UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2023

☐	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: 333-261384

Phoenix Motor Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		85-4319789
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


1500 Lakeview Loop, Anaheim, CA		92807
(Address of Principal Executive Offices)		(Zip Code)

(909) 978-0815

(Registrant’s Telephone Number, Including Area Code)

(Former name or former address, if changed since last report)

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


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.0004 per share	PEV	NASDAQ Capital Market

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 ☒

The registrant had 21,291,924 shares of common stock outstanding on August 14, 2023.

Table of Contents

TABLE OF CONTENTS

		Page
Part I.	Financial Information
	Item 1. Interim Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	F-1
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023, and 2022	F-2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023, and 2022	F-3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023, and 2022	F-4
	Notes to Unaudited Condensed Consolidated Financial Statements	F-5
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	10
	Item 4. Controls and Procedures	10
Part II.	Other Information
	Item 1. Legal Proceedings	11
	Item 1A. Risk Factors	11
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	11
	Item 3. Defaults Upon Senior Securities	11
	Item 4. Mine Safety Disclosures	11
	Item 5. Other Information.	11
	Item 6. Exhibits	12
Signatures		13

Table of Contents

PHOENIX MOTOR INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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


	June 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	382	$	139
Accounts receivable, net		1,771		1,510
Inventories		2,190		4,560
Prepaid expenses and other current assets		1,041		1,344
Restricted cash, current		250		—
Amount due from a related party		75		168
Total current assets		5,709		7,721
Restricted cash, noncurrent		—		250
Property and equipment, net		2,775		2,492
Security deposit		208		208
Right-of-use assets		3,423		3,797
Net investment in leases		217		—
Intangible assets, net		1,394		1,704
Goodwill		4,271		4,271
Total assets	$	17,997	$	20,443

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,031	$	1,359
Accrued liabilities		648		650
Advance from customers		1,650		1,230
Deferred income		486		503
Warranty reserve		302		325
Derivative liability		294		—
Lease liabilities - current portion		761		719
Long-term borrowing, current portion		3		3
Total current liabilities		6,175		4,789
Lease liabilities - non-current portion		2,809		3,225
Convertible notes		1,170		—
Long-term borrowings		143		147
Total liabilities		10,297		8,161

Commitments and contingencies (Note 11)

Equity:
Common stock, par $0.0004, 450,000,000 shares authorized, 21,291,924 and 20,277,046 shares issued and outstanding as of June 30, 2023, and December 31, 2022, respectively		8		8
Additional paid-in capital		42,209		40,836
Accumulated deficit		(34,517)		(28,562)
Total stockholders’ equity		7,700		12,282
Total liabilities and stockholders’ equity	$	17,997	$	20,443

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

F-1

Table of Contents

PHOENIX MOTOR INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Revenues	$	1,158	$	1,499	$	2,939	$	2,170
Cost of revenues		1,219		1,174		2,827		1,725
Gross profit (loss)		(61)		325		112		445
Operating expenses:
Selling, general and administrative		3,100		2,290		6,946		5,313
Operating loss		(3,161)		(1,965)		(6,834)		(4,868)

Other income (expense):
Interest (expense) income, net		(2)		(2)		(1)		(4)
Gain on sales-type leases						99
Others		8		54		803		639
Total other income, net		6		52		901		635
Loss before income taxes		(3,155)		(1,913)		(5,933)		(4,233)
Income tax provision		(22)		(12)		(22)		(14)
Net loss	$	(3,177)	$	(1,925)	$	(5,955)	$	(4,247)

Net loss per share of common stock:
Basic and diluted	$	(0.15)	$	(0.11)	$	(0.28)		(0.24)
Weighted average shares outstanding*		21,261,704		17,984,615		21,038,874		17,740,984

* The shares are presented on a retrospective basis to reflect the Company’s stock split (Note 7)

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

F-2

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PHOENIX MOTOR INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

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


						Additional				Total
	Common Stock			Subscription		Paid-In		Accumulated			Stockholders’
	Shares*	Amount		Receivable		Capital		Deficit		Equity
Balance as of January 1, 2022	17,500,000	$	7	$	(7)	$	26,085	$	(15,857)	$	10,228
Net loss	—		—		—		—		(2,322)		(2,322)
Stock-based compensation	—		—		—		63		—		63
Balance as of March 31, 2022	17,500,000	$	7	$	(7)	$	26,148	$	(18,179)	$	7,969
Net loss	—		—		—		—		(1,925)		(1,925)
Stock-based compensation	—		—		—		52		—		52
Receipt of subscription receivable	—		—		7		—		—		7
Issuance of common stock in the initial public offering (“IPO”)	2,100,000		1		—		13,437		—		13,438
Balance as of June 30, 2022	19,600,000	$	8	$	—	$	39,637	$	(20,104)	$	19,541

Balance as of January 1, 2023	20,277,046	$	8	$	—	$	40,836	$	(28,562)	$	12,282
Net loss	—		—		—		—		(2,778)		(2,778)
Stock-based compensation	—		—		—		109		—		109
Issuance of common stock per standby equity purchase agreements	904,878		—		—		1,154		—		1,154
Balance as of March 31, 2023	21,181,924		8		—		42,099		(31,340)		10,767
Net loss	—		—		—		—		(3,177)		(3,177)
Stock-based compensation	—		—		—		37		—		37
Issuance of common stock per standby equity purchase agreements	110,000		—		—		73		—		73
Balance as of June 30, 2023	21,291,924		8		—		42,209		(34,517)		7,700

* The shares are presented on a retrospective basis to reflect the Company’s stock split (Note 7)

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

F-3

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PHOENIX MOTOR INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Six Month ended June 30,
	2023	2022
Cash flows from operating activities:
Net loss	(5,955)	(4,247)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	843	855
Gain on sales-type leases	(99)	—
Gain on disposal of fixed assets	—	(54)
Provision for doubtful accounts	10	—
Write-down of inventories	98	—
Forgiveness of PPP loan	—	(586)
Stock-based compensation expenses	146	115
Warranty reserve	(23)	(20)
Amortization of ROU	491	—
Changes in operating assets and liabilities:
Accounts receivable	(271)	(49)
Inventories	2,002	(1,607)
Prepaid expenses and other assets	405	(3,213)
Accounts payable	672	567
Accrued liabilities	(2)	101
Deferred revenue	(17)	(227)
Advance from customer	420	(9)
Lease liability	(491)	—
Amount due from related party	93	—
Net cash used in operating activities	(1,678)	(8,374)

Cash flows from investing activities:
Purchase of property and equipment	(766)	(8)
Proceeds from disposal of fixed assets	—	273
Loan lent to a related party	(400)	—
Proceeds from repayment from a related party	400	—
Net cash (used in) provided by investing activities	(766)	265

Cash flows from financing activities:
Repayment of borrowings	(4)	(5)
Proceeds from a related party	—	1,676
Repayment to a related party	—	(1,676)
Proceeds from IPO	—	13,438
Proceeds from capital injection by a shareholder	—	7
Proceeds from convertible notes	1,464	—
Proceeds received from standby equity purchase agreement	1,227	—
Net cash generated from financing activities	2,687	13,440

Increase in cash, cash equivalents and restricted cash	243	5,331
Cash, cash equivalents and restricted cash at beginning of the period	389	2,683
Cash, cash equivalents and restricted cash at end of the period	632	8,014

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents	382	7,764
Restricted cash	250	250
Total cash, cash equivalents, and restricted cash	632	8,014

Supplemental cash flow information:
Income tax paid	—	3
Non-cash investing activities:
Inventories transferred to property and equipment	270	36
Derivative liability recorded as debt discount	294	—

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

F-4

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PHOENIX MOTOR INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in US$ thousands except for shares)

1.Description of Business and Organization

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

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

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

On June 8, 2022, the Company sold 2,100,000 shares of its common stock in its IPO, at an offering price of $7.5 per share. The Company received net proceeds of $13,438 after deducting underwriting discounts and commissions.

On December 21, 2022, the Group sold to YA II PN, LTD 30,000 shares of common stock as a draw-down pursuant to a Standby Equity Purchase Agreement (“SEPA”) (Note 7) and received $30 in net proceeds from the sale.

During the six months ended June 30, 2023, the Group sold to YA II PN, LTD 1,014,878 shares of common stock in total as the Group continued to draw down under the SEPA and received $1,227 in net proceeds from the sales.

2.Summary of Significant Accounting Policies

(a)Basis of Presentation

The accompany unaudited condensed consolidated financial statements of the Group are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The unaudited condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s consolidated financial statements as of December 31, 2022 and accompanying notes in the Company’s 2022 Annual Report on Form 10-K.

SEC Form 10-Q filed by Phoenix Motor Inc.