exercised for total proceeds to the Company of $7,500 during the three months ended March 31, 2021. During the three months ended March 31, 2020, no employee warrants were exercised for cash.

 

A total of 471,429 warrants issued to an investor, with an exercise price of $3.50 per share were exercised for total proceeds to the Company of $1,650,001 during the three months ended March 31, 2021. During the three months ended March 31, 2020, no warrants issued to investors were exercised for cash.

 

12

 

 

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

Offerings of Common Stock

 

On January 25, 2021, the Company entered into an Equity Distribution Agreement (“EDA”) with Canaccord Genuity LLC (“Canaccord”) under which we may offer and sell shares of our common stock in connection with the ATM in an aggregate offering amount of up to $80,000,000 from time to time through Canaccord, acting exclusively as our sales agent (the “Offering”). We intend to use the net proceeds of the Offering primarily for working capital and general corporate purposes.

 

We issued and sold 581,782 shares of common stock during the three months ended March 31, 2021, in connection with the ATM at per share prices between $19.35 and $32.50, resulting in net proceeds to the Company of approximately $13,500,000, after subtracting offering expenses.

 

NOTE 10: STOCK-BASED PAYMENTS

 

The Company has common stock, common stock units, and common stock purchase options and warrants reserved pursuant to the 2018 Omnibus Stock Incentive Plan (“2018 Plan”), Amended and Restated 2015 Stock Incentive Plan (“2015 Plan”) and the Second Amended and Restated 2012 Employee Stock Benefit Plan (“2012 Plan”).

 

13

 

 

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

Stock-based compensation, including stock options, warrants and stock issued for compensation and services is included in the statements of operations as follows:

 

   Three Months Ended
March 31,
 
   2021   2020 
Research and development  $162,447   $53,700 
Sales and marketing   98,589    21,157 
General and administrative   218,623    163,884 
Cost of goods sold   180,520    66,224 
Total  $660,479   $304,965 

 

2018 Omnibus Stock Incentive Plan

 

The 2018 Plan authorizing 1,000,000 shares was approved by the Board of Directors and then the Company’s shareholders at the Company’s 2018 annual meeting of shareholders held on June 9, 2018. At the 2019 Annual Meeting, the shareholders approved an additional 1,000,000 shares of common stock to be issued under the 2018 Plan. On April 20, 2020, the board of directors approved an increase from 2,000,000 to 4,000,000 shares; at the annual shareholder meeting on June 20, 2020, the increase was approved by a majority of the shareholders.

 

The 2018 Plan provides the Company the ability to grant to employees, directors, consultants or advisors shares of common stock of the Company through the grant of equity awards, including, but not limited to, options that are incentive stock options or NQSOs and restricted stock, provided that only employees are entitled to receive incentive stock options in accordance with IRS guidelines. As of March 31, 2021, the Company had a remaining reserve of 932,311 shares of common stock under the 2018 Plan. Awards that are forfeited generally become available for grant under the 2018 Plan.

 

Employee stock-based compensation expense under the 2018 Plan included in operating expenses for the three months ended March 31, 2021 was $638,907 and $267,641, respectively.

 

Total compensation cost related to non-vested awards issued under the 2018 Plan not yet recognized as of March 31, 2021 was approximately $4,380,134 and will be recognized on a straight-line basis through December 2023 based on the respective vesting periods. The amount of future stock option compensation expense could be affected by any future option grants or forfeitures.

 

NOTE 11: CUSTOMER DEPOSITS

 

The Company has received customer deposits ranging from $100 to $500 per vehicle for Retail Series production vehicles for purposes of securing a vehicle production slot As of March 31, 2021 and December 31, 2020, the Company’s balance of deposits received was approximately $616,000 and $606,000, respectively. As of March 31, 2021 and December 31, 2020, $409,724 and $403,624, respectively, of these deposits were refundable upon demand. Deposits are included in current liabilities in the accompanying balance sheets. When a customer’s order is ready to enter the production process, the customer is notified that if they would like to proceed with the purchase of a vehicle, their deposit will no longer be refundable and any additional deposit required must be paid prior to the start of the manufacturing process. There were $100 and no customer deposits from related parties as of March 31, 2021 and December 31, 2020, respectively.

 

NOTE 12: COMMITMENTS AND CONTINGENCIES

 

On December 6, 2019, we entered into a lease for a property approximately six blocks east of the AMP that contains two buildings. The initial term of the lease is 25 months and began on December 6, 2019. There is an option for a three-year extension. The main building is 6,508 square feet of office and warehouse space and the auxiliary building is 4,318 square feet of warehouse space. The office space is being used by marketing and sales. The warehouse is being used for R&D and battery module manufacturing. On March 3, 2020, we amended the lease to include the adjacent building which has 10,752 square feet of office and warehouse space on the ground floor plus second floor office and storage space. This location is being used for service will be used for further expansion. Rent is $11,750 per month and subject to a 3% increase per year.

 

14

 

 

ARCIMOTO, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

As of December 31, 2020, we occupied 1,700 square feet of office area, 32,000 square feet of warehouse space and 125,000 square feet of asphalt paving and undeveloped greenfield. The original lease expiring in 2021 has been extended until 2024. We believe that our current facilities are sufficient for our needs.

 

On November 18, 2020, we entered into a lease for a 106 square foot space in Orlando Florida. The term of the lease is month to month which began on December 1, 2020 and auto renews each month unless one months’ notice of cancellation is given. Total rent is $2,490 per month. The space is being used for Arcimoto’s Florida dealer showroom.

 

On February 8, 2021, we entered into a lease for a 15,124 square foot office space on the second floor of 155 Blair Boulevard, Eugene, Oregon 97402 that will be used for office and general use and warehouse space located at 135 Blair Boulevard, Eugene, Oregon 97402 that will be used for a dealer and rental location. The term of the lease is 60 months which began on March 1, 2020. There is an option for two successive five-year extension periods. Rent is $17,500 per month and subject to a 2.5% increase per year.

 

See the following table for future annual minimum rent payments as of December 31, 2020:

 

Remaining payments for years ending December 31:    
2021   640,619 
2022   543,246 
2023   517,945 
2024   340,840 
2025   229,916 
Thereafter   77,267 
Total  $2,349,833 

 

Rent expense is recognized on a straight-line basis. Total rent expense for the three months ended March 31, 2021 and 2020 was $140,413 and $62,042, respectively.

 

In February 2021, a statement of work for approximately $3,750,000 was signed with Munro and Associates for development activities through the end of the year to develop the FUV high volume production platform. Munro and Associates research and development expense invoiced in the three months ended March 31, 2021 was $874,500.

 

Litigation  

 

On March 6, 2020, the Company filed a complaint (“the Complaint”) against Ayro, Inc. (“Ayro”), accusing Ayro of patent infringement in Federal District Court for the Western District of Texas, Waco Division (Case No. 6:20-cv-00176-ADA) (“the Ayro Litigation”). In the Complaint, Arcimoto alleged that Ayro’s 311 two-seater electric vehicles infringe U.S. Patent 8,985,255 (the “255 Patent”). The Complaint asked for monetary damages and enhanced damages due to willful infringement of the 255 Patent by Ayro. On March 27, 2020, Ayro answered the Complaint, denying liability and asserting counterclaims of noninfringement and patent invalidity. During the first quarter of 2021, the parties reached a settlement and submitted a request to the court to dismiss the case.

 

NOTE 13: INCOME TAXES

 

The Company recorded a tax benefit of $2,938,848 for the period ended March 31, 2021 related to a partial release of its valuation allowance stemming from the acquisition of TMW (See Note 3). The acquisition of TMW created a deferred tax liability position, and those deferred tax liabilities can be used as a source of income for our existing deferred tax assets.

 

NOTE 14: SUBSEQUENT EVENTS

 

On April 19, 2021, the Company closed and completed the purchase of properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue for the sum of $10,250,000. The Company also purchased and closed an additional property commonly known as 1593 W. 5th Ave. Eugene, Oregon for related purposes for the sum of $2,500,000.  Approximately $11,500,000 was paid in cash. $1,250,000 is due one year from the closing and is secured by a promissory note at a zero-interest rate.

  

Between April 9 and April 20, 2021, 15,000 employee warrants were exercised for cash at a grant price of $0.50 per share.  Net proceeds to the Company were $7,500.

 

Between April 29 and May 5, 2020, 10,333 employee incentive stock options were exercised for cash at grant prices ranging from $1.71 to $4.52.  Net proceeds to the Company were $35,389.

 

15

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in this report and in other documents which we file with the SEC. In addition, such statements could be affected by risks and uncertainties related to:

 

our ability to identify financing sources to fund our capital expenditure requirements and continue operations until sufficient cash flow can be generated from operations;

 

our ability to effectively execute our business plan and growth strategy;

 

unforeseen or recurring operational problems at our facility, or a catastrophic loss of our manufacturing facility, including the temporary closures of our facility that might be required as a result of the continuing COVID-19 pandemic;

 

our dependence on our suppliers, whose ability to supply us may be negatively impacted by, among other things, the measures being implemented to address COVID-19;

 

changes in consumer demand for, and acceptance of, our products;

 

overall strength and stability of general economic conditions and of the automotive industry more specifically, both in the United States and globally;

 

changes in U.S. and foreign trade policy, including the imposition of tariffs and the resulting consequences;

 

changes in the competitive environment, including adoption of technologies and products that compete with our products;

 

our ability to generate consistent revenues;

 

our ability to design, produce and market our vehicles within projected timeframes given that a vehicle consists of several thousand unique items and we can only go as fast as the slowest item;

 

  our ability to manufacture vehicles at the high volumes that we anticipate;

  

our reliance on as well as our ability to attract and retain key personnel;

 

changes in the price of oil and electricity;

 

changes in laws or regulations governing our business and operations;

 

our ability to maintain adequate liquidity and financing sources and an appropriate level of debt, if any, on terms favorable to our company;

 

the number of reservations and cancellations for our vehicles and our ability to deliver on those reservations;

 

our ability to maintain quality control over our vehicles and avoid material vehicle recalls;

 

our ability to manage the distribution channels for our products, including our ability to successfully implement our direct to consumer distribution strategy and any additional distribution strategies we may deem appropriate;

 

our ability to obtain and protect our existing intellectual property protections including patents;

 

changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, which could have an effect on earnings or losses;

 

interest rates and the credit markets;

 

costs and risks associated with litigation; and

 

other risks described from time to time in periodic and current reports that we file with the SEC.

 

The foregoing list does not contain all potential risks and uncertainties. Any forward-looking statements speak only as of the date on which they are made, and except as may be required under applicable securities laws; we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the filing date of this report.

 

16

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2021 and 2020 should be read together with our unaudited condensed financial statements and related notes included elsewhere in this report and in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2021. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those set forth above. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements.”

 

Overview

 

Arcimoto, Inc. (the “Company”) was incorporated in the State of Oregon on November 21, 2007. The Company’s mission is to catalyze the global shift to a sustainable transportation system. Over the past 13 years, the Company has developed a new vehicle platform designed around the needs of everyday drivers. Having approximately one-third the weight and one-third of the footprint of the average car, the Arcimoto platform’s purpose is to bring the joy of ultra-efficient, pure electric driving to the masses. To date, the Company has introduced five vehicle products built on this platform that target specific niches in the vehicle market: our flagship product, the Fun Utility Vehicle® (“FUV®”), for everyday consumer trips; the Deliverator® for last-mile delivery and general fleet utility; the Rapid Responder™ for emergency services and security; the Cameo™ for film, sports and influencers; and the Arcimoto Roadster, an unparalleled pure-electric on-road thrill machine.

 

Retail production began on September 19, 2019. In total, Arcimoto produced 57 model year 2019 vehicles, 46 of which were delivered to customers by December 31, 2019. During the year ended December 31, 2020, Arcimoto produced 117 model year 2020 vehicles, and delivered 97 vehicles to customers. During the three months ended March 31, 2021, Arcimoto produced 84 model year 2021 vehicles, and delivered 60 vehicles to customers, a 122% improvement over the 27 vehicles delivered to customers in the three months ended March 31, 2020.

 

In March 2020, Arcimoto launched production pilots of the Rapid Responder and Deliverator product lines. In September 2020, the Company on-roaded its fourth product concept, the Cameo. In November 2020, the Company unveiled its fifth product concept, the Arcimoto Roadster prototype.

 

For portions of all four quarters of 2020, Arcimoto’s production operations were suspended in response to the COVID-19 pandemic. The Company restarted limited production and resumed deliveries to customers in the third quarter of 2020.

 

The Company’s focus is now squarely on volume production planning in order to push to sustainable profitability and fulfill the thousands of pre-orders in our queue, as well as to meet the demand generated by our pilot fleet vehicles in the field. In December 2020, the Company entered into a purchase agreement for an approximately 220,000 square foot facility, which closed on April 19, 2021, to expand production capabilities. The Company is currently in the final stages of applying for the Advanced Technology Vehicle Manufacturing Loan Program to secure the funds necessary to execute our growth strategy.

 

Platform and Technologies

 

Arcimoto spent its first decade developing and refining eight generations of a new three-wheeled electric vehicle platform: a light-footprint, nimble reverse-trike architecture that features a low center of gravity for stability on the road; dual-motor front-wheel drive for enhanced traction; can be parked three to a space while carrying two large adults comfortably, and is more efficient, by an order of magnitude, than today’s gas-powered cars. The Company has secured 10 utility patents on various constituent technologies and vehicle platform architectures. As announced on June 10, 2020, Arcimoto has teamed with Munro & Associates to evaluate Arcimoto’s manufacturing processes and supply chain management in order to drive down costs and begin high-volume production of Arcimoto ultra-efficient electric vehicles.  This project which is estimated to take two years has progressed in the first quarter of 2021, with a statement of work signed for the next phase.

 

17

 

 

Products

 

Arcimoto’s vehicle products are based on the Arcimoto Platform. While intended to serve very different market segments, an estimated 90% of the constituent parts are the same between all products currently in production and development.

 

Fun Utility Vehicle® (FUV®

 

Arcimoto’s flagship product is the Fun Utility Vehicle. The FUV delivers a thrilling ride experience, exceptional maneuverability, comfort for two passengers with cargo, highly-efficient parking (three FUVs to a single parking space), and ultra-efficient operation, all at an affordable price. Over time, we anticipate offering the FUV with several option packages to meet the needs of a variety of customers.

 

We led with a consumer product because we are a consumer-first brand. We believe individuals should be able to choose more efficient, more affordable, and lighter-footprint mobility solutions, so that more of us can participate in the transition to a sustainable transportation future.

 

Rapid Responder™

 

The Rapid Responder was announced on February 15, 2019. The pure-electric Rapid Responder is developed on the Arcimoto platform, and designed to perform specialized emergency, security and law enforcement services at a fraction of the cost and environmental impact of traditional combustion vehicles. The Rapid Responder aims to deliver first responders to incidents more quickly and affordably than traditional emergency response vehicles.

 

Arcimoto is initially targeting the more than 50,000 fire stations across the United States that use traditional fire engines and large automobiles to respond to calls. Arcimoto also plans to market the Rapid Responder as a solution for campus security and law enforcement applications.

 

Deliverator®

 

Development of the Deliverator was officially announced on March 19, 2019 with the reveal of the first Deliverator prototype.

 

The Deliverator is a pure electric, last-mile delivery solution designed to more quickly, efficiently, and affordably get goods where they need to go. We plan for the Deliverator to be customizable to carry a wide array of products, from pizza, groceries, and cold goods to the 65 billion parcels delivered worldwide annually.

 

Cameo ()

 

Arcimoto completed a prototype of the Cameo, an FUV equipped with a rear-facing rear seat and a modified roof built for on-road filming in September 2020. We teased the Cameo prototype in several Arcimoto videos in September 2020 and have used the Cameo to shoot all of our own driving footage since its on-roading. Development of the Cameo is still in the planning stages.

 

The Cameo is aimed at the film industry, as well as the growing influencer and DIY film market.

 

Arcimoto Roadster

 

The Arcimoto Roadster prototype was first introduced in a video released October 30, 2020. Conceived as a pure platform fun machine, the Roadster offers a lower center of gravity, lower overall weight, and potentially improved aerodynamics. We announced the formal development of the Roadster product, in collaboration with industry partners on November 16, 2020.

 

18

 

 

Autonomous Arcimoto

 

Our long-term goal is to offer the market one of the lowest cost, most efficient “last mile” human and goods transport solutions for the robotically-driven world. We intend that our platform will provide a ready foundation for self-driving technology deployment.

 

Sales and Distribution Model

 

Arcimoto’s sales and distribution model is direct. Customers place vehicle orders on our website, and the vehicle product will be delivered directly to the end user via common carrier or our own delivery fleet. The website ordering and vehicle configuration system is functional, with further development planned to become more fully automated.

 

On October 26, 2020, we announced a partnership with DHL to provide nationwide home delivery of the FUV. They are currently handling the bulk of our customer deliveries. 

 

Rental Model

 

We plan to augment this direct web purchase process with small-footprint experience rental in select key markets. This rental model will give prospective customers a direct experience with the physical product before purchasing. We intend to open rental operations in San Diego, California and Eugene, Oregon in Q2 2021.

 

Service

 

We are pursuing three different models for service of the FUV:

 

Service-on-demand

 

Our initial model is on-demand and on-site vehicle service by Arcimoto technicians or Arcimoto-authorized technicians. Service-on-demand will likely be the primary model during our West Coast release as the majority of the vehicles will be geographically located relatively near the factory or a mobile technician. We intend for customers to request service either through the Arcimoto mobile app or by calling a 24-hour service number.

 

In-market partnership

 

We are currently reviewing potential service partners located in our key distribution regions. We have contracted with Agero Driver Assistance Services, Inc. to provide our customers with roadside assistance. We are currently reviewing Agero’s network of pre-approved third-party service providers, as well as other third-party service providers, to perform service on Arcimoto vehicles. We will be selecting and certifying providers near our customers based on our planned expansion.

 

Retail facility service

 

We plan to employ Arcimoto service technicians at some of our rental locations, depending on the dealer laws in the state. Customers near those rental locations would be able to deliver their vehicle to that location for service needs.

 

Management Opportunities, Challenges and Risks

 

Demand, Production and Capital

 

Demand for the Retail Series Arcimoto FUV has continued to increase. As of March 31, 2021, we had 4,833 net FUV pre-orders placed with small refundable deposits or fleet order commitments, representing an increase of 116, or approximately 2%, from the 4,717 pre-orders as of December 31, 2020.

 

19

 

 

We consider pre-orders to be strong sales leads, and use these leads as an indicator of market demand. Pre-orders are made up of small refundable cash deposits from individual retail customers and distribution agreements or nonbinding letters of intent from commercial customers that may or may not have deposited cash. The distribution of pre-orders as of March 31, 2021, is presented in the table below:

 

    Retail     Commercial     Total  
    Vehicles     Dollars     Vehicles     Dollars     Vehicles     Dollars  
Vehicles/Deposits     4,680     $ 474,224       800     $ 30,000       5,480     $ 504,224  
Refunds     (647 )     (64,700 )                 (647 )     (64,700 )
Total net pre-orders     4,033       409,524       800       30,000       4,833       439,524  
Less purchases     (192 )     (19,300 )     (6 )     (10,500 )     (198 )     (29,800 )
Remaining     3,841     $ 390,224       794       19,500       4,635       409,724  

 

In the third quarter of 2019, we completed vehicle testing. Arcimoto tested to verify robustness of its vehicle design, to demonstrate compliance with all Federal Motor Vehicle Safety Standards required for motorcycles, and to demonstrate proper function of voluntarily-added equipment such as the FUV’s 3+3 seat belts. Following completion of compliance testing, we initiated the sales process with our first customers. As sales are completed, pre-order and reservation fees are applied to the purchase price and balances due are collected on delivery.

 

For portions of all four quarters of 2020, Arcimoto’s production operations were suspended in response to the COVID-19 pandemic. The Company restarted limited production and resumed deliveries to customers in the third quarter of 2020.

 

With limited FUV production through 2020 and now extending into 2021, we are focusing on pilot programs for the Deliverator and Rapid Responder, performing value engineering and planning for volume manufacture to achieve sustainable profitability, applying to the Federal Department of Energy’s Advanced Technology Vehicle Manufacturing Loan Program (“ATVMLP”) to finance original equipment manufacturing (“OEM”) volume production, engaging sales efforts focused on fleet deployments, building and testing our rental operations, and expanding our service network.

 

The average sales price, including custom upgrade options, for the three months ended March 31, 2021 was $20,853, $2,953 or 16.5% above the starting price. We began taking $5,000 non-refundable reservations for the Fun Utility Vehicle in the first quarter of 2019 with a starting price point of $19,900. We secured non-refundable reservations for the first 100 FUVs in anticipation of initial retail production and delivery. In the last week of September 2019, we delivered the first two FUVs. In the third quarter of 2020, we began taking $2,500 non-refundable deposits for the second 100 FUV’s with a starting price point of $17,900. During the three months ended March 31, 2021, Arcimoto produced 84 model year 2021 vehicles, and delivered 60 vehicles to customers.

 

We have contracted with a lean design consulting company to evaluate Arcimoto’s manufacturing processes and supply chain management in order to drive down costs and begin high-volume production of Arcimoto ultra-efficient electric vehicles. To date, substantial progress has been made understanding the cost models for future vehicles based on the current supply chain condition, ergonomic studies, failure modes and effects analysis (“FMEA”), baseline ride-drive characteristics, mapping out EU certification, cost reduction for manufacturing, lean manufacturing analysis and the technology roadmap for future vehicles and marketing roadmap.

 

Arcimoto’s test of the Rapid Responder in a pilot program with the City of Eugene, the Eugene-Springfield Fire Department (“ESFD”) completed on March 31, 2021, and ESFD has provided us with valuable feedback for future product development and marketing. We are evaluating upfitters and defining the process for installation of non-compliant accessories such as lights and sirens and we released pricing and availability for the Rapid Responder in the first quarter of 2021.

 

We have several ongoing Deliverator pilot programs with individuals, municipalities, and corporate fleets. We have completed the first phase of tool-up for manufacture and production of the Deliverator, and we will continue to build Deliverators in low volume through the remainder of 2021, with the intent to deliver them to new pilot programs.

 

20

 

 

On September 26, 2020, Arcimoto introduced the beta Configurator, a web tool for selecting vehicle options and visualizing the final configured product. We subsequently opened $2,500 non-refundable reservations for production FUVs through the end of the year to pre-order customers in Washington, California, and Oregon, with a new starting price of $17,900, and many more configurable options than our previous offering. Average sales price as configured for the first 113 reservations is $21,893. While the beta Configurator has been an effective tool for converting early preorders to purchased vehicles, we are working on the next iteration, to improve user interface and experience.

 

On February 4, 2021, the Company closed and completed the Asset Purchase Agreement with Tilting Motor Works, Inc. (“TMW”). The Company believes the TMW product line will continue to flourish under Arcimoto, as we are able to bring considerable marketing and manufacturing efforts to bear, and the underlying technology will be beneficial to future Arcimoto products. Authorized dealer/installers of the TMW products are potential partners for providing product support services to FUV owners in certain areas. TMW delivered 10 of their existing product line bolt on front end kits that convert a two wheeled motorcycle to a three wheeled tilting reverse trike, generating $92,106 in revenue with a 27% gross margin, during the three months ended March 31, 2021.

 

Trends in Cash Flow, Capital Expenditures and Operating Expenses

 

In 2019, Arcimoto generated cash flow from retail production vehicle sales for the first time.

 

Our capital expenditures for low-volume production are substantially complete. We are bringing the thermo forming of body panels in-house and ordered approximately $1,741,000 in equipment for this process. Approximately $1,150,000 of this amount has been financed at interest rates ranging from 5.56% to 9.0% and terms of 60-72 months. We anticipate a savings of $780 per FUV produced with this automation. We purchased a multi-directional rotary brush machine at a total cost of $142,200 to automate the deburr and finishing of sheet metal. This was financed at an interest rate of 9.86% and term of 60 months. We purchased an additional CNC mill at a total cost of $173,860 to increase production capacity. This was financed at an interest rate of 4.11% for 60 months. We are purchasing an additional welding cell at a total cost of $286,674 for welding the two sides of the upper frame together, and a wire bonding machine at a cost of $211,524 for next generation battery module production. We anticipate securing low interest debt for these equipment purchases. We anticipate a savings of $390 per FUV produced with the welding automation. The Company is preparing an ATVMLP application to finance OEM volume production.

 

Operating expenses increased by approximately 154%, or $3,510,000, for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020. This increase was mostly due to increased R&D expense associated with developing the 2.0 FUV platform that is planned for OEM production volumes. Other factors are an increase in sales and marketing efforts and G&A expense associated with the integration of TWM. The number of employees increased by approximately 55%, from 110 as of March 31, 2020 to 170 employees as of March 31, 2021. The increased staff was needed to build out all parts of the Company for selling and servicing vehicles.

 

New Accounting Pronouncements

 

For a description of our critical accounting policies and estimates, please refer to the “Summary of Significant Accounting Policies” in Note 2 to our Financial Statements under Part I, Item 1 of this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2021.

 

Critical Accounting Policies and Estimates

 

Our financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe are reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. See Note 2 to our Financial Statements under Part I, Item I of this Quarterly Report on Form 10-Q.

 

21

 

 

Results of Operations

 

Three Months Ended March 31, 2021 versus three months ended March 31, 2020

 

Revenues

 

We had approximately $1,394,000 in revenue, comprising of approximately $1,245,000 in revenue from the sales of our vehicles, approximately $92,000 in TMW revenue and approximately $57,000 in revenue from parts, delivery fees, merchandise and outside metal fabrication during the three months ended March 31, 2021. We had approximately $617,000 in revenue, comprising of approximately $598,000 in revenue from the sales of our vehicles, and approximately $19,000 in revenue from merchandise and outside metal fabrication during the three months ended March 31, 2020.

 

Cost of Goods Sold

 

We had approximately $3,245,000 in cost of goods sold (“COGS”), comprising approximately $1,805,000 in labor and overhead and underutilized factory capacity, $1,253,000 in FUV parts from the sale of our vehicles, approximately $67,000 from Tilting Motor Works operations, approximately $1,000 in FUV delivery cost, approximately $150,000 in service cost and warranty reserves, approximately $6,000 in COGS from merchandise and outside metal fabrication, and $38,000 for lower of cost or market reserves during the three months ended March 31, 2021. We had approximately $1,690,000 in COGS comprising approximately $1,218,000 in overhead and underutilized factory capacity, $650,000 in FUV parts from the sale of our vehicles, approximately $29,000 in warranty reserves and approximately $17,000 in COGS from merchandise and outside metal fabrication during the three months ended March 31, 2020.

 

Operating Expenses

 

Research and Development Expenses

 

Research and development (“R&D”) expenses consist primarily of prototyping new variants of the 1.0 FUV platform, developing the 2.0 platform, and developing new three wheeled tilting micro mobility platforms. R&D expenses for the three months ended March 31, 2021 and 2020 were approximately $2,408,000 and $449,000, respectively. The primary reason for the increase in R&D expenses of $1,959,000, or 436%, resulted from development the 2.0 FUV platform that is planned for OEM production volumes.

 

Sales and Marketing Expenses

 

Sales and marketing (“S&M”) expenses for the three months ended March 31, 2021 and 2020 were approximately $964,000 and $337,000, respectively. The primary reasons for the increase in sales and marketing expenses during the three months ended March 31, 2021 of approximately $628,000, or 186%, as compared to the prior period was increased marketing activities to ramp sales in line with planned production increases.

 

General and Administrative Expenses

 

General and administrative (“G&A”) expenses consist primarily of personnel and facilities costs related to executives, finance, human resources, information technology, as well as legal fees for professional and contract services. G&A expenses for the three months ended March 31, 2021 were approximately $2,421,000 as compared to approximately $1,497,000 for the same period last year, representing an increase of approximately $924,000, or 62%. The primary reasons for the increase in the current period was due to cost associated with the integration of TMW.

 

22

 

 

Interest Expense

 

Interest expense for the three months ended March 31, 2021 was approximately $52,000, as compared to $247,000 during the three months ended March 31, 2020. The decrease in interest expense was due to paying off all non-equipment financing in June 2020.

 

Liquidity and Capital Resources 

 

The Company has not achieved positive earnings and operating cash flows to enable the Company to finance its operations internally. Funding for the business to date has come primarily through the issuance of debt and equity securities. The Company may require additional funding to continue to operate in the normal course of business. The substantial doubt about the Company’s ability to continue as a going concern has been alleviated based on management’s belief that current cash reserves will sustain operations for more than 12 months.

 

Although the Company’s objective is to increase its revenues from the sales of its products sufficient to generate positive operating and cash flow levels, there can be no assurance that the Company will be successful in this regard. The Company may need to raise additional capital in order to fund its operations, which if needed, it intends to obtain through debt and/or equity offerings. Funds on hand and any follow-on capital, will be used to invest in our business to expand sales and marketing efforts, including Company-owned and franchise-rental operations and the systems to support them, enhance our current product lines by continuing research and development to enhance and reduce the cost of the FUV and to bring future variants to retail production, continue to build out and optimize our production facility, debt repayment, and fund operations until positive cash flow is achieved. The need for additional capital may be adversely impacted by uncertain market conditions or approval by regulatory bodies.

 

As of March 31, 2021, we had approximately $46,650,000 in cash and cash equivalents, representing an increase in cash and cash equivalents of approximately $7,199,000 from December 31, 2020. In connection with our ATM, we issued and sold 581,782 shares of common stock during the first quarter of 2021, resulting in net proceeds to the Company of approximately $13,500,000, net of offering costs. On April 19, 2021, we disbursed $12,750,000 cash for the purchase of the buildings on Chambers Ave. We anticipate that our current sources of liquidity, including cash and cash equivalents, together with our current projections of cash flow from operating activities, will provide us with more than 12 months of liquidity. The amount and timing of funds that we may raise is undetermined and could vary based on a number of factors, including our ongoing liquidity needs, our current capitalization, as well as access to current and future sources of liquidity.

 

Since inception, we have invested approximately $6,520,000 into tooling and manufacturing capital expenditures for our current FUV production facility. As we ramp up production, we may identify opportunities for reducing cost of goods sold that will require additional capital expenditures.

 

Cash Flows from Operating Activities

 

Our cash flows from operating activities are significantly affected by our cash outflows to support the growth of our business in areas such as R&D, sales and marketing and G&A expenses. Our operating cash flows are also affected by our working capital needs to support personnel related expenditures, accounts payable, inventory purchases and other current assets and liabilities.

 

During the three months ended March 31, 2021, cash used in operating activities was approximately $5,544,000, which included a net loss of approximately $4,743,000, non-cash charge related to depreciation and amortization of approximately $430,000, non-cash charge related to stock-based compensation of approximately $660,000, non-cash income related to income tax benefit of approximately $2,939,000,and changes in accounts receivable, inventory, prepaid inventory, other current assets, accounts payable, accrued liabilities, customer deposits, warranty reserve and deferred revenue of approximately $1,047,000, of which approximately $1,001,000 relates to accounts payable.

 

23

 

 

During the three months ended March 31, 2020, cash used in operating activities was approximately $3,487,000, which included a net loss of approximately $3,595,000, non-cash charge related to depreciation and amortization of approximately $208,000, non-cash charge related to the amortization of debt discounts of approximately $154,000, non-cash charge related to stock-based compensation of approximately $305,000, and accounts receivable, inventory, prepaid inventory, other current assets, accounts payable, accrued liabilities, customer deposits, warranty reserve and deferred revenue of approximately $558,000.

 

Cash Flows from Investing Activities

 

Cash flows from investing activities primarily relates to the capital expenditures to support our growth in operations, including investments in manufacturing equipment and tooling. During the three months ended March 31, 2021, the Company paid approximately $598,000 for manufacturing equipment and fixed asset purchases, approximately $24,000 for security deposits, and $1,754,000 for cash paid for the TMW acquisition.

 

During the three months ended March 31, 2020, the Company paid approximately $199,000, for manufacturing equipment and fixed asset purchases and approximately $47,000 for security deposits.

 

Cash Flows from Financing Activities

 

During the three months ended March 31, 2021, net cash provided by financing activities was approximately $15,120,000, compared to net cash used in financing activities of approximately $210,000 during the three months ended March 31, 2020. Cash flows provided by financing activities during the three months ended March 31, 2021 comprised of proceeds from the issuance of common stock through our registered offerings of approximately $14,070,000, offering costs of approximately $544,000, proceeds from the exercise of warrants of approximately $1,658,000, proceeds from the exercise of options of approximately $128,000, proceeds from equipment notes of approximately $205,000, repayments of notes payable of approximately $247,000, repayment of equipment notes of approximately $89,000, payments on capital lease obligations amounting to approximately $61,000.

 

During the three months ended March 31, 2020, net cash used in financing activities was approximately $210,000. Cash flows used in financing activities during the three months ended March 31, 2020 mainly comprised of payments on capital lease obligations amounting to approximately $50,000, offering costs of approximately $4,000, proceeds from equipment notes of approximately $70,000, repayments of notes payable of approximately $168,000 and repayment of equipment notes of approximately $58,000.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Because we are allowed to comply with the disclosure obligations applicable to a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, with respect to this Quarterly Report on Form 10-Q, we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Management uses the criteria in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013) to evaluate internal disclosure controls and procedures.

 

Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

 

(b) Changes in Internal Control Over Financial Reporting

 

There has not been any material change in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) or Rule 15d-15(f)) during the period ended March 31, 2021, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

24

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

On April 19, 2021, litigation styled David Barnette v. Arcimoto, Inc., Mark Frohnmayer and Douglas Campoli, was filed in the United States District Court for the Eastern District of New York.  The action, in which none of the defendants has yet been served, purports to be a class action on behalf of all those who purchased our common stock between February 14, 2018 and March 22, 2021 and is based on the research report dated March 23, 2021 produced by Bonitas Research, LLC, a short seller of our common stock with the stated intention of driving down the market price of our common stock.  Although the lawsuit is purportedly a class action, no motion to certify a class has been filed at this time. We believe we have substantial defenses to the claims asserted in this lawsuit and intend to vigorously defend this action.

 

Additionally, from time to time, we might become involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating to intellectual property, commercial arrangements and other matters arising in the ordinary course of our business. For information on our litigation matters, see “Litigation” under Note 12 of the Notes to Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated by reference herein.

 

Item 1A. Risk Factors.

 

There have been no material changes to the disclosures relating to this item from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 

 

None. 

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable. 

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits.

 

EXHIBIT INDEX

 

Exhibit       Incorporated by Reference
(Unless Otherwise Indicated)
Number   Exhibit Description   Form   File No.   Exhibit   Filing Date
3.1(a)   Second Amended and Restated Articles of Incorporation of Arcimoto, Inc.   10-K   001-38213   3.1(a)   March 29, 2019
3.1(b)   Articles of Amendment to Second Amended and Restated Articles of Incorporation of Arcimoto, Inc   10-K   001-38213   3.1(b)   March 29, 2019
3.2   Second Amended and Restated Bylaws of Arcimoto, Inc   1-A   024-10710   2.2   August 8, 2017
10.27   Purchase Agreement between Arcimoto, Inc. and RLA Holdings, LLC   8-K   001-38213   10.1   January 6, 2021
10.30   Asset Purchase Agreement dated January 22, 2021 between Arcimoto, Inc. and Tilting Motor Works, Inc.   8-K   001-38123   2.04   January 25, 2021
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.         Filed herewith
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.         Filed herewith
32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.         Filed herewith
101.INS   XBRL Instance Document.         Filed herewith
101.SCH   XBRL Taxonomy Extension Schema Document.         Filed herewith
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document.         Filed herewith
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document.         Filed herewith
101.LAB   XBRL Taxonomy Extension Label Linkbase Document.         Filed herewith
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document.         Filed herewith

 

25

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  ARCIMOTO, INC.
     
Date: May 17, 2021 By: /s/ Douglas M. Campoli
    Douglas M. Campoli
    Principal Financial
    and Chief Accounting Officer

 

 

26

 

EX-31.1 2 f10q0321ex31-1_arcimotoinc.htm CERTIFICATION

EXHIBIT 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Mark Frohnmayer, certify that:

 

  1. I have reviewed this Quarterly Report on Form 10-Q of Arcimoto, Inc. (the registrant);

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date May 17, 2021 By: /s/ Mark Frohnmayer
    Mark Frohnmayer
    President and Chief Executive Officer

 

EX-31.2 3 f10q0321ex31-2_arcimotoinc.htm CERTIFICATION

 

EXHIBIT 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Douglas M. Campoli, certify that:

 

  1. I have reviewed this Quarterly Report on Form 10-Q of Arcimoto, Inc. (the registrant);

 

  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

  4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 17, 2021 By: /s/ Douglas M. Campoli
    Douglas M. Campoli
    Chief Financial Officer

 

EX-32.1 4 f10q0321ex32-1_arcimotoinc.htm CERTIFICATION

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Mark Frohnmayer, President and Chief Executive Officer of Arcimoto, Inc. (the “registrant”), and Douglas M. Campoli, Chief Financial Officer of the registrant, each hereby certifies that, to the best of their knowledge:

 

  1. The registrant’s Quarterly Report on Form 10-Q for the period ended March 31, 2021, to which this Certification is attached as Exhibit 32.1 (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

 

  2. The information contained in the Report fairly presents, in all material respects, the financial condition of the registrant at the end of the period covered by the Report and results of operations of the registrant for the periods covered by the Report.

 

Date: May 17, 2021 By: /s/ Mark Frohnmayer
    Mark Frohnmayer
    President and Chief Executive Officer
     
    /s/ Douglas M. Campoli
    Douglas M. Campoli
    Chief Financial Officer

 

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Tilting Motor Works, Inc. 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(the &#x201c;Company&#x201d;) was incorporated in the State of Oregon on November 21, 2007. The Company&#x2019;s mission is to catalyze the global shift to a sustainable transportation system. Over the past 13 years, the Company has developed a new vehicle platform designed around the needs of everyday drivers. Having approximately one-third the weight and one-third of the footprint of the average car, the Arcimoto platform&#x2019;s purpose is to bring the joy of ultra-efficient, pure electric driving to the masses. To date, the Company has introduced five vehicle products built on this platform that target specific niches in the vehicle market: our flagship product, the Fun Utility Vehicle&#xae; (&#x201c;FUV&#xae;&#x201d;), for everyday consumer trips; the Deliverator&#xae; for last-mile delivery and general fleet utility; the Rapid Responder&#x2122; for emergency services and security; the Cameo&#x2122; for film, sports and influencers; and the Arcimoto Roadster, an unparalleled pure-electric on-road thrill machine.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Risks and Uncertainties</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We started retail production in the third quarter of 2019 at one FUV per build day and ramped to two per build day in the first quarter of 2020 before suspending production in response to the COVID-19 pandemic. We restarted production and resumed deliveries to customers in the third quarter of 2020. As a result of the suspension, revenues from 2020 were negatively impacted. Revenues from subsequent quarters may be negatively impacted based on the length and severity of the pandemic. Production in the first quarter of 2021 achieved three FUV per build day and successfully tested to validate four per day.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Further, Arcimoto does not have a history of higher-scale production and may encounter delays or inefficiencies in its sales and manufacturing processes, which may prevent or delay achieving higher-scale production within anticipated timeliness. In order to achieve higher-scale production, the Company may need to raise additional capital, and there can be no assurance such capital will be available upon reasonable terms, if at all.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally, the Company&#x2019;s business and operations are sensitive to governmental policies on importation and exportation, as well as the availability of vehicle components from suppliers, which themselves may be impacted by pandemics and such, as well as the ever-shifting general landscape of governmental policy related to cars and motorcycles.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company&#x2019;s industry is characterized by rapid changes in technology and customer demands. The Company&#x2019;s future success will depend on its ability to adapt to technological advances, its nimble reaction to customer demands, its development of well-considered new products and services, and the enhancement of its current products and services on a timely and cost-effective basis.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Finally, the Company may not have the capital resources necessary to further the development of existing and/or new products.</font></p><br/> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Going Concern</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The accompanying financial statements have been prepared on a basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred significant losses since inception and management expects losses to continue for the foreseeable future. The Company had approximately $46,650,000 of cash as of March 31, 2021, which is in excess of cash needed for the next twelve months.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Unaudited Interim Financial Information</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (&#x201c;GAAP&#x201d;) for interim financial information, and pursuant to the instructions to Form 10-Q promulgated by the United States Securities and Exchange Commission (the &#x201c;SEC&#x201d;). Accordingly, they do not include all information and disclosures required by GAAP for complete financial statement presentation. In the opinion of management, the accompanying condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company&#x2019;s financial position as of March&#xa0;31, 2021, and the results of its operations for the three months ended March 31, 2021 and 2020 and its cash flows for the three months ended March 31, 2021 and 2020. Results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto for the year ended December&#xa0;31, 2020 included in the Company&#x2019;s Annual Report on Form 10-K filed with the SEC on March 31, 2021.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Business Combinations</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for business combinations under Financial Accounting Standards Board (&#x201c;FASB&#x201d;) Accounting Standards Codification (&#x201c;ASC&#x201d;) 805 &#x201c;Business Combinations&#x201d; using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the acquired assets and liabilities and results of operations are consolidated beginning at the acquisition date.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Inventory</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventory is stated at the lower of cost (using the first-in, first-out method (&#x201c;FIFO&#x201d;) or market value. Inventories consist of purchased electric motors, electrical storage and transmission equipment, and component parts.</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31, <br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Raw materials</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,892,827</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,667,780</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Work in progress</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">59,078</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">65,210</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Finished goods</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">690,919</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">371,078</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,642,824</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,104,068</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is required to remit partial prepayments for some purchases of its inventories acquired from overseas vendors which are included in prepaid inventories. The Company is currently selling vehicles below the base cost of a finished unit. Accordingly, the Company expensed all labor and overhead as period costs, and recorded an allowance to reduce inventories to net realizable value of approximately $593,000 and $550,000 as of March&#xa0;31, 2021 and December&#xa0;31, 2020, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Customer Deposits</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Non-refundable customer deposits are comingled with operating funds. Refundable customer deposits are held in a separate deposit account. Revenue is not recognized on customer deposits until the deposit is applied to a non-refundable vehicle order, the vehicle manufacturing process is completed, the vehicle is picked up by or delivered to the customer and the appropriate revenue recognition criteria have been met.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Intangible Assets</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Intangible assets primarily consist of trade names/trademarks, proprietary technology, and customer relationships. They are amortized using the straight-lined method over a period of 10 to 14 years. The Company assesses the recoverability of its finite-lived intangible assets when there are indications of potential impairment. Indefinite-lived intangible assets are evaluated for impairment annually.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Goodwill</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company calculates the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables. The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Net Earnings or Loss per Share </font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company&#x2019;s computation of earnings (loss) per share (&#x201c;EPS&#x201d;) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common shareholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., common stock warrants and common stock options) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares 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 EPS.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented because all common stock warrants and common stock options outstanding were anti-dilutive.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At March 31, 2021 and 2020, the Company excluded the outstanding Employee Equity Plans (&#x201c;EEP&#x201d;) and other securities summarized below calculated using the Treasury Stock Method, which entitled the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three Months Ended<br/> March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left; padding-left: 2.65pt">Options and other instruments under the 2012, 2015, and 2018 Plans to purchase common stock</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">3,094,548</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">431,746</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 2.65pt">Underwriters and investors warrants issued outside of an EEP</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">76,402</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt; padding-left: 2.65pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">3,170,950</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">431,746</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Recent Accounting Pronouncements</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company&#x2019;s financial reporting, the Company undertakes a study to determine the consequences of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company&#x2019;s financial statements properly reflect the change.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In February 2016, the FASB issued ASU No. 2016-02, &#x201c;Leases (Topic 842)&#x201d; (&#x201c;ASU 2016-02&#x201d;) which supersedes ASC Topic 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all the leases with terms greater than 12 months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. In November 2019, the FASB delayed the effective date for Topic 842 to fiscal years beginning after December 15, 2020 for private companies and emerging growth companies, and interim periods within those years, with early adoption permitted. In June 2020, the FASB issued ASU No 2020-05 that further delayed the effective date of Topic 842 to fiscal years beginning after December 15, 2021. We will adopt this new standard on January 1, 2022. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, &#x201c;Leases (Topic 842): Targeted Improvements&#x201d; that allows entities to apply the provisions of the new standard at the effective date, as opposed to the earliest period presented under the modified retrospective transition approach and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon its adoption of Topic 842, which will increase the total assets and total liabilities that the Company reports relative to such amounts prior to adoption.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Adoption of Recent Accounting Pronouncements</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In October 2020, the FASB issued ASU 2020-10, &#x201c;Codification Improvements&#x201d; (&#x201c;ASU 2020-10&#x201d;), which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC&#x2019;s regulations. The effective date of the standard will be for interim and annual reporting periods beginning after December 15, 2020 for public entities. The new guidance was effective upon issuance of this final accounting standards update. The Company has adopted this standard and the adoption did not have a material impact on its condensed consolidated financial statements or disclosures.</font></p><br/> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Going Concern</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The accompanying financial statements have been prepared on a basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred significant losses since inception and management expects losses to continue for the foreseeable future. The Company had approximately $46,650,000 of cash as of March 31, 2021, which is in excess of cash needed for the next twelve months.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Unaudited Interim Financial Information</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (&#x201c;GAAP&#x201d;) for interim financial information, and pursuant to the instructions to Form 10-Q promulgated by the United States Securities and Exchange Commission (the &#x201c;SEC&#x201d;). Accordingly, they do not include all information and disclosures required by GAAP for complete financial statement presentation. In the opinion of management, the accompanying condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company&#x2019;s financial position as of March&#xa0;31, 2021, and the results of its operations for the three months ended March 31, 2021 and 2020 and its cash flows for the three months ended March 31, 2021 and 2020. Results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto for the year ended December&#xa0;31, 2020 included in the Company&#x2019;s Annual Report on Form 10-K filed with the SEC on March 31, 2021.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Business Combinations</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for business combinations under Financial Accounting Standards Board (&#x201c;FASB&#x201d;) Accounting Standards Codification (&#x201c;ASC&#x201d;) 805 &#x201c;Business Combinations&#x201d; using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the acquired assets and liabilities and results of operations are consolidated beginning at the acquisition date.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Inventory</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventory is stated at the lower of cost (using the first-in, first-out method (&#x201c;FIFO&#x201d;) or market value. Inventories consist of purchased electric motors, electrical storage and transmission equipment, and component parts.</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31, <br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Raw materials</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,892,827</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,667,780</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Work in progress</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">59,078</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">65,210</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Finished goods</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">690,919</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">371,078</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,642,824</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,104,068</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company is required to remit partial prepayments for some purchases of its inventories acquired from overseas vendors which are included in prepaid inventories. The Company is currently selling vehicles below the base cost of a finished unit. Accordingly, the Company expensed all labor and overhead as period costs, and recorded an allowance to reduce inventories to net realizable value of approximately $593,000 and $550,000 as of March&#xa0;31, 2021 and December&#xa0;31, 2020, respectively.</p> 593000 550000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Customer Deposits</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Non-refundable customer deposits are comingled with operating funds. Refundable customer deposits are held in a separate deposit account. Revenue is not recognized on customer deposits until the deposit is applied to a non-refundable vehicle order, the vehicle manufacturing process is completed, the vehicle is picked up by or delivered to the customer and the appropriate revenue recognition criteria have been met.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Intangible Assets</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Intangible assets primarily consist of trade names/trademarks, proprietary technology, and customer relationships. They are amortized using the straight-lined method over a period of 10 to 14 years. The Company assesses the recoverability of its finite-lived intangible assets when there are indications of potential impairment. Indefinite-lived intangible assets are evaluated for impairment annually.</font></p> P10Y P14Y <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Goodwill</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company calculates the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables. The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations.</font></p> 0.50 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Net Earnings or Loss per Share </font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company&#x2019;s computation of earnings (loss) per share (&#x201c;EPS&#x201d;) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common shareholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., common stock warrants and common stock options) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares 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 EPS.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented because all common stock warrants and common stock options outstanding were anti-dilutive.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At March 31, 2021 and 2020, the Company excluded the outstanding Employee Equity Plans (&#x201c;EEP&#x201d;) and other securities summarized below calculated using the Treasury Stock Method, which entitled the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three Months Ended<br/> March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left; padding-left: 2.65pt">Options and other instruments under the 2012, 2015, and 2018 Plans to purchase common stock</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">3,094,548</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">431,746</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 2.65pt">Underwriters and investors warrants issued outside of an EEP</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">76,402</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt; padding-left: 2.65pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">3,170,950</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">431,746</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Recent Accounting Pronouncements</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company&#x2019;s financial reporting, the Company undertakes a study to determine the consequences of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company&#x2019;s financial statements properly reflect the change.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In February 2016, the FASB issued ASU No. 2016-02, &#x201c;Leases (Topic 842)&#x201d; (&#x201c;ASU 2016-02&#x201d;) which supersedes ASC Topic 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all the leases with terms greater than 12 months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. In November 2019, the FASB delayed the effective date for Topic 842 to fiscal years beginning after December 15, 2020 for private companies and emerging growth companies, and interim periods within those years, with early adoption permitted. In June 2020, the FASB issued ASU No 2020-05 that further delayed the effective date of Topic 842 to fiscal years beginning after December 15, 2021. We will adopt this new standard on January 1, 2022. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, &#x201c;Leases (Topic 842): Targeted Improvements&#x201d; that allows entities to apply the provisions of the new standard at the effective date, as opposed to the earliest period presented under the modified retrospective transition approach and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon its adoption of Topic 842, which will increase the total assets and total liabilities that the Company reports relative to such amounts prior to adoption.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Adoption of Recent Accounting Pronouncements</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In October 2020, the FASB issued ASU 2020-10, &#x201c;Codification Improvements&#x201d; (&#x201c;ASU 2020-10&#x201d;), which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC&#x2019;s regulations. The effective date of the standard will be for interim and annual reporting periods beginning after December 15, 2020 for public entities. The new guidance was effective upon issuance of this final accounting standards update. The Company has adopted this standard and the adoption did not have a material impact on its condensed consolidated financial statements or disclosures.</font></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31, <br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Raw materials</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,892,827</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">4,667,780</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Work in progress</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">59,078</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">65,210</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Finished goods</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">690,919</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">371,078</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,642,824</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,104,068</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 4892827 4667780 59078 65210 690919 371078 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three Months Ended<br/> March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left; padding-left: 2.65pt">Options and other instruments under the 2012, 2015, and 2018 Plans to purchase common stock</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">3,094,548</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">431,746</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 2.65pt">Underwriters and investors warrants issued outside of an EEP</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">76,402</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt; padding-left: 2.65pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">3,170,950</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">431,746</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 3094548 431746 76402 3170950 431746 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 3: TMW ACQUISITION</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 23, 2021, the Company entered into an Asset Purchase Agreement (the &#x201c;Agreement&#x201d;) with Tilting Motor Works, Inc. (&#x201c;TMW&#x201d;), a Washington corporation (the &#x201c;Seller&#x201d;) and its owner. Pursuant to the terms and conditions of the Agreement, the Company paid cash of $1,754,083 and issued 436,339 shares of Company common stock as consideration for substantially all of the TMW&#x2019;s assets and certain assumed liabilities. The common shares issued were unregistered and are subject to sales restrictions under the Securities Act of 1933. The Company valued the shares issued in the transaction at the average of opening and closing price on the date of acquisition with a 12.5% discount for lack of marketability. The acquisition closed on February 4, 2021 and was recorded as a business combination as the set of assets and activities acquired met the definition of a business.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The purchase price is allocation is as follows:</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%">Cash</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,754,083</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Add: Fair value of shares issued</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">13,038,355</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Total consideration</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">14,792,438</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Description</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">Fair value</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>Assets acquired:</td><td>&#xa0;</td> <td colspan="2" style="text-align: right">&#xa0;</td><td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; width: 88%">Inventory</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">342,394</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 0.125in">Prepaid expenses and other current assets</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,083</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.125in">Property, plant, and equipment</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,349</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 0.125in">Trade name</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,052,000</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.125in">Proprietary technology</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">7,010,000</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 0.125in">Customer relationships</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,586,000</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt; padding-left: 0.125in">Goodwill</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,824,209</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt; padding-left: 0.25in">Total assets acquired</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">17,823,035</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Liabilities assumed:</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.125in">Customer deposits</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">91,749</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0.125in">Deferred tax liability</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,938,848</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Total liabilities assumed</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,030,597</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt; padding-left: 0.25in">Estimated fair value of net assets acquired</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">14,792,438</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The following unaudited pro-forma financial information presents the consolidated results of operations of the Company and TMW for the three months ended March 31, 2021 and 2020, as if the acquisition had occurred as of the beginning of the first period presented instead of on February 4, 2021. The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The pro-forma financial information for the Company and TMW is as follows:</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">For the Three Months Ended <br/> March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; padding-bottom: 4pt">Revenues</td><td style="width: 1%; padding-bottom: 4pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right">1,403,954</td><td style="width: 1%; padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="width: 1%; padding-bottom: 4pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right">828,660</td><td style="width: 1%; padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Net loss attributable to common stockholders</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">(7,911,783</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">(3,860,541</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Net loss per basic and diluted common share</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(0.22</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(0.15</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td>Weighted average common shares outstanding:</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Basic and diluted</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">35,327,316</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">24,916,784</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/> 1754083 436339 0.125 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%">Cash</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,754,083</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Add: Fair value of shares issued</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">13,038,355</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Total consideration</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">14,792,438</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Description</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">Fair value</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>Assets acquired:</td><td>&#xa0;</td> <td colspan="2" style="text-align: right">&#xa0;</td><td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; width: 88%">Inventory</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">342,394</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 0.125in">Prepaid expenses and other current assets</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,083</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.125in">Property, plant, and equipment</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,349</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 0.125in">Trade name</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,052,000</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.125in">Proprietary technology</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">7,010,000</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 0.125in">Customer relationships</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,586,000</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt; padding-left: 0.125in">Goodwill</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">6,824,209</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt; padding-left: 0.25in">Total assets acquired</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">17,823,035</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Liabilities assumed:</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 0.125in">Customer deposits</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">91,749</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0.125in">Deferred tax liability</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,938,848</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Total liabilities assumed</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,030,597</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt; padding-left: 0.25in">Estimated fair value of net assets acquired</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">14,792,438</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 1754083 13038355 14792438 342394 4083 4349 2052000 7010000 1586000 6824209 17823035 91749 2938848 3030597 14792438 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">For the Three Months Ended <br/> March 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; padding-bottom: 4pt">Revenues</td><td style="width: 1%; padding-bottom: 4pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right">1,403,954</td><td style="width: 1%; padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="width: 1%; padding-bottom: 4pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right">828,660</td><td style="width: 1%; padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Net loss attributable to common stockholders</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">(7,911,783</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">(3,860,541</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Net loss per basic and diluted common share</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(0.22</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(0.15</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td>Weighted average common shares outstanding:</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Basic and diluted</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">35,327,316</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">24,916,784</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 1403954 828660 -7911783 -3860541 -0.22 -0.15 35327316 24916784 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE 4: PROPERTY AND EQUIPMENT</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">As of March&#xa0;31, 2021 and December&#xa0;31, 2020, our property and equipment consisted of the following:</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31, <br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31, <br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left; padding-left: 2.65pt">Machinery and equipment</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,245,534</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,245,534</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 2.65pt">Fixed assets in process</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,105,561</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,993,760</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 2.65pt">Leasehold improvements</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">983,522</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">983,522</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 2.65pt">FUV fleet</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">520,354</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">336,730</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 2.65pt">FUV rental fleet</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">115,124</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 2.65pt">Computer equipment and software</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">188,984</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">94,384</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 2.65pt">Vehicles</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">97,661</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 2.65pt">Furniture and fixtures</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">52,007</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">52,007</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 2.65pt">Total property and equipment</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">9,308,747</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">8,705,937</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 2.65pt">Less: Accumulated depreciation</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,359,587</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,060,707</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt; padding-left: 2.65pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,949,160</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,645,230</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fixed assets in process is comprised primarily of tooling and equipment related to the manufacturing of our vehicles. Completed assets are transferred to their respective asset class and depreciation begins when the asset is ready for its intended use. FUV fleet consists of marketing and other non-revenue generating vehicles. FUV rental fleet is comprised of rental revenue generating vehicles.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Depreciation expense was approximately $299,000 and $208,000 during the three months ended March 31, 2021 and 2020, respectively.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On December 23, 2020, the Company entered into an agreement to purchase certain buildings totaling approximately 187,000 square feet, and approximately 6.6 acres of real estate located within the City of Eugene, Oregon. The Company has agreed to purchase the properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue, from RLA Holdings, LLC for the total purchase price of $10,250,000. The Company pledged $80,000 as earnest money for the transaction. During the first quarter of 2021, an additional 4.1 acres and 33,000 square feet of buildings to the south were added to the purchase agreement totaling $2,500,000. The total sales price was increased to $12,750,000. The purchase was contingent upon the Company&#x2019;s complete and unconditional approval of: (i) the property and its physical condition, zoning and land use restrictions, and all systems, utilities, and access rights pertaining to the property; (ii) the seller&#x2019;s documents; (iii) securing financing; (iv) a Phase I environmental assessment and all appropriate inquiries investigation so as to protect the Company under CERCLA; and (v) anything else the Company deems necessary. On March 15, 2021, the due diligence was complete and the Company paid the $80,000 earnest money. On April 19, 2021, the Company closed and completed the purchase of the properties described above. RLA Holdings, LLC will be permitted to rent back the 311 Chambers St property after closing for up to six (6) months at a rate of $50,000 per month plus all utilities, taxes, insurance, and maintenance expenses. The Company intends to utilize these properties to improve its production capabilities. The new facility is expected to be operational by the end of 2022.</p><br/> 299000 208000 the Company entered into an agreement to purchase certain buildings totaling approximately 187,000 square feet, and approximately 6.6 acres of real estate located within the City of Eugene, Oregon. The Company has agreed to purchase the properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue, from RLA Holdings, LLC for the total purchase price of $10,250,000. The Company pledged $80,000 as earnest money for the transaction. During the first quarter of 2021, an additional 4.1 acres and 33,000 square feet of buildings to the south were added to the purchase agreement totaling $2,500,000. The total sales price was increased to $12,750,000. The purchase was contingent upon the Company&#x2019;s complete and unconditional approval of: (i) the property and its physical condition, zoning and land use restrictions, and all systems, utilities, and access rights pertaining to the property; (ii) the seller&#x2019;s documents; (iii) securing financing; (iv) a Phase I environmental assessment and all appropriate inquiries investigation so as to protect the Company under CERCLA; and (v) anything else the Company deems necessary. On March 15, 2021, the due diligence was complete and the Company paid the $80,000 earnest money. On April 19, 2021, the Company closed and completed the purchase of the properties described above. RLA Holdings, LLC will be permitted to rent back the 311 Chambers St property after closing for up to six (6) months at a rate of $50,000 per month plus all utilities, taxes, insurance, and maintenance expenses. The Company intends to utilize these properties to improve its production capabilities. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">March 31, <br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31, <br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left; padding-left: 2.65pt">Machinery and equipment</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,245,534</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,245,534</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 2.65pt">Fixed assets in process</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,105,561</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,993,760</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 2.65pt">Leasehold improvements</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">983,522</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">983,522</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 2.65pt">FUV fleet</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">520,354</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">336,730</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 2.65pt">FUV rental fleet</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">115,124</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-left: 2.65pt">Computer equipment and software</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">188,984</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">94,384</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 2.65pt">Vehicles</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">97,661</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 2.65pt">Furniture and fixtures</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">52,007</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">52,007</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 2.65pt">Total property and equipment</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">9,308,747</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">8,705,937</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 2.65pt">Less: Accumulated depreciation</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,359,587</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,060,707</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt; padding-left: 2.65pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,949,160</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,645,230</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 5245534 5245534 2105561 1993760 983522 983522 520354 336730 115124 188984 94384 97661 52007 52007 9308747 8705937 2359587 2060707 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE 5: INTANGIBLE ASSETS</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif">The following table summarizes the Company&#x2019;s intangible assets:</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="text-align: center; padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: center">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="14" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Estimated <br/> Useful Life<br/> (Years)</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Gross <br/> Carrying <br/> Amount at December 31, <br/> 2020</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Assets <br/> Acquired <br/> Pursuant to <br/> Business <br/> Combination <br/> (1)</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Accumulated <br/> Amortization</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Net Book <br/> Value</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; text-align: left">Tradename and trademarks</td><td style="width: 1%">&#xa0;</td> <td style="width: 11%; text-align: center; padding-left: 2.65pt">14 years</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">&#x2014;</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,052,000</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(22,684</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,029,316</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Proprietary technology</td><td>&#xa0;</td> <td style="text-align: center; padding-left: 2.65pt">13 years</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">7,010,000</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(83,452</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">6,926,548</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Customer relationships</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 2.65pt">10 years</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,586,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(24,545</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,561,455</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="text-align: center; padding-bottom: 4pt; padding-left: 2.65pt">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,648,000</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(130,681</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,517,319</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify"> <td style="width: 0"></td><td style="width: 0.25in; text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</font></td><td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On January 23, 2021 the Company acquired various assets of Tilting Motor Works, Inc. (See Note 3)</font></td> </tr></table><br/> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="text-align: center; padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: center">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="14" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">March 31, 2021</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Estimated <br/> Useful Life<br/> (Years)</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Gross <br/> Carrying <br/> Amount at December 31, <br/> 2020</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Assets <br/> Acquired <br/> Pursuant to <br/> Business <br/> Combination <br/> (1)</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Accumulated <br/> Amortization</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Net Book <br/> Value</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; text-align: left">Tradename and trademarks</td><td style="width: 1%">&#xa0;</td> <td style="width: 11%; text-align: center; padding-left: 2.65pt">14 years</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">&#x2014;</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,052,000</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(22,684</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,029,316</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Proprietary technology</td><td>&#xa0;</td> <td style="text-align: center; padding-left: 2.65pt">13 years</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">7,010,000</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(83,452</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">6,926,548</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Customer relationships</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 2.65pt">10 years</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,586,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(24,545</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,561,455</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="text-align: center; padding-bottom: 4pt; padding-left: 2.65pt">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,648,000</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(130,681</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,517,319</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> P14Y 2052000 -22684 2029316 P13Y 7010000 -83452 6926548 P10Y 1586000 -24545 1561455 10648000 -130681 10517319 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 6: GOODWILL</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The following table summarizes the Company&#x2019;s goodwill as of March&#xa0;31, 2021:</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt">&#xa0;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total <br/> Goodwill</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Balance as of January 1, 2021</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="width: 88%; text-align: left">Goodwill additions through Tilting Motor Works acquisition</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">6,824,209</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt; text-align: left">Less: impairment charge recorded</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">Balance as of March 31, 2021</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,824,209</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt">&#xa0;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Total <br/> Goodwill</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Balance as of January 1, 2021</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="width: 88%; text-align: left">Goodwill additions through Tilting Motor Works acquisition</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">6,824,209</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt; text-align: left">Less: impairment charge recorded</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">Balance as of March 31, 2021</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,824,209</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 6824209 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 7: CAPITAL LEASE OBLIGATIONS</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March&#xa0;31, 2021, the Company has financed through lease agreements a total of approximately $1,250,000 of its capital equipment purchases with monthly payments ranging from $437 to $8,582, repayment terms ranging from 48 to 60 months, and effective interest rates ranging from 4.52% to 9.52%. Total monthly capital lease payments as of March&#xa0;31, 2021 are $25,223. These lease obligations mature ranging from December 2021 through November 2023 and are secured by approximately $1,427,000 in underlying assets which have approximately $475,000 in accumulated depreciation as of March&#xa0;31, 2021. The balance of capital lease obligations was approximately $594,000 and approximately $781,000 as of March&#xa0;31, 2021 and December&#xa0;31, 2020, respectively.</p><br/> 1250000 437 8582 P48M P60M 0.0452 0.0952 25223 These lease obligations mature ranging from December 2021 1427000 475000 594000 781000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 8: NOTES PAYABLE</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On May 5, 2020, the Company received a Paycheck Protection Program (&#x201c;PPP&#x201d;) loan in the amount of $1,068,686, referred to on the balance sheet as Note payable to bank. The loan has an interest rate of 1% and monthly payments of $60,154 for 18 months beginning December 5, 2020. This loan is eligible for the limited loan forgiveness provisions of Section 1102 of the CARES Act, and the SBA Interim Final Rule dated April 2, 2020. As of March&#xa0;31, 2021, the balance on the loan was $1,068,686. As of April 27, 2021 all of the outstanding principal and interest of $1,068,686 and $10,568 were forgiven. The entire loan balance was presented as noncurrent on the balance sheet as of March&#xa0;31, 2021. &#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of March&#xa0;31, 2021, the Company has financed a total of approximately $2,440,000 of its capital equipment purchases with monthly payments ranging from $362 to $11,749, repayment terms ranging from 60 to 72 months, and effective interest rates ranging from 1.99% to 9.90%. Total monthly payments as of March&#xa0;31, 2021 are $47,376. These equipment notes mature ranging from January 2023 through October 2026. The balance of equipment financing notes payable was approximately $1,832,000 and $1,590,000 as of March&#xa0;31, 2021 and December&#xa0;31, 2020, respectively.</p><br/> the Company received a Paycheck Protection Program (&#x201c;PPP&#x201d;) loan in the amount of $1,068,686, referred to on the balance sheet as Note payable to bank. The loan has an interest rate of 1% and monthly payments of $60,154 for 18 months beginning December 5, 2020. 1068686 1068686 10568 the Company has financed a total of approximately $2,440,000 of its capital equipment purchases with monthly payments ranging from $362 to $11,749, repayment terms ranging from 60 to 72 months, and effective interest rates ranging from 1.99% to 9.90%. Total monthly payments as of March 31, 2021 are $47,376. These equipment notes mature ranging from January 2023 through October 2026. The balance of equipment financing notes payable was approximately $1,832,000 and $1,590,000 as of March 31, 2021 and December 31, 2020, respectively. <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 9: STOCKHOLDERS&#x2019; EQUITY</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Preferred Stock</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company is authorized to issue 5,000,000 shares of preferred stock, no par value, of which 1,500,000 shares were designated as Series A-1 Preferred Stock and 2,000,000 are designated as Class C Preferred Stock.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Series A-1 Preferred Stock is convertible at any time after issuance at the option of the holder into shares of common stock at the original issue price of the Series A-1 Preferred Stock. The Series A-1 Preferred Stock was also subject to mandatory conversion provisions upon an initial public offering raising $15 million or more and is not redeemable. To prevent dilution, the conversion price of the Series A-1 Preferred Stock is to be adjusted for any issuance of securities, excluding exempt securities, which change the number of shares of common stock outstanding. The Series A-1 Preferred Stockholders are entitled to equal voting rights to common stockholders on an as-converted basis and receive preference to the common stockholders upon liquidation.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except as otherwise required by law or expressly provided in the Company&#x2019;s Second Amended and Restated Articles of Incorporation, as amended, each share of Class C Preferred Stock has one vote for the election of directors and on all matters submitted to a vote of shareholders of the Company. The Company is not obligated to redeem or repurchase any shares of Class C Preferred Stock. Shares of Class C Preferred Stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Common Stock</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company has reserved a total of 4,876,580 shares of its common stock pursuant to the equity incentive plans (see Note 10). The Company has 3,938,824 and 4,058,791 stock units, options and warrants outstanding under these plans as of March&#xa0;31, 2021 and December&#xa0;31, 2020, respectively.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company has 122,238 and 593,667 shares of its common stock reserved for warrants issued outside of the equity incentive plans as of March&#xa0;31, 2021 and December&#xa0;31, 2020, respectively.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Issuance of common stock for settlement of payable</i></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company issued 11,000 common shares for investor relations consulting services with a fair value of $146,300 during the three months ended March 31, 2021. During the three months ended March 31, 2020, the Company issued 32,749 common shares for services with a fair value of $56,328. The shares were valued based on the stock price at the time of the grant when the performance commitment was complete. The shares issued during the three months ended March 31, 2021 and 2020 were to settle existing accounts payable.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Exercise of Stock Options and Warrants</i></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A total of 54,985 employee options, with exercise prices ranging from $1.71 to $4.52 per share were exercised for total proceeds to the Company of $127,987 during the three months ended March 31, 2021. During the three months ended March 31, 2020, no employee options were exercised for cash.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A total of 15,000 employee warrants, with an exercise prices of $0.50 per share were exercised for total proceeds to the Company of $7,500 during the three months ended March 31, 2021. During the three months ended March 31, 2020, no employee warrants were exercised for cash.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A total of 471,429 warrants issued to an investor, with an exercise price of $3.50 per share were exercised for total proceeds to the Company of $1,650,001 during the three months ended March 31, 2021. During the three months ended March 31, 2020, no warrants issued to investors were exercised for cash.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Offerings of Common Stock</i></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On January 25, 2021, the Company entered into an Equity Distribution Agreement (&#x201c;EDA&#x201d;) with Canaccord Genuity LLC (&#x201c;Canaccord&#x201d;) under which we may offer and sell shares of our common stock in connection with the ATM in an aggregate offering amount of up to $80,000,000 from time to time through Canaccord, acting exclusively as our sales agent (the &#x201c;Offering&#x201d;). We intend to use the net proceeds of the Offering primarily for working capital and general corporate purposes.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We issued and sold 581,782 shares of common stock during the three months ended March 31, 2021, in connection with the ATM at per share prices between $19.35 and $32.50, resulting in net proceeds to the Company of approximately $13,500,000, after subtracting offering expenses.</font></p><br/> 2000000 15000000 4876580 3938824 4058791 122238 593667 11000 32749 54985 1.71 4.52 127987 15000 0.50 7500 471429 3.50 1650001 80000000 581782 19.35 32.50 13500000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 10: STOCK-BASED PAYMENTS</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has common stock, common stock units, and common stock purchase options and warrants reserved pursuant to the 2018 Omnibus Stock Incentive Plan (&#x201c;2018 Plan&#x201d;), Amended and Restated 2015 Stock Incentive Plan (&#x201c;2015 Plan&#x201d;) and the Second Amended and Restated 2012 Employee Stock Benefit Plan (&#x201c;2012 Plan&#x201d;).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Stock-based compensation, including stock options, warrants and stock issued for compensation&#xa0;and services is included in the statements of operations as follows:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold">&#xa0;</td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended <br/> March 31,</td><td style="font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="text-align: center; font-weight: bold">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="text-align: center; font-weight: bold">&#xa0;</td><td style="text-align: center; font-weight: bold">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="text-align: center; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Research and development</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">162,447</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">53,700</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Sales and marketing</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">98,589</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">21,157</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">General and administrative</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">218,623</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">163,884</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Cost of goods sold</td><td>&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">180,520</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">66,224</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Total</td><td>&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">660,479</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">304,965</td><td style="text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">2018 Omnibus Stock Incentive Plan</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The 2018 Plan authorizing 1,000,000 shares was approved by the Board of Directors and then the Company&#x2019;s shareholders at the Company&#x2019;s 2018 annual meeting of shareholders held on June 9, 2018. At the 2019 Annual Meeting, the shareholders approved an additional 1,000,000 shares of common stock to be issued under the 2018 Plan. On April 20, 2020, the board of directors approved an increase from 2,000,000 to 4,000,000 shares; at the annual shareholder meeting on June 20, 2020, the increase was approved by a majority of the shareholders.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The 2018 Plan provides the Company the ability to grant to employees, directors, consultants or advisors shares of common stock of the Company through the grant of equity awards, including, but not limited to, options that are incentive stock options or NQSOs and restricted stock, provided that only employees are entitled to receive incentive stock options in accordance with IRS guidelines. As of March&#xa0;31, 2021, the Company had a remaining reserve of 932,311 shares of common stock under the 2018 Plan. Awards that are forfeited generally become available for grant under the 2018 Plan.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employee stock-based compensation expense under the 2018 Plan included in operating expenses for the three months ended March 31, 2021 was $638,907 and $267,641, respectively.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total compensation cost related to non-vested awards issued under the 2018 Plan not yet recognized as of March&#xa0;31, 2021 was approximately $4,380,134 and will be recognized on a straight-line basis through December 2023 based on the respective vesting periods. The amount of future stock option compensation expense could be affected by any future option grants or forfeitures.</font></p><br/> 1000000 1000000 2000000 4000000 932311 638907 267641 Total compensation cost related to non-vested awards issued under the 2018 Plan not yet recognized as of March 31, 2021 was approximately $4,380,134 and will be recognized on a straight-line basis through December 2023 based on the respective vesting periods. The amount of future stock option compensation expense could be affected by any future option grants or forfeitures. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold">&#xa0;</td> <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended <br/> March 31,</td><td style="font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: center">&#xa0;</td><td style="text-align: center; font-weight: bold">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="text-align: center; font-weight: bold">&#xa0;</td><td style="text-align: center; font-weight: bold">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="text-align: center; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Research and development</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">162,447</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">53,700</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Sales and marketing</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">98,589</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">21,157</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">General and administrative</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">218,623</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">163,884</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Cost of goods sold</td><td>&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">180,520</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">66,224</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Total</td><td>&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">660,479</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">304,965</td><td style="text-align: left">&#xa0;</td></tr> </table> 162447 53700 98589 21157 218623 163884 180520 66224 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 11: CUSTOMER DEPOSITS</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">The Company has received customer deposits ranging from $100 to $500 per vehicle for Retail Series production vehicles for purposes of securing a vehicle production slot As of March&#xa0;31, 2021 and December&#xa0;31, 2020, the Company&#x2019;s balance of deposits received was approximately $616,000 and $606,000, respectively. As of March&#xa0;31, 2021 and December&#xa0;31, 2020, $409,724 and $403,624, respectively, of these deposits were refundable upon demand. Deposits are included in current liabilities in the accompanying balance sheets. When a customer&#x2019;s order is ready to enter the production process, the customer is notified that if they would like to proceed with the purchase of a vehicle, their deposit will no longer be refundable and any additional deposit required must be paid prior to the start of the manufacturing process. There were $100 and no customer deposits from related parties as of March&#xa0;31, 2021 and December&#xa0;31, 2020, respectively.</font></p><br/> 100 500 409724 403624 100 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font: 10pt Times New Roman, Times, Serif"><b>NOTE 12: COMMITMENTS AND CONTINGENCIES</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On December 6, 2019, we entered into a lease for a property approximately six blocks east of the AMP that contains two buildings. The initial term of the lease is 25 months and began on December 6, 2019. There is an option for a three-year extension. The main building is 6,508 square feet of office and warehouse space and the auxiliary building is 4,318 square feet of warehouse space. The office space is being used by marketing and sales. The warehouse is being used for R&amp;D and battery module manufacturing. On March 3, 2020, we amended the lease to include the adjacent building which has 10,752 square feet of office and warehouse space on the ground floor plus second floor office and storage space. This location is being used for service will be used for further expansion. Rent is $11,750 per month and subject to a 3% increase per year.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2020, we occupied 1,700 square feet of office area, 32,000 square feet of warehouse space and 125,000 square feet of asphalt paving and undeveloped greenfield. The original lease expiring in 2021 has been extended until 2024. We believe that our current facilities are sufficient for our needs.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 18, 2020, we entered into a lease for a 106 square foot space in Orlando Florida. The term of the lease is month to month which began on December 1, 2020 and auto renews each month unless one months&#x2019; notice of cancellation is given. Total rent is $2,490 per month. The space is being used for Arcimoto&#x2019;s Florida dealer showroom.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 8, 2021, we entered into a lease for a 15,124 square foot office space on the second floor of 155 Blair Boulevard, Eugene, Oregon 97402 that will be used for office and general use and warehouse space located at 135 Blair Boulevard, Eugene, Oregon 97402 that will be used for a dealer and rental location. The term of the lease is 60 months which began on March 1, 2020. There is an option for two successive five-year extension periods. Rent is $17,500 per month and subject to a 2.5% increase per year.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">See the following table for future annual minimum rent payments as of December 31, 2020:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>Remaining payments for years ending December 31:</td><td>&#xa0;</td> <td colspan="2" style="text-align: right">&#xa0;</td><td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">2021</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">640,619</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2022</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">543,246</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2023</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">517,945</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2024</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">340,840</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2025</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">229,916</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">77,267</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt; padding-left: 0.125in">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2,349,833</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Rent expense is recognized on a straight-line basis. Total rent expense for the three months ended March 31, 2021 and 2020 was $140,413 and $62,042, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2021, a statement of work for approximately $3,750,000 was signed with Munro and Associates for development activities through the end of the year to develop the FUV high volume production platform. Munro and Associates research and development expense invoiced in the three months ended March 31, 2021 was $874,500.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">Litigation&#xa0;</font>&#xa0;</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On March 6, 2020, the Company filed a complaint (&#x201c;the Complaint&#x201d;) against Ayro, Inc. (&#x201c;Ayro&#x201d;), accusing Ayro of patent infringement in Federal District Court for the Western District of Texas, Waco Division (Case No. 6:20-cv-00176-ADA) (&#x201c;the Ayro Litigation&#x201d;). In the Complaint, Arcimoto alleged that Ayro&#x2019;s 311 two-seater electric vehicles infringe U.S. Patent 8,985,255 (the &#x201c;255 Patent&#x201d;). The Complaint asked for monetary damages and enhanced damages due to willful infringement of the 255 Patent by Ayro. On March 27, 2020, Ayro answered the Complaint, denying liability and asserting counterclaims of noninfringement and patent invalidity. During the first quarter of 2021, the parties reached a settlement and submitted a request to the court to dismiss the case.</font></p><br/> 6508 4318 10752 11750 0.03 1700 32000 125000 106 we entered into a lease for a 15,124 square foot office space on the second floor of 155 Blair Boulevard, Eugene, Oregon 97402 that will be used for office and general use and warehouse space located at 135 Blair Boulevard, Eugene, Oregon 97402 that will be used for a dealer and rental location. The term of the lease is 60 months which began on March 1, 2020. There is an option for two successive five-year extension periods. Rent is $17,500 per month and subject to a 2.5% increase per year. 140413 62042 3750000 Arcimoto alleged that Ayro&#x2019;s 311 two-seater electric vehicles infringe U.S. Patent 8,985,255 (the &#x201c;255 Patent&#x201d;). The Complaint asked for monetary damages and enhanced damages due to willful infringement of the 255 Patent by Ayro. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>Remaining payments for years ending December 31:</td><td>&#xa0;</td> <td colspan="2" style="text-align: right">&#xa0;</td><td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">2021</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">640,619</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2022</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">543,246</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2023</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">517,945</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2024</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">340,840</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">2025</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">229,916</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">77,267</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt; padding-left: 0.125in">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2,349,833</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 640619 543246 517945 340840 229916 77267 2349833 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 13: INCOME TAXES</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company recorded a tax benefit of $2,938,848 for the period ended March 31, 2021 related to a partial release of its valuation allowance stemming from the acquisition of TMW (See Note 3). The acquisition of TMW created a deferred tax liability position, and those deferred tax liabilities can be used as a source of income for our existing deferred tax assets.</font></p><br/> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTE 14: SUBSEQUENT EVENTS</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On April 19, 2021, the Company closed and completed the purchase of properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue for the sum of $10,250,000. The Company also purchased and closed an additional property commonly known as 1593 W. 5th Ave. Eugene, Oregon for related purposes for the sum of $2,500,000.&#xa0; The $12,750,000 was paid in cash.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Between April 9 and April 20, 2021, 15,000 employee warrants were exercised for cash at a grant price of $0.50 per share.&#xa0; Net proceeds to the Company were $7,500.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Between April 29 and May 5, 2020, 10,333 employee incentive stock options were exercised for cash at grant prices ranging from $1.71 to $4.52.&#xa0; Net proceeds to the Company were $35,389.</p><br/> the Company closed and completed the purchase of properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue for the sum of $10,250,000. The Company also purchased and closed an additional property commonly known as 1593 W. 5th Ave. Eugene, Oregon for related purposes for the sum of $2,500,000. 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Mar. 31, 2021
May 17, 2021
Document Information Line Items    
Entity Registrant Name Arcimoto Inc  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   35,783,000
Amendment Flag false  
Entity Central Index Key 0001558583  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
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Document Fiscal Year Focus 2021  
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Condensed Balance Sheets (Unaudited) - USD ($)
Mar. 31, 2021
Dec. 31, 2020
Current assets:    
Cash and cash equivalents $ 46,650,143 $ 39,451,401
Accounts receivable, net 13,882 17,117
Inventory 5,642,824 5,104,068
Prepaid inventory 946,119 1,029,617
Other current assets 990,608 900,827
Total current assets 54,243,576 46,503,030
Property and equipment, net 6,949,160 6,645,230
Intangible assets, net 10,517,319
Goodwill 6,824,209
Security deposits 125,771 101,688
Total assets 78,660,035 53,249,948
Current liabilities:    
Accounts payable 1,060,267 205,133
Accrued liabilities 529,173 431,166
Customer deposits 616,173 605,532
Current portion of capital lease obligations 264,220 246,524
Notes payable 231,597 478,928
Current portion of warranty reserve 177,659 161,607
Current portion of deferred revenue 281,509 127,219
Current portion of equipment financing notes payable 306,551 237,069
Current portion of note payable to bank   421,076
Total current liabilities 3,467,149 2,914,254
Capital lease obligations, net of current portion 330,272 534,624
Warranty reserve 126,500 66,500
Long-term deferred revenue 43,750 50,000
Equipment financing notes payable, net of current portion 1,525,026 1,352,930
Note payable to bank, net of current portion 1,068,686 647,610
Total long-term liabilities 3,094,234 2,651,664
Total liabilities 6,561,383 5,565,918
Commitments and contingencies (Note 12)
Stockholders’ equity:    
Preferred Stock, no par value, 1,500,000 authorized, none issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
Common Stock, no par value, 60,000,000 shares authorized; 35,758,090 and 34,187,555 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively 128,855,849 100,236,178
Additional paid-in capital 4,413,966 3,876,503
Accumulated deficit (61,171,163) (56,428,651)
Total stockholders’ equity 72,098,652 47,684,030
Total liabilities and stockholders’ equity 78,660,035 53,249,948
Series A-1 Preferred Stock    
Stockholders’ equity:    
Preferred Stock, no par value, 1,500,000 authorized, none issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
Total stockholders’ equity
Class C Preferred Stock    
Stockholders’ equity:    
Preferred Stock, no par value, 1,500,000 authorized, none issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
Total stockholders’ equity
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Dec. 31, 2020
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Condensed Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Revenue:    
Product sales $ 1,246,363 $ 598,035
Other revenue 147,612 18,760
Total revenues 1,393,975 616,795
Cost of goods sold 3,244,507 1,689,518
Gross loss (1,850,532) (1,072,723)
Operating expenses:    
Research and development 2,407,695 448,974
Sales and marketing 964,447 336,898
General and administrative 2,420,613 1,496,845
Total operating expenses 5,792,755 2,282,717
Loss from operations (7,643,287) (3,355,440)
Other expense (income):    
Interest expense 52,227 246,834
Other income (14,154) (7,500)
Loss before benefit for income taxes (7,681,360) (3,594,774)
Income tax benefit 2,938,848  
Net loss $ (4,742,512) $ (3,594,774)
Weighted average common shares - basic and diluted (in Shares) 35,327,316 24,480,445
Net loss per common share - basic and diluted (in Dollars per share) $ (0.13) $ (0.15)
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Condensed Statements of Stockholders’ Equity (Unaudited) - USD ($)
Series A-1 Preferred Stock
Class C Preferred Stock
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Total
Balance at Dec. 31, 2019 $ 43,573,529 $ 2,344,751 $ (38,308,162) $ 7,610,118
Balance (in Shares) at Dec. 31, 2019 24,436,389      
Issuance of common stock for settlement of payable $ 56,328     56,328
Issuance of common stock for settlement of payable (in Shares)     32,749      
Offering costs $ (3,619)     (3,619)
Stock-based compensation 304,965   304,965
Net loss   (3,594,774) (3,594,774)
Balance at Mar. 31, 2020 $ 43,626,238 2,649,716 (41,902,936) 4,373,018
Balance (in Shares) at Mar. 31, 2020 24,469,138      
Balance at Dec. 31, 2020 $ 100,236,178 3,876,503 (56,428,651) 47,684,030
Balance (in Shares) at Dec. 31, 2020 34,187,555      
Issuance of common stock for settlement of payable $ 146,300     146,300
Issuance of common stock for settlement of payable (in Shares)     11,000      
Issuance of common stock for cash, net of offering costs of $543,523 $ 13,526,512     13,526,512
Issuance of common stock for cash, net of offering costs of $543,523 (in Shares)     581,782      
Issuance of common stock for the acquisition of TMW $ 13,038,355     13,038,355
Issuance of common stock for the acquisition of TMW (in Shares)     436,339      
Exercise of warrants $ 1,714,663 (57,162)   1,657,501
Exercise of warrants (in Shares)     486,429      
Exercise of stock options $ 193,841 (65,854)   127,987
Exercise of stock options (in Shares)     54,985      
Stock-based compensation 660,479   660,479
Net loss (4,742,512) (4,742,512)
Balance at Mar. 31, 2021 $ 128,855,849 $ 4,413,966 $ (61,171,163) $ 72,098,652
Balance (in Shares) at Mar. 31, 2021 35,758,090      
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Condensed Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
OPERATING ACTIVITIES    
Net loss $ (4,742,512) $ (3,594,774)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 429,561 207,551
Amortization of debt discount 153,748
Stock-based compensation 660,479 304,965
Deferred income tax benefit (2,938,848)
Changes in operating assets and liabilities:    
Accounts receivable 3,235 228,225
Inventory (196,362) (1,461,051)
Prepaid inventory 83,498 70,505
Other current assets (85,698) 47,542
Accounts payable 1,001,434 742,691
Accrued liabilities 98,007 (50,355)
Customer deposits (81,108) (145,100)
Warranty reserve 76,052 20,874
Deferred revenue 148,040 (11,674)
Net cash used in operating activities (5,544,222) (3,486,853)
INVESTING ACTIVITIES    
Purchase of property and equipment (598,461) (198,993)
Security deposits (24,083) (47,100)
Cash paid for acquisition of Tilting Motor Works (1,754,083)
Net cash used in investing activities (2,376,627) (246,093)
FINANCING ACTIVITIES    
Proceeds from the sale of common stock 14,070,035
Payment of offering costs (543,523) (3,619)
Proceeds from exercise of warrants 1,657,501
Proceeds from the exercise of stock options 127,987
Proceeds from equipment notes 204,661 69,740
Repayment of notes payable (247,331) (167,847)
Repayment of equipment notes (88,583) (58,146)
Payment on capital lease obligations (61,156) (49,954)
Net cash provided by (used in) financing activities 15,119,591 (209,826)
Net cash increase (decrease) for period 7,198,742 (3,942,772)
Cash at beginning of period 39,451,401 5,832,489
Cash at end of period 46,650,143 1,889,717
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION    
Cash paid during the period for interest 42,015
Cash paid during the period for income taxes
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES    
Common shares issued for Tilting Motor Works acquisition 13,038,355
Issuance of common stock for settlement of accounts payable $ 146,300 $ 56,328
XML 18 R8.htm IDEA: XBRL DOCUMENT v3.21.1
Nature of Operations
3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
NATURE OF OPERATIONS

NOTE 1: NATURE OF OPERATIONS


Arcimoto, Inc. (the “Company”) was incorporated in the State of Oregon on November 21, 2007. The Company’s mission is to catalyze the global shift to a sustainable transportation system. Over the past 13 years, the Company has developed a new vehicle platform designed around the needs of everyday drivers. Having approximately one-third the weight and one-third of the footprint of the average car, the Arcimoto platform’s purpose is to bring the joy of ultra-efficient, pure electric driving to the masses. To date, the Company has introduced five vehicle products built on this platform that target specific niches in the vehicle market: our flagship product, the Fun Utility Vehicle® (“FUV®”), for everyday consumer trips; the Deliverator® for last-mile delivery and general fleet utility; the Rapid Responder™ for emergency services and security; the Cameo™ for film, sports and influencers; and the Arcimoto Roadster, an unparalleled pure-electric on-road thrill machine.


Risks and Uncertainties


We started retail production in the third quarter of 2019 at one FUV per build day and ramped to two per build day in the first quarter of 2020 before suspending production in response to the COVID-19 pandemic. We restarted production and resumed deliveries to customers in the third quarter of 2020. As a result of the suspension, revenues from 2020 were negatively impacted. Revenues from subsequent quarters may be negatively impacted based on the length and severity of the pandemic. Production in the first quarter of 2021 achieved three FUV per build day and successfully tested to validate four per day.


Further, Arcimoto does not have a history of higher-scale production and may encounter delays or inefficiencies in its sales and manufacturing processes, which may prevent or delay achieving higher-scale production within anticipated timeliness. In order to achieve higher-scale production, the Company may need to raise additional capital, and there can be no assurance such capital will be available upon reasonable terms, if at all.


Additionally, the Company’s business and operations are sensitive to governmental policies on importation and exportation, as well as the availability of vehicle components from suppliers, which themselves may be impacted by pandemics and such, as well as the ever-shifting general landscape of governmental policy related to cars and motorcycles.


The Company’s industry is characterized by rapid changes in technology and customer demands. The Company’s future success will depend on its ability to adapt to technological advances, its nimble reaction to customer demands, its development of well-considered new products and services, and the enhancement of its current products and services on a timely and cost-effective basis.


Finally, the Company may not have the capital resources necessary to further the development of existing and/or new products.


XML 19 R9.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Going Concern


The accompanying financial statements have been prepared on a basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred significant losses since inception and management expects losses to continue for the foreseeable future. The Company had approximately $46,650,000 of cash as of March 31, 2021, which is in excess of cash needed for the next twelve months.


Unaudited Interim Financial Information


The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q promulgated by the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all information and disclosures required by GAAP for complete financial statement presentation. In the opinion of management, the accompanying condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of March 31, 2021, and the results of its operations for the three months ended March 31, 2021 and 2020 and its cash flows for the three months ended March 31, 2021 and 2020. Results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2021.


Business Combinations


The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the acquired assets and liabilities and results of operations are consolidated beginning at the acquisition date.


Inventory


Inventory is stated at the lower of cost (using the first-in, first-out method (“FIFO”) or market value. Inventories consist of purchased electric motors, electrical storage and transmission equipment, and component parts.


   March 31,
2021
   December 31,
2020
 
Raw materials  $4,892,827   $4,667,780 
Work in progress   59,078    65,210 
Finished goods   690,919    371,078 
Total  $5,642,824   $5,104,068 

The Company is required to remit partial prepayments for some purchases of its inventories acquired from overseas vendors which are included in prepaid inventories. The Company is currently selling vehicles below the base cost of a finished unit. Accordingly, the Company expensed all labor and overhead as period costs, and recorded an allowance to reduce inventories to net realizable value of approximately $593,000 and $550,000 as of March 31, 2021 and December 31, 2020, respectively.


Customer Deposits


Non-refundable customer deposits are comingled with operating funds. Refundable customer deposits are held in a separate deposit account. Revenue is not recognized on customer deposits until the deposit is applied to a non-refundable vehicle order, the vehicle manufacturing process is completed, the vehicle is picked up by or delivered to the customer and the appropriate revenue recognition criteria have been met.


Intangible Assets


Intangible assets primarily consist of trade names/trademarks, proprietary technology, and customer relationships. They are amortized using the straight-lined method over a period of 10 to 14 years. The Company assesses the recoverability of its finite-lived intangible assets when there are indications of potential impairment. Indefinite-lived intangible assets are evaluated for impairment annually.


Goodwill


The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.


The Company calculates the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables. The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations.


Net Earnings or Loss per Share


The Company’s computation of earnings (loss) per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common shareholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., common stock warrants and common stock options) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares 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 EPS.


Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented because all common stock warrants and common stock options outstanding were anti-dilutive.


At March 31, 2021 and 2020, the Company excluded the outstanding Employee Equity Plans (“EEP”) and other securities summarized below calculated using the Treasury Stock Method, which entitled the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.


   Three Months Ended
March 31,
 
   2021   2020 
Options and other instruments under the 2012, 2015, and 2018 Plans to purchase common stock   3,094,548    431,746 
Underwriters and investors warrants issued outside of an EEP   76,402     
Total   3,170,950    431,746 

Recent Accounting Pronouncements


The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financial statements properly reflect the change.


In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) which supersedes ASC Topic 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all the leases with terms greater than 12 months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. In November 2019, the FASB delayed the effective date for Topic 842 to fiscal years beginning after December 15, 2020 for private companies and emerging growth companies, and interim periods within those years, with early adoption permitted. In June 2020, the FASB issued ASU No 2020-05 that further delayed the effective date of Topic 842 to fiscal years beginning after December 15, 2021. We will adopt this new standard on January 1, 2022. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” that allows entities to apply the provisions of the new standard at the effective date, as opposed to the earliest period presented under the modified retrospective transition approach and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon its adoption of Topic 842, which will increase the total assets and total liabilities that the Company reports relative to such amounts prior to adoption.


Adoption of Recent Accounting Pronouncements


In October 2020, the FASB issued ASU 2020-10, “Codification Improvements” (“ASU 2020-10”), which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations. The effective date of the standard will be for interim and annual reporting periods beginning after December 15, 2020 for public entities. The new guidance was effective upon issuance of this final accounting standards update. The Company has adopted this standard and the adoption did not have a material impact on its condensed consolidated financial statements or disclosures.


XML 20 R10.htm IDEA: XBRL DOCUMENT v3.21.1
TMW Acquisition
3 Months Ended
Mar. 31, 2021
Business Combinations [Abstract]  
TMW ACQUISITION

NOTE 3: TMW ACQUISITION


On January 23, 2021, the Company entered into an Asset Purchase Agreement (the “Agreement”) with Tilting Motor Works, Inc. (“TMW”), a Washington corporation (the “Seller”) and its owner. Pursuant to the terms and conditions of the Agreement, the Company paid cash of $1,754,083 and issued 436,339 shares of Company common stock as consideration for substantially all of the TMW’s assets and certain assumed liabilities. The common shares issued were unregistered and are subject to sales restrictions under the Securities Act of 1933. The Company valued the shares issued in the transaction at the average of opening and closing price on the date of acquisition with a 12.5% discount for lack of marketability. The acquisition closed on February 4, 2021 and was recorded as a business combination as the set of assets and activities acquired met the definition of a business.


The purchase price is allocation is as follows:


Cash  $1,754,083 
Add: Fair value of shares issued   13,038,355 
Total consideration  $14,792,438 

Description  Fair value 
Assets acquired:    
Inventory  $342,394 
Prepaid expenses and other current assets   4,083 
Property, plant, and equipment   4,349 
Trade name   2,052,000 
Proprietary technology   7,010,000 
Customer relationships   1,586,000 
Goodwill   6,824,209 
Total assets acquired  $17,823,035 
      
Liabilities assumed:     
Customer deposits  $91,749 
Deferred tax liability   2,938,848 
Total liabilities assumed   3,030,597 
Estimated fair value of net assets acquired  $14,792,438 

The following unaudited pro-forma financial information presents the consolidated results of operations of the Company and TMW for the three months ended March 31, 2021 and 2020, as if the acquisition had occurred as of the beginning of the first period presented instead of on February 4, 2021. The proforma information does not necessarily reflect the results of operations that would have occurred had the entities been a single company during those periods.


The pro-forma financial information for the Company and TMW is as follows:


   For the Three Months Ended
March 31,
 
   2021   2020 
Revenues  $1,403,954   $828,660 
Net loss attributable to common stockholders  $(7,911,783)  $(3,860,541)
Net loss per basic and diluted common share  $(0.22)  $(0.15)
Weighted average common shares outstanding:          
Basic and diluted   35,327,316    24,916,784 

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment
3 Months Ended
Mar. 31, 2021
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT

NOTE 4: PROPERTY AND EQUIPMENT


As of March 31, 2021 and December 31, 2020, our property and equipment consisted of the following:


   March 31,
2021
   December 31,
2020
 
Machinery and equipment  $5,245,534   $5,245,534 
Fixed assets in process   2,105,561    1,993,760 
Leasehold improvements   983,522    983,522 
FUV fleet   520,354    336,730 
FUV rental fleet   115,124     
Computer equipment and software   188,984    94,384 
Vehicles   97,661     
Furniture and fixtures   52,007    52,007 
Total property and equipment   9,308,747    8,705,937 
Less: Accumulated depreciation   (2,359,587)   (2,060,707)
Total  $6,949,160   $6,645,230 

Fixed assets in process is comprised primarily of tooling and equipment related to the manufacturing of our vehicles. Completed assets are transferred to their respective asset class and depreciation begins when the asset is ready for its intended use. FUV fleet consists of marketing and other non-revenue generating vehicles. FUV rental fleet is comprised of rental revenue generating vehicles.


Depreciation expense was approximately $299,000 and $208,000 during the three months ended March 31, 2021 and 2020, respectively.


On December 23, 2020, the Company entered into an agreement to purchase certain buildings totaling approximately 187,000 square feet, and approximately 6.6 acres of real estate located within the City of Eugene, Oregon. The Company has agreed to purchase the properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue, from RLA Holdings, LLC for the total purchase price of $10,250,000. The Company pledged $80,000 as earnest money for the transaction. During the first quarter of 2021, an additional 4.1 acres and 33,000 square feet of buildings to the south were added to the purchase agreement totaling $2,500,000. The total sales price was increased to $12,750,000. The purchase was contingent upon the Company’s complete and unconditional approval of: (i) the property and its physical condition, zoning and land use restrictions, and all systems, utilities, and access rights pertaining to the property; (ii) the seller’s documents; (iii) securing financing; (iv) a Phase I environmental assessment and all appropriate inquiries investigation so as to protect the Company under CERCLA; and (v) anything else the Company deems necessary. On March 15, 2021, the due diligence was complete and the Company paid the $80,000 earnest money. On April 19, 2021, the Company closed and completed the purchase of the properties described above. RLA Holdings, LLC will be permitted to rent back the 311 Chambers St property after closing for up to six (6) months at a rate of $50,000 per month plus all utilities, taxes, insurance, and maintenance expenses. The Company intends to utilize these properties to improve its production capabilities. The new facility is expected to be operational by the end of 2022.


XML 22 R12.htm IDEA: XBRL DOCUMENT v3.21.1
Intangible Assets
3 Months Ended
Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS

NOTE 5: INTANGIBLE ASSETS


The following table summarizes the Company’s intangible assets:


      March 31, 2021 
   Estimated
Useful Life
(Years)
  Gross
Carrying
Amount at December 31,
2020
   Assets
Acquired
Pursuant to
Business
Combination
(1)
   Accumulated
Amortization
   Net Book
Value
 
Tradename and trademarks  14 years  $   $2,052,000   $(22,684)  $2,029,316 
Proprietary technology  13 years       7,010,000    (83,452)   6,926,548 
Customer relationships  10 years       1,586,000    (24,545)   1,561,455 
      $   $10,648,000   $(130,681)  $10,517,319 

(1)On January 23, 2021 the Company acquired various assets of Tilting Motor Works, Inc. (See Note 3)

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.21.1
Goodwill
3 Months Ended
Mar. 31, 2021
Disclosure Text Block Supplement [Abstract]  
GOODWILL

NOTE 6: GOODWILL


The following table summarizes the Company’s goodwill as of March 31, 2021:


   Total
Goodwill
 
Balance as of January 1, 2021  $ 
Goodwill additions through Tilting Motor Works acquisition   6,824,209 
Less: impairment charge recorded    
Balance as of March 31, 2021  $6,824,209 

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.21.1
Capital Lease Obligations
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
CAPITAL LEASE OBLIGATIONS

NOTE 7: CAPITAL LEASE OBLIGATIONS


As of March 31, 2021, the Company has financed through lease agreements a total of approximately $1,250,000 of its capital equipment purchases with monthly payments ranging from $437 to $8,582, repayment terms ranging from 48 to 60 months, and effective interest rates ranging from 4.52% to 9.52%. Total monthly capital lease payments as of March 31, 2021 are $25,223. These lease obligations mature ranging from December 2021 through November 2023 and are secured by approximately $1,427,000 in underlying assets which have approximately $475,000 in accumulated depreciation as of March 31, 2021. The balance of capital lease obligations was approximately $594,000 and approximately $781,000 as of March 31, 2021 and December 31, 2020, respectively.


XML 25 R15.htm IDEA: XBRL DOCUMENT v3.21.1
Notes Payable
3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 8: NOTES PAYABLE


On May 5, 2020, the Company received a Paycheck Protection Program (“PPP”) loan in the amount of $1,068,686, referred to on the balance sheet as Note payable to bank. The loan has an interest rate of 1% and monthly payments of $60,154 for 18 months beginning December 5, 2020. This loan is eligible for the limited loan forgiveness provisions of Section 1102 of the CARES Act, and the SBA Interim Final Rule dated April 2, 2020. As of March 31, 2021, the balance on the loan was $1,068,686. As of April 27, 2021 all of the outstanding principal and interest of $1,068,686 and $10,568 were forgiven. The entire loan balance was presented as noncurrent on the balance sheet as of March 31, 2021.  


As of March 31, 2021, the Company has financed a total of approximately $2,440,000 of its capital equipment purchases with monthly payments ranging from $362 to $11,749, repayment terms ranging from 60 to 72 months, and effective interest rates ranging from 1.99% to 9.90%. Total monthly payments as of March 31, 2021 are $47,376. These equipment notes mature ranging from January 2023 through October 2026. The balance of equipment financing notes payable was approximately $1,832,000 and $1,590,000 as of March 31, 2021 and December 31, 2020, respectively.


XML 26 R16.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders’ Equity
3 Months Ended
Mar. 31, 2021
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 9: STOCKHOLDERS’ EQUITY


Preferred Stock


The Company is authorized to issue 5,000,000 shares of preferred stock, no par value, of which 1,500,000 shares were designated as Series A-1 Preferred Stock and 2,000,000 are designated as Class C Preferred Stock.


The Series A-1 Preferred Stock is convertible at any time after issuance at the option of the holder into shares of common stock at the original issue price of the Series A-1 Preferred Stock. The Series A-1 Preferred Stock was also subject to mandatory conversion provisions upon an initial public offering raising $15 million or more and is not redeemable. To prevent dilution, the conversion price of the Series A-1 Preferred Stock is to be adjusted for any issuance of securities, excluding exempt securities, which change the number of shares of common stock outstanding. The Series A-1 Preferred Stockholders are entitled to equal voting rights to common stockholders on an as-converted basis and receive preference to the common stockholders upon liquidation.


Except as otherwise required by law or expressly provided in the Company’s Second Amended and Restated Articles of Incorporation, as amended, each share of Class C Preferred Stock has one vote for the election of directors and on all matters submitted to a vote of shareholders of the Company. The Company is not obligated to redeem or repurchase any shares of Class C Preferred Stock. Shares of Class C Preferred Stock are not otherwise entitled to any redemption rights, or mandatory sinking fund or analogous fund provisions.


Common Stock


The Company has reserved a total of 4,876,580 shares of its common stock pursuant to the equity incentive plans (see Note 10). The Company has 3,938,824 and 4,058,791 stock units, options and warrants outstanding under these plans as of March 31, 2021 and December 31, 2020, respectively.


The Company has 122,238 and 593,667 shares of its common stock reserved for warrants issued outside of the equity incentive plans as of March 31, 2021 and December 31, 2020, respectively.


Issuance of common stock for settlement of payable


The Company issued 11,000 common shares for investor relations consulting services with a fair value of $146,300 during the three months ended March 31, 2021. During the three months ended March 31, 2020, the Company issued 32,749 common shares for services with a fair value of $56,328. The shares were valued based on the stock price at the time of the grant when the performance commitment was complete. The shares issued during the three months ended March 31, 2021 and 2020 were to settle existing accounts payable.


Exercise of Stock Options and Warrants


A total of 54,985 employee options, with exercise prices ranging from $1.71 to $4.52 per share were exercised for total proceeds to the Company of $127,987 during the three months ended March 31, 2021. During the three months ended March 31, 2020, no employee options were exercised for cash.


A total of 15,000 employee warrants, with an exercise prices of $0.50 per share were exercised for total proceeds to the Company of $7,500 during the three months ended March 31, 2021. During the three months ended March 31, 2020, no employee warrants were exercised for cash.


A total of 471,429 warrants issued to an investor, with an exercise price of $3.50 per share were exercised for total proceeds to the Company of $1,650,001 during the three months ended March 31, 2021. During the three months ended March 31, 2020, no warrants issued to investors were exercised for cash.


Offerings of Common Stock


On January 25, 2021, the Company entered into an Equity Distribution Agreement (“EDA”) with Canaccord Genuity LLC (“Canaccord”) under which we may offer and sell shares of our common stock in connection with the ATM in an aggregate offering amount of up to $80,000,000 from time to time through Canaccord, acting exclusively as our sales agent (the “Offering”). We intend to use the net proceeds of the Offering primarily for working capital and general corporate purposes.


We issued and sold 581,782 shares of common stock during the three months ended March 31, 2021, in connection with the ATM at per share prices between $19.35 and $32.50, resulting in net proceeds to the Company of approximately $13,500,000, after subtracting offering expenses.


XML 27 R17.htm IDEA: XBRL DOCUMENT v3.21.1
Stock-Based Payments
3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]  
STOCK-BASED PAYMENTS

NOTE 10: STOCK-BASED PAYMENTS


The Company has common stock, common stock units, and common stock purchase options and warrants reserved pursuant to the 2018 Omnibus Stock Incentive Plan (“2018 Plan”), Amended and Restated 2015 Stock Incentive Plan (“2015 Plan”) and the Second Amended and Restated 2012 Employee Stock Benefit Plan (“2012 Plan”).


Stock-based compensation, including stock options, warrants and stock issued for compensation and services is included in the statements of operations as follows:


   Three Months Ended
March 31,
 
   2021   2020 
Research and development  $162,447   $53,700 
Sales and marketing   98,589    21,157 
General and administrative   218,623    163,884 
Cost of goods sold   180,520    66,224 
Total  $660,479   $304,965 

2018 Omnibus Stock Incentive Plan


The 2018 Plan authorizing 1,000,000 shares was approved by the Board of Directors and then the Company’s shareholders at the Company’s 2018 annual meeting of shareholders held on June 9, 2018. At the 2019 Annual Meeting, the shareholders approved an additional 1,000,000 shares of common stock to be issued under the 2018 Plan. On April 20, 2020, the board of directors approved an increase from 2,000,000 to 4,000,000 shares; at the annual shareholder meeting on June 20, 2020, the increase was approved by a majority of the shareholders.


The 2018 Plan provides the Company the ability to grant to employees, directors, consultants or advisors shares of common stock of the Company through the grant of equity awards, including, but not limited to, options that are incentive stock options or NQSOs and restricted stock, provided that only employees are entitled to receive incentive stock options in accordance with IRS guidelines. As of March 31, 2021, the Company had a remaining reserve of 932,311 shares of common stock under the 2018 Plan. Awards that are forfeited generally become available for grant under the 2018 Plan.


Employee stock-based compensation expense under the 2018 Plan included in operating expenses for the three months ended March 31, 2021 was $638,907 and $267,641, respectively.


Total compensation cost related to non-vested awards issued under the 2018 Plan not yet recognized as of March 31, 2021 was approximately $4,380,134 and will be recognized on a straight-line basis through December 2023 based on the respective vesting periods. The amount of future stock option compensation expense could be affected by any future option grants or forfeitures.


XML 28 R18.htm IDEA: XBRL DOCUMENT v3.21.1
Customer Deposits
3 Months Ended
Mar. 31, 2021
Other Liabilities Disclosure [Abstract]  
CUSTOMER DEPOSITS

NOTE 11: CUSTOMER DEPOSITS


The Company has received customer deposits ranging from $100 to $500 per vehicle for Retail Series production vehicles for purposes of securing a vehicle production slot As of March 31, 2021 and December 31, 2020, the Company’s balance of deposits received was approximately $616,000 and $606,000, respectively. As of March 31, 2021 and December 31, 2020, $409,724 and $403,624, respectively, of these deposits were refundable upon demand. Deposits are included in current liabilities in the accompanying balance sheets. When a customer’s order is ready to enter the production process, the customer is notified that if they would like to proceed with the purchase of a vehicle, their deposit will no longer be refundable and any additional deposit required must be paid prior to the start of the manufacturing process. There were $100 and no customer deposits from related parties as of March 31, 2021 and December 31, 2020, respectively.


XML 29 R19.htm IDEA: XBRL DOCUMENT v3.21.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 12: COMMITMENTS AND CONTINGENCIES


On December 6, 2019, we entered into a lease for a property approximately six blocks east of the AMP that contains two buildings. The initial term of the lease is 25 months and began on December 6, 2019. There is an option for a three-year extension. The main building is 6,508 square feet of office and warehouse space and the auxiliary building is 4,318 square feet of warehouse space. The office space is being used by marketing and sales. The warehouse is being used for R&D and battery module manufacturing. On March 3, 2020, we amended the lease to include the adjacent building which has 10,752 square feet of office and warehouse space on the ground floor plus second floor office and storage space. This location is being used for service will be used for further expansion. Rent is $11,750 per month and subject to a 3% increase per year.


As of December 31, 2020, we occupied 1,700 square feet of office area, 32,000 square feet of warehouse space and 125,000 square feet of asphalt paving and undeveloped greenfield. The original lease expiring in 2021 has been extended until 2024. We believe that our current facilities are sufficient for our needs.


On November 18, 2020, we entered into a lease for a 106 square foot space in Orlando Florida. The term of the lease is month to month which began on December 1, 2020 and auto renews each month unless one months’ notice of cancellation is given. Total rent is $2,490 per month. The space is being used for Arcimoto’s Florida dealer showroom.


On February 8, 2021, we entered into a lease for a 15,124 square foot office space on the second floor of 155 Blair Boulevard, Eugene, Oregon 97402 that will be used for office and general use and warehouse space located at 135 Blair Boulevard, Eugene, Oregon 97402 that will be used for a dealer and rental location. The term of the lease is 60 months which began on March 1, 2020. There is an option for two successive five-year extension periods. Rent is $17,500 per month and subject to a 2.5% increase per year.


See the following table for future annual minimum rent payments as of December 31, 2020:


Remaining payments for years ending December 31:    
2021   640,619 
2022   543,246 
2023   517,945 
2024   340,840 
2025   229,916 
Thereafter   77,267 
Total  $2,349,833 

Rent expense is recognized on a straight-line basis. Total rent expense for the three months ended March 31, 2021 and 2020 was $140,413 and $62,042, respectively.


In February 2021, a statement of work for approximately $3,750,000 was signed with Munro and Associates for development activities through the end of the year to develop the FUV high volume production platform. Munro and Associates research and development expense invoiced in the three months ended March 31, 2021 was $874,500.


Litigation  


On March 6, 2020, the Company filed a complaint (“the Complaint”) against Ayro, Inc. (“Ayro”), accusing Ayro of patent infringement in Federal District Court for the Western District of Texas, Waco Division (Case No. 6:20-cv-00176-ADA) (“the Ayro Litigation”). In the Complaint, Arcimoto alleged that Ayro’s 311 two-seater electric vehicles infringe U.S. Patent 8,985,255 (the “255 Patent”). The Complaint asked for monetary damages and enhanced damages due to willful infringement of the 255 Patent by Ayro. On March 27, 2020, Ayro answered the Complaint, denying liability and asserting counterclaims of noninfringement and patent invalidity. During the first quarter of 2021, the parties reached a settlement and submitted a request to the court to dismiss the case.


XML 30 R20.htm IDEA: XBRL DOCUMENT v3.21.1
Income Taxes
3 Months Ended
Mar. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 13: INCOME TAXES


The Company recorded a tax benefit of $2,938,848 for the period ended March 31, 2021 related to a partial release of its valuation allowance stemming from the acquisition of TMW (See Note 3). The acquisition of TMW created a deferred tax liability position, and those deferred tax liabilities can be used as a source of income for our existing deferred tax assets.


XML 31 R21.htm IDEA: XBRL DOCUMENT v3.21.1
Subsequent Events
3 Months Ended
Mar. 31, 2021
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 14: SUBSEQUENT EVENTS


On April 19, 2021, the Company closed and completed the purchase of properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue for the sum of $10,250,000. The Company also purchased and closed an additional property commonly known as 1593 W. 5th Ave. Eugene, Oregon for related purposes for the sum of $2,500,000.  The $12,750,000 was paid in cash.


Between April 9 and April 20, 2021, 15,000 employee warrants were exercised for cash at a grant price of $0.50 per share.  Net proceeds to the Company were $7,500.


Between April 29 and May 5, 2020, 10,333 employee incentive stock options were exercised for cash at grant prices ranging from $1.71 to $4.52.  Net proceeds to the Company were $35,389.


XML 32 R22.htm IDEA: XBRL DOCUMENT v3.21.1
Accounting Policies, by Policy (Policies)
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Going Concern

Going Concern


The accompanying financial statements have been prepared on a basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred significant losses since inception and management expects losses to continue for the foreseeable future. The Company had approximately $46,650,000 of cash as of March 31, 2021, which is in excess of cash needed for the next twelve months.

Unaudited Interim Financial Information

Unaudited Interim Financial Information


The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and pursuant to the instructions to Form 10-Q promulgated by the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all information and disclosures required by GAAP for complete financial statement presentation. In the opinion of management, the accompanying condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the Company’s financial position as of March 31, 2021, and the results of its operations for the three months ended March 31, 2021 and 2020 and its cash flows for the three months ended March 31, 2021 and 2020. Results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2021.

Business Combinations

Business Combinations


The Company accounts for business combinations under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations” using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. All acquisition costs are expensed as incurred. Upon acquisition, the acquired assets and liabilities and results of operations are consolidated beginning at the acquisition date.

Inventory

Inventory


Inventory is stated at the lower of cost (using the first-in, first-out method (“FIFO”) or market value. Inventories consist of purchased electric motors, electrical storage and transmission equipment, and component parts.


   March 31,
2021
   December 31,
2020
 
Raw materials  $4,892,827   $4,667,780 
Work in progress   59,078    65,210 
Finished goods   690,919    371,078 
Total  $5,642,824   $5,104,068 

The Company is required to remit partial prepayments for some purchases of its inventories acquired from overseas vendors which are included in prepaid inventories. The Company is currently selling vehicles below the base cost of a finished unit. Accordingly, the Company expensed all labor and overhead as period costs, and recorded an allowance to reduce inventories to net realizable value of approximately $593,000 and $550,000 as of March 31, 2021 and December 31, 2020, respectively.

Customer Deposits

Customer Deposits


Non-refundable customer deposits are comingled with operating funds. Refundable customer deposits are held in a separate deposit account. Revenue is not recognized on customer deposits until the deposit is applied to a non-refundable vehicle order, the vehicle manufacturing process is completed, the vehicle is picked up by or delivered to the customer and the appropriate revenue recognition criteria have been met.

Intangible Assets

Intangible Assets


Intangible assets primarily consist of trade names/trademarks, proprietary technology, and customer relationships. They are amortized using the straight-lined method over a period of 10 to 14 years. The Company assesses the recoverability of its finite-lived intangible assets when there are indications of potential impairment. Indefinite-lived intangible assets are evaluated for impairment annually.

Goodwill

Goodwill


The Company tests goodwill for potential impairment at least annually, or more frequently if an event or other circumstance indicates that the Company may not be able to recover the carrying amount of the net assets of the reporting unit. In evaluating goodwill for impairment, the Company may assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. If the Company bypasses the qualitative assessment, or if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.


The Company calculates the estimated fair value of a reporting unit using a weighting of the income and market approaches. For the income approach, the Company uses internally developed discounted cash flow models that include the following assumptions, among others: projections of revenues, expenses, and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. For the market approach, the Company uses internal analyses based primarily on market comparables. The Company bases these assumptions on its historical data and experience, third party appraisals, industry projections, micro and macro general economic condition projections, and its expectations.

Net Earnings or Loss per Share

Net Earnings or Loss per Share


The Company’s computation of earnings (loss) per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common shareholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., common stock warrants and common stock options) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares 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 EPS.


Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented because all common stock warrants and common stock options outstanding were anti-dilutive.


At March 31, 2021 and 2020, the Company excluded the outstanding Employee Equity Plans (“EEP”) and other securities summarized below calculated using the Treasury Stock Method, which entitled the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive.


   Three Months Ended
March 31,
 
   2021   2020 
Options and other instruments under the 2012, 2015, and 2018 Plans to purchase common stock   3,094,548    431,746 
Underwriters and investors warrants issued outside of an EEP   76,402     
Total   3,170,950    431,746 
Recent Accounting Pronouncements

Recent Accounting Pronouncements


The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financial statements properly reflect the change.


In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) which supersedes ASC Topic 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets for all the leases with terms greater than 12 months. Based on certain criteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. In November 2019, the FASB delayed the effective date for Topic 842 to fiscal years beginning after December 15, 2020 for private companies and emerging growth companies, and interim periods within those years, with early adoption permitted. In June 2020, the FASB issued ASU No 2020-05 that further delayed the effective date of Topic 842 to fiscal years beginning after December 15, 2021. We will adopt this new standard on January 1, 2022. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” that allows entities to apply the provisions of the new standard at the effective date, as opposed to the earliest period presented under the modified retrospective transition approach and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unless the lease is modified. The Company currently expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon its adoption of Topic 842, which will increase the total assets and total liabilities that the Company reports relative to such amounts prior to adoption.

Adoption of Recent Accounting Pronouncements

Adoption of Recent Accounting Pronouncements


In October 2020, the FASB issued ASU 2020-10, “Codification Improvements” (“ASU 2020-10”), which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations. The effective date of the standard will be for interim and annual reporting periods beginning after December 15, 2020 for public entities. The new guidance was effective upon issuance of this final accounting standards update. The Company has adopted this standard and the adoption did not have a material impact on its condensed consolidated financial statements or disclosures.

XML 33 R23.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Schedule of inventory
   March 31,
2021
   December 31,
2020
 
Raw materials  $4,892,827   $4,667,780 
Work in progress   59,078    65,210 
Finished goods   690,919    371,078 
Total  $5,642,824   $5,104,068 
Schedule of earnings per share anti-dilutive
   Three Months Ended
March 31,
 
   2021   2020 
Options and other instruments under the 2012, 2015, and 2018 Plans to purchase common stock   3,094,548    431,746 
Underwriters and investors warrants issued outside of an EEP   76,402     
Total   3,170,950    431,746 
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.21.1
TMW Acquisition (Tables)
3 Months Ended
Mar. 31, 2021
Business Combinations [Abstract]  
Schedule of purchase price
Cash  $1,754,083 
Add: Fair value of shares issued   13,038,355 
Total consideration  $14,792,438 
Description  Fair value 
Assets acquired:    
Inventory  $342,394 
Prepaid expenses and other current assets   4,083 
Property, plant, and equipment   4,349 
Trade name   2,052,000 
Proprietary technology   7,010,000 
Customer relationships   1,586,000 
Goodwill   6,824,209 
Total assets acquired  $17,823,035 
      
Liabilities assumed:     
Customer deposits  $91,749 
Deferred tax liability   2,938,848 
Total liabilities assumed   3,030,597 
Estimated fair value of net assets acquired  $14,792,438 
Schedule of proforma financial information
   For the Three Months Ended
March 31,
 
   2021   2020 
Revenues  $1,403,954   $828,660 
Net loss attributable to common stockholders  $(7,911,783)  $(3,860,541)
Net loss per basic and diluted common share  $(0.22)  $(0.15)
Weighted average common shares outstanding:          
Basic and diluted   35,327,316    24,916,784 
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment (Tables)
3 Months Ended
Mar. 31, 2021
Property, Plant and Equipment [Abstract]  
Schedule of property and equipment
   March 31,
2021
   December 31,
2020
 
Machinery and equipment  $5,245,534   $5,245,534 
Fixed assets in process   2,105,561    1,993,760 
Leasehold improvements   983,522    983,522 
FUV fleet   520,354    336,730 
FUV rental fleet   115,124     
Computer equipment and software   188,984    94,384 
Vehicles   97,661     
Furniture and fixtures   52,007    52,007 
Total property and equipment   9,308,747    8,705,937 
Less: Accumulated depreciation   (2,359,587)   (2,060,707)
Total  $6,949,160   $6,645,230 
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.21.1
Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of intangible assets
      March 31, 2021 
   Estimated
Useful Life
(Years)
  Gross
Carrying
Amount at December 31,
2020
   Assets
Acquired
Pursuant to
Business
Combination
(1)
   Accumulated
Amortization
   Net Book
Value
 
Tradename and trademarks  14 years  $   $2,052,000   $(22,684)  $2,029,316 
Proprietary technology  13 years       7,010,000    (83,452)   6,926,548 
Customer relationships  10 years       1,586,000    (24,545)   1,561,455 
      $   $10,648,000   $(130,681)  $10,517,319 
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.21.1
Goodwill (Tables)
3 Months Ended
Mar. 31, 2021
Disclosure Text Block Supplement [Abstract]  
Schedule of goodwill
   Total
Goodwill
 
Balance as of January 1, 2021  $ 
Goodwill additions through Tilting Motor Works acquisition   6,824,209 
Less: impairment charge recorded    
Balance as of March 31, 2021  $6,824,209 
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.21.1
Stock-Based Payments (Tables)
3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]  
Schedule of stock-based compensation, including stock-options, warrants and stock issued for compensation and services
   Three Months Ended
March 31,
 
   2021   2020 
Research and development  $162,447   $53,700 
Sales and marketing   98,589    21,157 
General and administrative   218,623    163,884 
Cost of goods sold   180,520    66,224 
Total  $660,479   $304,965 
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.21.1
Commitments and Contingencies (Tables)
3 Months Ended
Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Schedule of future minimum rent payments by year
Remaining payments for years ending December 31:    
2021   640,619 
2022   543,246 
2023   517,945 
2024   340,840 
2025   229,916 
Thereafter   77,267 
Total  $2,349,833 
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Details) - USD ($)
3 Months Ended
Mar. 31, 2021
Dec. 31, 2020
Summary of Significant Accounting Policies (Details) [Line Items]    
Cash and cash equivalents $ 46,650,143 $ 39,451,401
Inventory scrap $ 593,000 $ 550,000
Percentage of fair value of reporting unit in excess of carrying amount 50.00%  
Minimum [Member]    
Summary of Significant Accounting Policies (Details) [Line Items]    
Intangible assets amortized useful life 10 years  
Maximum [Member]    
Summary of Significant Accounting Policies (Details) [Line Items]    
Intangible assets amortized useful life 14 years  
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of inventory - USD ($)
Mar. 31, 2021
Dec. 31, 2020
Schedule of inventory [Abstract]    
Raw materials $ 4,892,827 $ 4,667,780
Work in progress 59,078 65,210
Finished goods 690,919 371,078
Total $ 5,642,824 $ 5,104,068
XML 42 R32.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of earnings per share anti-dilutive - shares
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total 3,170,950 431,746
Options and other instruments under the 2012, 2015, and 2018 Plans to purchase common stock [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total 3,094,548 431,746
Underwriters and investors warrants issued outside of an EEP [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Total 76,402
XML 43 R33.htm IDEA: XBRL DOCUMENT v3.21.1
TMW Acquisition (Details)
1 Months Ended
Jan. 23, 2021
USD ($)
shares
Business Combinations [Abstract]  
Cash paid | $ $ 1,754,083
Issued shares of common stock | shares 436,339
Date of acquisition 12.50%
XML 44 R34.htm IDEA: XBRL DOCUMENT v3.21.1
TMW Acquisition (Details) - Schedule of purchase price - USD ($)
Feb. 04, 2021
Mar. 31, 2021
Dec. 31, 2020
Schedule of purchase price [Abstract]      
Cash $ 1,754,083    
Add: Fair value of shares issued (in Shares) 13,038,355    
Total consideration $ 14,792,438    
Assets acquired:      
Inventory 342,394    
Prepaid expenses and other current assets 4,083    
Property, plant, and equipment 4,349    
Trade name 2,052,000    
Proprietary technology 7,010,000    
Customer relationships 1,586,000    
Goodwill 6,824,209 $ 6,824,209
Total assets acquired 17,823,035    
Liabilities assumed:      
Customer deposits 91,749    
Deferred tax liability 2,938,848    
Total liabilities assumed 3,030,597    
Estimated fair value of net assets acquired $ 14,792,438    
XML 45 R35.htm IDEA: XBRL DOCUMENT v3.21.1
TMW Acquisition (Details) - Schedule of proforma financial information - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Schedule of proforma financial information [Abstract]    
Revenues $ 1,403,954 $ 828,660
Net loss attributable to common stockholders $ (7,911,783) $ (3,860,541)
Net loss per basic and diluted common share (in Dollars per share) $ (0.22) $ (0.15)
Weighted average common shares outstanding:    
Basic and diluted (in Shares) 35,327,316 24,916,784
XML 46 R36.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment (Details) - USD ($)
1 Months Ended 3 Months Ended
Dec. 23, 2020
Mar. 31, 2021
Mar. 31, 2020
Property, Plant and Equipment [Abstract]      
Depreciation expense   $ 299,000 $ 208,000
Purchase of assets, description the Company entered into an agreement to purchase certain buildings totaling approximately 187,000 square feet, and approximately 6.6 acres of real estate located within the City of Eugene, Oregon. The Company has agreed to purchase the properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue, from RLA Holdings, LLC for the total purchase price of $10,250,000. The Company pledged $80,000 as earnest money for the transaction. During the first quarter of 2021, an additional 4.1 acres and 33,000 square feet of buildings to the south were added to the purchase agreement totaling $2,500,000. The total sales price was increased to $12,750,000. The purchase was contingent upon the Company’s complete and unconditional approval of: (i) the property and its physical condition, zoning and land use restrictions, and all systems, utilities, and access rights pertaining to the property; (ii) the seller’s documents; (iii) securing financing; (iv) a Phase I environmental assessment and all appropriate inquiries investigation so as to protect the Company under CERCLA; and (v) anything else the Company deems necessary. On March 15, 2021, the due diligence was complete and the Company paid the $80,000 earnest money. On April 19, 2021, the Company closed and completed the purchase of the properties described above. RLA Holdings, LLC will be permitted to rent back the 311 Chambers St property after closing for up to six (6) months at a rate of $50,000 per month plus all utilities, taxes, insurance, and maintenance expenses. The Company intends to utilize these properties to improve its production capabilities.    
XML 47 R37.htm IDEA: XBRL DOCUMENT v3.21.1
Property and Equipment (Details) - Schedule of property and equipment - USD ($)
Mar. 31, 2021
Dec. 31, 2020
Property, Plant and Equipment [Line Items]    
Total property and equipment $ 9,308,747 $ 8,705,937
Less: Accumulated depreciation (2,359,587) (2,060,707)
Total 6,949,160 6,645,230
Machinery and equipment [Member]    
Property, Plant and Equipment [Line Items]    
Total property and equipment 5,245,534 5,245,534
Fixed assets in process [Member]    
Property, Plant and Equipment [Line Items]    
Total property and equipment 2,105,561 1,993,760
Leasehold improvements [Member]    
Property, Plant and Equipment [Line Items]    
Total property and equipment 983,522 983,522
FUV fleet [Member]    
Property, Plant and Equipment [Line Items]    
Total property and equipment 520,354 336,730
FUV rental fleet [Member]    
Property, Plant and Equipment [Line Items]    
Total property and equipment 115,124
Computer equipment and software [Member]    
Property, Plant and Equipment [Line Items]    
Total property and equipment 188,984 94,384
Vehicles [Member]    
Property, Plant and Equipment [Line Items]    
Total property and equipment 97,661
Furniture and fixtures [Member]    
Property, Plant and Equipment [Line Items]    
Total property and equipment $ 52,007 $ 52,007
XML 48 R38.htm IDEA: XBRL DOCUMENT v3.21.1
Intangible Assets (Details) - Schedule of intangible assets
3 Months Ended
Mar. 31, 2021
USD ($)
Finite-Lived Intangible Assets [Line Items]  
Gross Carrying Amount
Assets Acquired Pursuant to Business Combination 10,648,000 [1]
Accumulated Amortization (130,681)
Net Book Value $ 10,517,319
Tradename and trademarks [Member]  
Finite-Lived Intangible Assets [Line Items]  
Estimated Useful Life (Years) 14 years
Gross Carrying Amount
Assets Acquired Pursuant to Business Combination 2,052,000 [1]
Accumulated Amortization (22,684)
Net Book Value $ 2,029,316
Proprietary technology [Member]  
Finite-Lived Intangible Assets [Line Items]  
Estimated Useful Life (Years) 13 years
Gross Carrying Amount
Assets Acquired Pursuant to Business Combination 7,010,000 [1]
Accumulated Amortization (83,452)
Net Book Value $ 6,926,548
Customer relationships [Member]  
Finite-Lived Intangible Assets [Line Items]  
Estimated Useful Life (Years) 10 years
Gross Carrying Amount
Assets Acquired Pursuant to Business Combination 1,586,000 [1]
Accumulated Amortization (24,545)
Net Book Value $ 1,561,455
[1] On January 23, 2021 the Company acquired various assets of Tilting Motor Works, Inc. (See Note 3)
XML 49 R39.htm IDEA: XBRL DOCUMENT v3.21.1
Goodwill (Details) - Schedule of goodwill
3 Months Ended
Mar. 31, 2021
USD ($)
Schedule of goodwill [Abstract]  
Balance as of January 1, 2021
Goodwill additions through Tilting Motor Works acquisition 6,824,209
Less: impairment charge recorded
Balance as of March 31, 2021 $ 6,824,209
XML 50 R40.htm IDEA: XBRL DOCUMENT v3.21.1
Capital Lease Obligations (Details) - USD ($)
3 Months Ended
Mar. 31, 2021
Dec. 31, 2020
Capital Lease Obligations (Details) [Line Items]    
Purchase of capital equipment $ 1,250,000  
Capital lease payments $ 25,223  
Lease obligations maturity, description These lease obligations mature ranging from December 2021  
Underlying assets $ 1,427,000  
Accumulated depreciation 475,000  
Capital lease obligations 594,000 $ 781,000
Minimum [Member]    
Capital Lease Obligations (Details) [Line Items]    
Purchase of capital equipment $ 437  
Repayment financial term 48 months  
Effective interest rates 4.52%  
Maximum [Member]    
Capital Lease Obligations (Details) [Line Items]    
Purchase of capital equipment $ 8,582  
Repayment financial term 60 months  
Effective interest rates 9.52%  
XML 51 R41.htm IDEA: XBRL DOCUMENT v3.21.1
Notes Payable (Details) - USD ($)
1 Months Ended 3 Months Ended
May 05, 2020
Apr. 27, 2021
Mar. 31, 2021
Notes Payable (Details) [Line Items]      
Description of note convertible the Company received a Paycheck Protection Program (“PPP”) loan in the amount of $1,068,686, referred to on the balance sheet as Note payable to bank. The loan has an interest rate of 1% and monthly payments of $60,154 for 18 months beginning December 5, 2020.   the Company has financed a total of approximately $2,440,000 of its capital equipment purchases with monthly payments ranging from $362 to $11,749, repayment terms ranging from 60 to 72 months, and effective interest rates ranging from 1.99% to 9.90%. Total monthly payments as of March 31, 2021 are $47,376. These equipment notes mature ranging from January 2023 through October 2026. The balance of equipment financing notes payable was approximately $1,832,000 and $1,590,000 as of March 31, 2021 and December 31, 2020, respectively.
Balance loan     $ 1,068,686
Subsequent Event [Member]      
Notes Payable (Details) [Line Items]      
Outstanding principal forgiven amount   $ 1,068,686  
Interest forgiven amount   $ 10,568  
XML 52 R42.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders’ Equity (Details) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Jan. 25, 2021
Mar. 31, 2021
Mar. 31, 2020
Dec. 31, 2020
Stockholders’ Equity (Details) [Line Items]        
Preferred stock, shares authorized   1,500,000   1,500,000
Reserved shares of common stock equity incentive plans   4,876,580    
Issuance of common stock shares   11,000 32,749  
Fair value of common stock (in Dollars)   $ 146,300 $ 56,328  
Equity Distribution Agreement [Member]        
Stockholders’ Equity (Details) [Line Items]        
Aggregate gross proceeds (in Dollars) $ 80,000,000      
ATM [Member]        
Stockholders’ Equity (Details) [Line Items]        
Aggregate shares of common stock 581,782      
Aggregate net proceeds (in Dollars)   $ 13,500,000    
ATM [Member] | Minimum [Member]        
Stockholders’ Equity (Details) [Line Items]        
Purchase price per share (in Dollars per share)   $ 19.35    
ATM [Member] | Maximum [Member]        
Stockholders’ Equity (Details) [Line Items]        
Purchase price per share (in Dollars per share)   $ 32.50    
Equity Incentive Plan [Member]        
Stockholders’ Equity (Details) [Line Items]        
Reserved shares of common stock equity incentive plans   122,238   593,667
Options and warrants outstanding (in Dollars)   $ 3,938,824   $ 4,058,791
Employee Stock Option [Member]        
Stockholders’ Equity (Details) [Line Items]        
Stock option exercised   54,985    
Proceeds from stock option exercised (in Dollars)   $ 127,987    
Employee Stock Option [Member] | Minimum [Member]        
Stockholders’ Equity (Details) [Line Items]        
Exercise price (in Dollars per share)   $ 1.71    
Employee Stock Option [Member] | Maximum [Member]        
Stockholders’ Equity (Details) [Line Items]        
Exercise price (in Dollars per share)   $ 4.52    
Employee Stock Option [Member] | Warrants [Member]        
Stockholders’ Equity (Details) [Line Items]        
Stock option exercised   15,000    
Proceeds from stock option exercised (in Dollars)   $ 7,500    
Warrants exercise price (in Dollars per share)   $ 0.50    
Employee Stock Option One [Member]        
Stockholders’ Equity (Details) [Line Items]        
Stock option exercised   471,429    
Exercise price (in Dollars per share)   $ 3.50    
Proceeds from stock option exercised (in Dollars)   $ 1,650,001    
Series A-1 Preferred Stock [Member]        
Stockholders’ Equity (Details) [Line Items]        
Preferred stock, shares authorized   1,500,000   1,500,000
Conversion provisions upon an initial public offering (in Dollars)   $ 15,000,000    
Fair value of common stock (in Dollars)    
Class C Preferred Stock [Member]        
Stockholders’ Equity (Details) [Line Items]        
Preferred stock, shares authorized   2,000,000   2,000,000
Preferred stock, shares designated   2,000,000    
Fair value of common stock (in Dollars)    
XML 53 R43.htm IDEA: XBRL DOCUMENT v3.21.1
Stock-Based Payments (Details) - USD ($)
1 Months Ended 3 Months Ended
Apr. 20, 2020
Mar. 31, 2021
Mar. 31, 2020
Stock-Based Payments (Details) [Line Items]      
Options authorized   11,000 32,749
Description of stock-based compensation   Total compensation cost related to non-vested awards issued under the 2018 Plan not yet recognized as of March 31, 2021 was approximately $4,380,134 and will be recognized on a straight-line basis through December 2023 based on the respective vesting periods. The amount of future stock option compensation expense could be affected by any future option grants or forfeitures.  
2018 Omnibus Stock Incentive Plan [Member]      
Stock-Based Payments (Details) [Line Items]      
Options authorized   1,000,000  
Additional shares of common stock   1,000,000  
Remaining reserve of shares of common stock under plan   932,311  
Employee stock-based compensation expense (in Dollars)   $ 638,907 $ 267,641
Minimum [Member] | 2018 Omnibus Stock Incentive Plan [Member]      
Stock-Based Payments (Details) [Line Items]      
Additional shares of common stock 2,000,000    
Maximum [Member] | 2018 Omnibus Stock Incentive Plan [Member]      
Stock-Based Payments (Details) [Line Items]      
Additional shares of common stock 4,000,000    
XML 54 R44.htm IDEA: XBRL DOCUMENT v3.21.1
Stock-Based Payments (Details) - Schedule of stock-based compensation, including stock-options, warrants and stock issued for compensation and services - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Stock-based compensation $ 660,479 $ 304,965
Research and development [Member]    
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Stock-based compensation 162,447 53,700
Sales and marketing [Member]    
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Stock-based compensation 98,589 21,157
General and administrative [Member]    
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Stock-based compensation 218,623 163,884
Cost of goods sold [Member]    
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]    
Stock-based compensation $ 180,520 $ 66,224
XML 55 R45.htm IDEA: XBRL DOCUMENT v3.21.1
Customer Deposits (Details) - USD ($)
Mar. 31, 2021
Dec. 31, 2020
Customer Deposits (Details) [Line Items]    
Deposits received $ 616,173 $ 605,532
Refundable deposits amount 409,724 $ 403,624
Customer deposits from related parties 100  
Retail Series Production Vehicles [Member] | Minimum [Member]    
Customer Deposits (Details) [Line Items]    
Customer deposits per order 100  
Retail Series Production Vehicles [Member] | Maximum [Member]    
Customer Deposits (Details) [Line Items]    
Customer deposits per order $ 500  
XML 56 R46.htm IDEA: XBRL DOCUMENT v3.21.1
Commitments and Contingencies (Details)
1 Months Ended 3 Months Ended
Dec. 31, 2021
Feb. 08, 2021
Feb. 28, 2021
USD ($)
Mar. 06, 2020
Mar. 31, 2021
USD ($)
Mar. 31, 2020
USD ($)
ft²
Nov. 18, 2020
ft²
Mar. 03, 2020
Commitments and Contingencies Disclosure [Abstract]                
Office lease 1,700         6,508 106 10,752
Warehouse space | m² 32,000       4,318      
Rent         $ 11,750      
Rent expenses percentage         3.00%      
Asphalt paving and undeveloped greenfield space | m² 125,000              
Office lease, description   we entered into a lease for a 15,124 square foot office space on the second floor of 155 Blair Boulevard, Eugene, Oregon 97402 that will be used for office and general use and warehouse space located at 135 Blair Boulevard, Eugene, Oregon 97402 that will be used for a dealer and rental location. The term of the lease is 60 months which began on March 1, 2020. There is an option for two successive five-year extension periods. Rent is $17,500 per month and subject to a 2.5% increase per year.            
Rent expense         $ 140,413 $ 62,042    
Munro work space expenses     $ 3,750,000          
Associates research and development expense         $ 2,407,695 $ 448,974    
Commitments and contingencies, description       Arcimoto alleged that Ayro’s 311 two-seater electric vehicles infringe U.S. Patent 8,985,255 (the “255 Patent”). The Complaint asked for monetary damages and enhanced damages due to willful infringement of the 255 Patent by Ayro.        
XML 57 R47.htm IDEA: XBRL DOCUMENT v3.21.1
Commitments and Contingencies (Details) - Schedule of future minimum rent payments by year
Mar. 31, 2021
USD ($)
Schedule of future minimum rent payments by year [Abstract]  
2021 $ 640,619
2022 543,246
2023 517,945
2024 340,840
2025 229,916
Thereafter 77,267
Total $ 2,349,833
XML 58 R48.htm IDEA: XBRL DOCUMENT v3.21.1
Income Taxes (Details)
3 Months Ended
Mar. 31, 2021
USD ($)
Income Tax Disclosure [Abstract]  
Income tax benefit $ (2,938,848)
XML 59 R49.htm IDEA: XBRL DOCUMENT v3.21.1
Subsequent Events (Details) - Subsequent Event [Member] - USD ($)
1 Months Ended
May 05, 2021
Apr. 21, 2021
Apr. 19, 2021
Subsequent Events (Details) [Line Items]      
Subsequent event, description     the Company closed and completed the purchase of properties commonly known as 311 Chambers Street and 1480 West 3rd Avenue for the sum of $10,250,000. The Company also purchased and closed an additional property commonly known as 1593 W. 5th Ave. Eugene, Oregon for related purposes for the sum of $2,500,000. The $12,750,000 was paid in cash.
Investor exercised warrants (in Shares)   15,000  
Investor exercised warrants   $ 0.50  
Net proceeds (in Dollars)   $ 7,500  
Sale of stock (in Shares) 10,333    
Total gross proceeds (in Dollars) $ 35,389    
Minimum [Member]      
Subsequent Events (Details) [Line Items]      
Average price per share $ 1.71    
Maximum [Member]      
Subsequent Events (Details) [Line Items]      
Average price per share $ 4.52    
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