v3.25.2
Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2025
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation—These unaudited consolidated financial statements are prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States ("U.S.") generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the Company’s opinion, these unaudited financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the interim periods. These unaudited financial statements should be read in conjunction with the Company's audited financial statements for the years ended  December 31, 2024 and 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 15, 2025. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year.

 
Reclassification, Comparability Adjustment [Policy Text Block]

Out of Period Adjustment—During the three months ended June 20, 2025, the Company recorded out-of-period adjustments to correct errors related to the understatement of the sales and the understatement of research and development expense that were incorrectly omitted from the financial statements for the period ended March 31, 2025. Regarding the adjustment to sales the Company did not record sales for the three-month period ended March 31, 2025 due to lack of evidence that the performance obligation was met. An adjustment of $126,535 was recorded in the current period's statement of operations to recognize revenue associated with medical supplies that were delivered during the period. The research and development expense error was the result of Management not recognizing the nature of a development contract that was entered into during the period ended March 31, 2025 and beginning to expense the associated costs but rather those costs remained on the balance sheet within inventory deposits. The adjustment of $400,000 was recorded in the current period's statement of operations to recognize research and development expense and a corresponding reduction in inventory deposits on the balance sheet. Management has evaluated the impact of the errors, both qualitatively and quantitatively, and determined that they were not material to the financial statements for the quarter ended March 31, 2025, or the current period.

 
Consolidation, Policy [Policy Text Block] Principles of Consolidation—The accompanying financial statements reflect the consolidation of the financial statements of Envirotech Vehicles, Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.
Use of Estimates, Policy [Policy Text Block] Use of Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments—The carrying values of the Company’s financial instruments, including cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments.  Accounting Standards Codification ("ASC") 820, Fair Value Measurements ("ASC 820") defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

Level 1:         Observable inputs such as quoted prices in active markets;

 

Level 2:         Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

Level 3:         Unobservable inputs that are supported by little or no market data and that require the reporting entity to develop its own assumptions.

 

The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis other than the options liability and convertible note disclosed in Note 5 - Debt, in which the Company has elected the fair value option.

 
Revenue [Policy Text Block]

Revenue Recognition—The Company recognizes revenue from the sales of zero-emission electric vehicles and vehicle maintenance and inspection services and delivery of medical supplies to the customers of its related party. The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company recorded net revenue of ($25,237) from the delivery of electric vehicles as a result of certain credits given to our customers for operational issues. The Company recorded net revenue of $1,072,266 from the delivery of medical supplies to a related party for the three months ended June 30, 2025 for the Company's medical supplies segment. One customer accounted for 100% of the net revenue for the three months ended June 30, 2025 from the delivery of an electric vehicle in the electric vehicle segment. Certain credit memos were issued to one customer due to one-time operational issues. One customer, a related party, accounted for 100% of the net revenue for the three months ended June 30, 2025 for the Company's medical supplies segment.  

 

Net revenue recorded for the six months ended June 30, 2025 was $348,063 and $1,289,532 for the electric vehicles segment and medical supplies segment, respectively.  Two customers accounted for 100% of the net revenue for the delivery of electric vehicles in the electric vehicles segment for the six months ended June 30, 2025. One customer, a related party, in the medical supplies segment accounted for 100% or $1,289,532 of the net revenue for the six months ended June 30, 2025.  

 

In applying ASC 606, the Company is required to:

 

 

(1)

identify any contracts with customers;

 

 

(2)

determine if multiple performance obligations exist;

 

 

(3)

determine the transaction price;

 

 

(4)

allocate the transaction price to the respective obligation; and

 

 

(5)

recognize the revenue as the obligation is satisfied.

 

Product revenue primarily includes the sale of electric trucks and cargo vans. These sales represent a single performance obligation and revenue is recognized when the vehicle is delivered, the customer has accepted the vehicle and signed the appropriate documentation acknowledging receipt of the vehicle. At this time, the title of the vehicle is transferred to the customer.

 

Medical supply revenue is recognized at the point in time when control transfers to the customer, which in this arrangement, occurs when the gowns are delivered.

 
Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents—The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less to be cash equivalents. The recorded value of our restricted cash and cash equivalents approximates their fair value. The Company had no restricted cash at both  June 30, 2025 and  December 31, 2024. See Concentration of Credit Risk below in this Note.

 
Marketable Securities, Policy [Policy Text Block] Marketable Securities—The Company invests in short-term, highly liquid, marketable securities, such as U.S. Treasury notes, U.S. Treasury bonds, and other government-backed securities. The Company classifies these marketable securities as held-to-maturity, as the intent is not to liquidate them prior to the respective stated maturity date. The Company had no marketable securities at both June 30, 2025 and December 31, 2024.
Accounts Receivable [Policy Text Block]

Accounts Receivable and Allowance for Doubtful Accounts— The accounts receivable balance relates to the Company's electric vehicles segment. The Company establishes an allowance for bad debts through a review of several factors, including historical collection experience, current aging status of the customer accounts, and financial condition of its customers. The Company does not generally require collateral for its accounts receivable. The Company had trade accounts receivable of $846,982 as of  June 30, 2025 and a recorded allowance for doubtful accounts of $406,690, resulting in a net trade accounts receivable balance of $440,292. The Company had trade accounts receivable of $1,031,972 as of  December 31, 2024 and an allowance for doubtful accounts of $15,306, resulting in a net trade receivable balance of $1,016,666. A significant portion of the Company’s electric vehicle sales are made to customers who qualify for state-sponsored grant programs which can cover a significant portion, up to all of a vehicle’s purchase price. Grant monies are paid directly to vehicle dealers like the Company after the customer and the dealer meet state requirements related to the transaction; reimbursements to the Company may take two to nine months from the date of request before being received. The Company does not provide an allowance for doubtful accounts related to electric vehicle sales made utilizing state grant funds, as those funds are guaranteed by the state(s) once awarded. The trade accounts receivable balance at  June 30, 2025 is primarily from credit-worthy customers, many of whom are fully or partially funded through state government sponsored programs. At June 30, 2025, the Company did have a concentration of customers; with five customer balances accounting for approximately 93% of the outstanding accounts receivable of the Company's electric vehicle segment.

 

Receivable from Related Party and Allowance for Doubtful Accounts—The receivable from related party relates to the Company's medical supplies segment. The allowance for doubtful accounts is established by reviewing several factors, including historical collection experience, current aging of the customer account and financial condition of its customer. The Company had receivable from related party of $2,195,880 and a recorded allowance of $40,633, resulting in a net receivable from related party of $2,155,247 as of June 30, 2025. The Company had a receivable from related party of $1,000,000 and a recorded allowance of $6,700, resulting in a net receivable from related party of $993,300 as of December 31, 2024.

 
Inventory, Policy [Policy Text Block]

Inventory and Inventory Valuation Allowance—The Company records inventory at the lower of cost or market, and uses a First In, First Out accounting valuation methodology and establishes an inventory valuation allowance for vehicles that it does not intend to sell in the future or when their cost has fallen below net realizable value. The Company had finished goods inventory on hand of $6,040,410 as of June 30, 2025 and recorded an inventory valuation allowance of $1,184,731 related to vehicles that the Company does not intend to sell in the future, resulting in a net inventory balance of $4,855,679 at  June 30, 2025. The Company had finished goods inventory on hand and a related inventory valuation allowance of $6,428,806 and $12,429, respectively, as of December 31, 2024, resulting in a net inventory balance of $6,416,377 as of December 31, 2024.

 

Inventory Deposits—Certain of our vendors require the Company to pay upfront deposits before they commence manufacturing our vehicles and then require progress deposits through the production cycle and before the finished vehicles are shipped. These deposits are classified as inventory deposits in the consolidated balance sheets. Upon completion of production acceptance by the Company, and passage of title to the Company, deposits are reclassified to inventory. The Company had inventory deposits of $7,465,129 and $6,036,809 as of  June 30, 2025 and December 31, 2024, respectively. Funds obtained for the Company's electric buses are deposited within inventory deposits. Three vendors account for 100% of the inventory deposit balance at June 30, 2025. 

 
Income Tax, Policy [Policy Text Block]

Income Taxes—The Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.

 
Income Tax Uncertainties, Policy [Policy Text Block]

Accounting for Uncertainty in Income Taxes—The Company evaluates its uncertain tax positions and will recognize a loss contingency when it is probable that a liability has been incurred as of the date of the financial statements and the amount of the loss can be reasonably estimated. The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax positions in the aggregate could differ from the amount recognized. At  June 30, 2025 and December 31, 2024, respectively, management did not identify any uncertain tax positions.

 
Earnings Per Share, Policy [Policy Text Block]

Net Loss Per Share—Basic net loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. For the periods presented, the diluted loss per share and basic loss per share calculations are the same as the diluted loss per share calculation would be anti-dilutive.

 

Diluted net loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the diluted weighted average number of shares of common stock outstanding during the period. The diluted weighted average number of shares of common stock outstanding is the basic weighted number of shares of common stock adjusted for any potentially dilutive debt or equity securities. As of June 30, 2025, 977,250 shares of the Company’s common stock were subject to issuance upon the exercise of stock options then outstanding and 147,039 shares of the Company’s common stock were subject to issuance upon the exercise of warrants then outstanding. The Company also has convertible notes that may potentially be converted into shares of the Company’s common stock, however, the conversion is based on several market factors, and as such, the number of shares of the Company’s common stock to be converted is not known.

 
Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of Credit Risk—The Company has credit risks related to cash and cash equivalents on deposit with a federally insured bank, as at times it exceeds the $250,000 maximum amount insured by the Federal Deposit Insurance Corporation (“FDIC”). Additionally, the Company may maintain cash and short-term securities invested at Arvest Bank, National Association (“Arvest”). Between FDIC and the Securities Investor Protection Corporation (“SIPC”) coverage, funds up to $750,000, which may include cash up to $500,000, are insured. In addition, Arvest provides excess insurance acquired by them from SIPC for unlimited per customer securities up to a $1 billion cap. There were no short-term securities invested at Arvest at June 30, 2025. Additionally, the Company had a concentration in accounts payable, as three vendors and two vendors made up greater than 10% individually, and 60% and 50% in the aggregate of the outstanding accounts payable balance as of June 30, 2025 and December 31, 2024, respectively.

 
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long-Lived Assets—Long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset  may not be recoverable. The Company evaluates these assets to determine potential impairment by comparing the carrying amount to the undiscounted estimated future cash flows of the related assets. If the estimated undiscounted cash flows are less than the carrying value of the assets, the assets are written down to their fair value. There was no impairment of long-lived assets, or property and equipment, as of June 30, 2025 and  December 31, 2024, respectively.

 
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill—Goodwill represents the excess of acquisition cost over the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized and is subject to annual impairment testing on or between annual tests if an event or change in circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. In testing for goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it can conclude the assessment. If the Company concludes otherwise, the Company is required to perform a quantitative analysis to determine the amount of impairment, if any. 

 

The Company has determined that it has three reporting units, and based on both qualitative and quantitative analysis and based on management’s assessment, the Company recorded a non-cash impairment of $10,103,048 during the first quarter of 2025 on the Company's Consolidated Statements of Operations. No impairment was recorded for the year ended December 31, 2024 resulting in a goodwill balance of $10,103,048 on that date.

 
Research and Development Expense, Policy [Policy Text Block]

Research and Development—Costs incurred in connection with the development of new products and manufacturing methods are charged to operating expenses as incurred. Research and development costs were $590,121 and $688,519 during the three and six months ended June 30, 2025, respectively. Research and development costs were $61,616 and $131,880 during the three and six months ended June 30, 2024, respectively.

 
Share-Based Payment Arrangement [Policy Text Block]

Stock-Based Compensation—The Company accounts for employee stock-based compensation in accordance with the guidance of ASC 718, Stock-Based Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. Non-cash stock-based compensation expense of $40,479 and $587,055 was recorded for the three and six months ended June 30, 2025, respectively. Non-cash stock-based compensation expense of $35,045 and $1,853,428 was recorded for the three and six months ended  June 30, 2024, respectively. 

 
Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment— Property and equipment are stated at cost, less accumulated depreciation. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets, which range from three to five years, except leasehold improvements, which are being amortized over the life of the lease term. Property and equipment qualify for capitalization if the purchase price exceeds $2,000. Major repairs and replacements, which extend the useful lives of equipment, are capitalized and depreciated over the estimated useful lives of the property. All other maintenance and repairs are expensed as incurred. See Note 3 - Property and Equipment, net.

 
Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Other Intangibles— Other intangibles are stated at cost, less accumulated amortization. The Company records amortization expense using the straight-line method over the estimated useful lives of these assets, which range from three to ten years. See Note 4 - Goodwill and Other Intangibles.

 
Lessee, Leases [Policy Text Block]

Leases—The Company accounts for leases in accordance with ASC 842, Leases (“ASC 842”). At the inception or modification of a contract, the Company determines whether a lease exists and classifies its leases as an operating or finance lease at commencement. Right-of-use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent their obligation to make lease payments arising from the lease. See Note 12 - Leases.

 

As most of the Company’s leases do not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.

 

The lease asset also reflects any prepaid rent, initial direct costs incurred, and lease incentives received. The Company’s lease terms may include optional extension periods when it is reasonably certain that those options will be exercised.

 

Leases with an initial expected term of 12 months or less are not recorded in the Company's consolidated balance sheets and the related lease expense is recognized on a straight-line basis over the lease term. For certain classes of underlying assets, the Company has elected to not separate fixed lease components from the fixed non-lease components.

 
New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements Not Yet Adopted

 

ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”

 

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires public entities, on an annual basis, to provide disclosure of specific categories in the reconciliation of the effective tax rate, as well as disclosure of income taxes paid, disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09 and will adopt the guidance when it becomes effective on a prospective basis.

 

ASU No. 2024-03, “Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses”

 

In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires additional information about certain expenses in the notes to the financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 and will adopt the guidance when it becomes effective on a prospective basis.