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adom20251231_10k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2025 or

For the transition period from to

Commission file number: 001-38078

ENVIROTECH VEHICLES, INC.

(Name of registrant as specified in its charter)

7510 Ardmore Street

Houston, TX77054

(Address of principal executive offices, including zip code)

Registrant’s telephone number including area code: (870) 970-3355

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

Title of each class Trading Symbol(s) Name of exchange on which registered

Common Stock, $0.00001 par value EVTV Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or 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 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the common stock held by non-affiliates of the registrant, based on the closing price reported by the Nasdaq Stock Market LLC. on June 30, 2025, was approximately $6.4 million.

As of April 8, 2026, 12,930,719 shares of the registrant’s common stock, $0.00001 par value per share, were issued and outstanding.

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ENVIROTECH VEHICLES, INC. AND SUBSIDIARIES

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Page

PART I

Item 1. Business 2

Item 1A. Risk Factors 7

Item 1B. Unresolved Staff Comments 25

Item 1C. Cybersecurity 25

Item 2. Properties 25

Item 3. Legal Proceedings 25

Item 4. Mine Safety Disclosures 25

PART II

Item 6. [Reserved] 26

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 32

Item 8. Financial Statements and Supplementary Data 33

Item 9A. Controls and Procedures 53

Item 9B. Other Information 53

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 53

PART III

Item 10. Directors, Executive Officers and Corporate Governance 54

Item 11. Executive Compensation 57

Item 14. Principal Accountant Fees and Services 63

PART IV

Item 15. Exhibits and Financial Statement Schedules 64

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FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Annual Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or our future financial performance or condition and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievement to differ materially from those expressed or implied by these forward-looking statements.In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “contemplate,” “plan,” “project,” “forecast,” “potential,” “possible,” “proposed,” “should,” “develop,” “opportunity,” “target,” “outlook,” “optimistic,” “poised,” “positioned,” “maintain,” “continue,” “aim,” “goal,” “will” and “would” or the negatives of these terms or other comparable terminology intended to identify statements about the future.

You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Annual Report, including in “Risk Factors” and elsewhere, identify important factors, which you should consider in evaluating our forward-looking statements. These factors could cause actual results and events to differ materially from those expressed or implied in any forward-looking statement and include, among other things:

• our ability to generate demand for our products in order to generate revenue;

• our dependence upon external sources for the financing of our operations;

• our ability to effectively execute our business plan;

• our ability to obtain, retain and grow our customers;

• our dependency on, and retention of, key personnel;

• our ability to achieve and sustain profitability;

• our ability to evaluate and measure our current business and future prospects;

• our ability to respond and adapt to changes in technology;

You should read this Annual Report and the documents that we reference elsewhere in this Annual Report completely and with the understanding that our actual results may differ materially from what we expect as expressed or implied by our forward-looking statements. Forward-looking statements are subject to a number of known and unknown risks, uncertainties, assumptions and other important factors, including, but not limited to, those discussed in the sections entitled “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Annual Report. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. In light of the significant risks and uncertainties to which our forward-looking statements are subject, you should not place undue reliance on such forward-looking statements or regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all. These forward-looking statements represent our estimates and assumptions only as of the date of this Annual Report regardless of the time of delivery of this Annual Report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Annual Report.

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Unless expressly indicated or the context requires otherwise, references in this Annual Report to “Envirotech,” the "Company,” “we,” “our,” and “us” refer to Envirotech Vehicles, Inc., a Delaware corporation, and our consolidated subsidiaries, unless the context indicates otherwise.

Part I

Item 1. BUSINESS

Overview

We are a diversified, power-backed hardware technology company focused on the development, integration, and deployment of electrified and energy-intensive systems across multiple end markets. Our operating and development initiatives are organized around a common foundation of power management, electrification, and integrated hardware know-how, with current focus areas including commercial EVs, electric drone platforms, and medical supplies.

We are also exploring opportunities to develop and deploy energy-integrated artificial intelligence (“AI”) compute infrastructure. EVTV’s intended role would be to design, integrate, and deploy modular AI compute systems that combine power generation, power management, and high-performance computing hardware.

EVTV would not develop proprietary AI software models. Rather, the Company’s focus would be on the physical infrastructure layer — including power systems integration, modular compute enclosures, cooling systems, and related electrical balance-of-system components — designed to support third-party AI workloads.

Revenue, if pursued, would be generated through equipment sales, system integration services, infrastructure leasing arrangements, and/or joint ventures with energy and technology partners. As of the date of this Annual Report, we are in the testing and validation phase of our modular AI infrastructure platform.

Our EV segment serves commercial and last-mile fleets, school districts, public and private transportation service companies and colleges and universities to meet their demand for light to heavy-duty EVs. We currently offer Class 2 through 4 logistics vans, Class 4 through 5 urban trucks, school buses, electric forklifts, street sweepers, neighborhood EVs and right-hand drive vans and urban trucks. Our EVs are manufactured by original equipment manufacturers (“OEMs”) located in China, Taiwan, and Malaysia and can be marketed, sold, warrantied and serviced through our developing distribution and service network.

Our medical supplies segment operates through our wholly owned subsidiary, Maddox Industries, LLC (“Maddox Industries”), and manufactures medical supplies for distribution by Maddox Medical Corp. (“Maddox Medical”), of which Jason Maddox, our President and Interim Chief Financial Officer, is the founder and a stockholder, and Elgin Tracy, our Chief Operating Officer, is also a stockholder, to government agencies, healthcare systems, and institutional customers requiring domestically manufactured medical products. This segment was established upon our acquisition of Maddox Industries in late 2024, to support U.S.-based manufacturing, supply chain resiliency, and government procurement requirements.

We utilize semi-automated manufacturing systems to produce medical supplies, including protective apparel and related products, in compliance with applicable regulatory and contractual standards. Products manufactured by this segment are intended for use in healthcare, emergency response, and government stockpile applications.

The medical supplies segment supports our broader manufacturing strategy by generating revenue, validating domestic manufacturing capabilities, and demonstrating our ability to execute regulated production at scale. While this segment is not our primary long-term growth focus, it provides operational experience and past-performance manufacturing credentials for the federal government that support other business initiatives.

Our drone segment is focused on the development of heavy-lift, industrial-grade drone platforms designed for agricultural, fire suppression, and forestry applications. This segment targets commercial agricultural operators, farming cooperatives, forestry managers, and public-sector customers seeking aerial solutions for large-area spraying, monitoring, and emergency response.

We are developing a high-payload agricultural drone capable of carrying significantly greater payloads than typical commercial drones, with a focus on durability, operational efficiency, and suitability for large-scale land management. The platform is intended to support precision agriculture, including crop spraying and treatment across extensive acreage, as well as fire suppression and forestry use cases involving water or fire-retardant delivery. As of the date of this Annual Report, we are in the design phase of our drone product offerings.

Our drone products are intended to be manufactured in the United States (the “U.S.”), subject to completion of product development, regulatory approvals, and manufacturing readiness. We are also evaluating the integration of advanced technologies, including geospatial mapping, coordinated multi-drone operations, and artificial intelligence-enabled sensing and analytics. Commercial manufacturing and sales of drone products have not yet commenced.

In the first quarter of 2025, we acquired a 52% equity interest in AG Drone Inc. (“AG Drone”). The remaining equity interest in AG Drone is owned equally by Phillip Oldridge, the Chairman of our Board of Directors (the “Board”) and our Chief Executive Officer, Jason Maddox, our President and Interim Chief Financial Officer, and Elgin Tracy, our Chief Operating Officer. There were no transactions conducted by AG Drone during 2025. All transactions conducted by the Company within the drone segment were transacted directly by the Company.

Recent Developments

Business Strategy

Within our EV segment, we have historically operated as a provider of zero-emission EVs to commercial and institutional customers. However, the EV sector experienced significant disruption as a result of changes in U.S. federal and state policies, reduced availability of federal and state incentive programs for EVs, and increased uncertainty surrounding long-term EV adoption. These developments contributed to widespread contraction across the commercial EV market, with many competitors reducing operations or exiting the sector altogether.

At the same time, substantial increases in import tariffs on certain components, including tariffs exceeding 100% on selected parts and subassemblies sourced from Asia, materially impacted the economic feasibility of domesticating certain manufacturing processes for our EVs. These cost pressures reduced margin predictability and constrained our ability to shift specific elements of our EV production to the U.S., particularly battery-related components, to the extent previously anticipated. In response, we have adjusted our operational strategy to prioritize existing inventory, selectively source domestically available components, and focus on vehicle classes for which we maintain sufficient parts availability and customer demand.

While we continue to support and deliver our existing commercial EV offerings, the combination of policy-driven market contraction, elevated input costs, and tariff-related volatility prompted a broader strategic reassessment during 2025. As a result, we began positioning our company as a platform for expanding into additional power-backed hardware technology verticals that are adjacent to our core competencies and offer the potential for higher-margin and recurring revenue characteristics, including electric drone technologies. Beginning in 2026, we also began exploring opportunities in power-intensive AI data compute infrastructure. Both of these verticals rely on our experience in electrification, power systems integration, and hardware deployment.

In connection with this strategic evolution, our acquisition of Maddox Industries in late 2024, the underpinnings of our medical supplies segment, has provided operational validation of our ability to design, deploy, and operate semi-automated, domestic manufacturing systems in regulated environments. Through Maddox Industries, we have established U.S.-based production capabilities focused on fulfilling our subcontract with Maddox Medical for medical supplies for government use, thereby supporting our domestic supply chain objectives and establishing past-performance manufacturing credentials with the federal government. We believe that this experience further reinforces our broader strategy of deploying power-backed hardware systems across multiple end markets while maintaining disciplined execution and operational control.

Goba Capital Financing

In the third quarter of 2025, we terminated our purchase order discounting facility for up to $10 million with GOBA Capital.

For the years ended December 31, 2025 and 2024, our net losses were $39.1 million and $8.8 million, respectively. Included in the net loss for 2025 were non-cash charges of approximately $26.4 million.

Market Overview

U.S. Electric Vehicle Market Conditions and Policy Environment

During 2025, the U.S. EV market was impacted by changes in federal policy direction, uncertainty surrounding the continuation of federal and state incentive programs, and evolving U.S. tariffs and trade policy. These factors collectively altered the growth expectations for portions of the EV sector, particularly for incentive-dependent commercial and fleet applications such as our EV portfolio.

In January 2025, the U.S. presidential administration issued Executive Order 14154, which directed federal agencies to pause and review certain funding programs established under the Inflation Reduction Act (“IRA”) and the Infrastructure Investment and Jobs Act (“IIJA”), including programs supporting EV charging infrastructure and related electrification initiatives. As a result, the timing and availability of certain federal EV incentives became uncertain, contributing to delayed purchasing decisions among fleet operators and institutional customers that historically relied on grant and rebate programs to support EV project economics. While some state-level incentive programs remain active, the overall federal and state policy environment for EV adoption in the U.S. became less predictable during 2025.

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At the same time, U.S. trade policy developments materially affected the cost structure of our EV manufacturing and assembly. In September 2024, the Office of the U.S. Trade Representative finalized modifications to Section 301 tariffs on Chinese goods that increased tariff rates on Chinese-origin EVs to 100% and on certain lithium-ion EV batteries to 25%. Additional trade actions and retaliatory measures during 2025 contributed to further volatility in our component costs and supply chain planning. These tariffs increased our input costs, constrained our ability to pass through pricing to customers, and reduced our margin predictability.

Drone and Unmanned Aerial Vehicles (“UAVs”) Demand Trends

In contrast to the policy-sensitive EV market, the drone market demonstrated more durable demand characteristics during 2025. Increased focus on supply-chain security and national security considerations supported interest in domestically manufactured drone and UAV systems. Recent federal regulatory actions discussed under “Government Regulation” below and procurement preferences limiting the use of foreign-manufactured drones in federal government and government-adjacent applications have contributed to demand for U.S.-based alternatives in select markets. According to a market analysis prepared by Grand View Research, the global drone market size was valued at $73.1 billion in 2024 and is projected to growth at a compounded annual growth rate of 14.3% to 2030 and the U.S. drone market specifically was valued at $25.1 billion in 2024 and is projected to more than double by 2030 to approximately $52.5 billion.

AI Infrastructure Demand Trends

Separately, the rapid adoption of AI technologies is expected to drive significant growth in demand for data center infrastructure. Industry forecasts indicate that U.S. data center power demand is increasing at a pace that exceeds historical norms, driven primarily by AI-related compute workloads. For example, BloombergNEF projected that U.S. data center power demand could reach approximately 106 gigawatts by 2035. In addition, Goldman Sachs Research forecasts data center power demand rising by approximately 175% by 2030 relative to 2023, driven by pervasive AI workloads and infrastructure expansion. The International Energy Agency (IEA) also reported that global data center electricity demand is expected to more than double by 2030, with accelerated servers (mainly AI workloads) driving a significant share of demand increases. As a result, we consider the availability of reliable power, speed of deployment, and integration of power and hardware systems to be critical constraints for data center expansion. We have seen these dynamics contribute to increased focus on infrastructure solutions to support power-intensive computing environments, including configurations that reduce reliance on traditional grid expansion timelines.

Products and Segments

We develop and deploy power-backed hardware systems across multiple end markets that require reliable energy delivery, integrated hardware, and system-level execution. Our activities are organized around a common foundation of power management, electrification, and hardware-software integration. As of the end of 2025, our operations and development initiatives are focused on the following areas: (i) commercial EVs, (ii) drone systems, and (iii) medical supplies. In addition, at the beginning of 2026, we announced a new strategic focus on the development and deployment of power-driven computing and data infrastructure designed to support high density, compute intensive workloads.

In early 2026, we announced a strategic initiative focused on the development and deployment of modular, power-backed computing infrastructure to support high-density artificial intelligence and advanced computing workloads. Our planned offerings include containerized data center modules integrating dedicated power generation (including natural gas and alternative energy sources), electrical distribution equipment, thermal management systems, and rack-level high-performance compute hardware. We intend to pursue this strategy through a combination of internal development, strategic partnerships, and potential joint ventures. Following commercialization, our role is expected to include system design, power integration, project development, and deployment execution. These systems are expected to incorporate commercially available central processing units (“CPUs”) and, in future configurations, graphics processing units (“GPUs”) capable of supporting AI and other advanced compute workloads. These platforms are intended to be deployable in traditional data center environments as well as distributed or site-constrained locations where power availability, reliability and speed of deployment are critical considerations. We do not intend to design or manufacture semiconductor components.

We are evaluating both grid-connected and off-grid power solutions to support these deployments, including on-site generation and hybrid configurations designed to enhance uptime and reduce reliance on extended grid interconnection timelines. Power strategies that are currently under our consideration include clean natural gas–based generation and other reliable energy sources, subject to regulatory and permitting requirements, as discussed under “Governmental Regulation” below. We believe that access to cost-effective and dependable power infrastructure is a key constraint facing data center expansion and AI compute deployment in the U.S.

Potential customers for these solutions may include hyperscale operators, government agencies, and commercial enterprises seeking secure, power-resilient computing infrastructure. In addition, we may evaluate opportunities to utilize excess compute capacity for internally managed workloads, including digital asset–related applications, as part of an overall infrastructure utilization strategy. These initiatives remain in research and development, and we have not yet commenced commercial sales.

Drone Systems

During 2025, we initiated research and development efforts in the drone systems market, leveraging our power management, hardware integration, and electrification expertise but have not yet begun offering our drone products as of the end of 2025. We are developing a heavy-lift drone platform designed to carry payloads of approximately 500 pounds. This platform is intended to be manufactured in the U.S. and is being designed primarily for agricultural, fire suppression, and forestry applications, including precision spraying and related use cases.

We believe that recent federal regulatory actions discussed under “Government Regulation” below and procurement preferences limiting the use of certain foreign-manufactured drones have created an opportunity for domestically produced alternatives in agricultural and federally funded projects. We are developing a drone platform to provide greater payload capacity, durability, and operational flexibility than our competitors.

In addition to agricultural applications, we are designing our drone platform to support fire suppression and forestry management use cases, including the transport and deployment of water or fire retardant materials. We are also evaluating the integration of advanced software capabilities, including geospatial mapping, coordinated multi-drone operations (“swarming”), and AI–enabled applications to support data-driven operations in complex environments.

These drone products and associated software systems remain in development, and we have not yet commenced commercial manufacturing or sales in this segment.

In February 2025, we engaged a drone manufacturer for the manufacture of a U.S.-made heavy-lift drone in accordance with our detailed specifications and, following delivery of the drone, for transfer of the associated intellectual property rights. This initial heavy-lift drone is purpose-built for the agricultural market, with advanced spraying and mapping functionality. As part of our business strategy, following delivery of the model drone, we intend to open our U.S. drone manufacturing facility and commence commercial sales, subject to applicable regulatory approvals.

Commercial Electric Vehicles

Our commercial EV segment includes purpose-built electric vans, trucks, buses, and specialty vehicles designed for fleet, municipal, and institutional customers. These vehicles are manufactured through third-party OEMs located in China and Malaysia, followed by a Company-led final assembly and integration processes, and then marketed, sold, warrantied and serviced through our service and distribution network. Our vehicles include options for telemetry for remote monitoring, electric power-export and various levels of grid-connectivity. Our zero-emission products may also grow to include automated charging infrastructure and “intelligent” stationary energy storage that enables fast vehicle charging, emergency back-up facility power, and access to the developing, grid-connected opportunities for the aggregate power available from groups of large battery packs.

During 2025, in response to market conditions—including reduced federal and state incentives to support the EV market, substantial increases in import tariffs on certain components, including tariffs exceeding 100% on selected parts and subassemblies sourced from Asia, and reduced profit margins due to cost pressure—we have moderated the pace of expansion within this segment. We remain focused on commercial use cases where electrification provides a measurable return on investment, particularly in jurisdictions with established incentive programs such as New Jersey and California.

Medical Supplies (Maddox Industries)

We maintain U.S.-based production capabilities through our wholly owned subsidiary, Maddox Industries that are focused on fulfilling our subcontract with Maddox Medical for medical supplies for government use.

While our medical supplies segment is not a primary growth area for us, our manufacturing operations for medical supplies provide operational validation of our ability to design, deploy, and manage semi-automated manufacturing processes within regulated environments. We believe this capability supports our broader strategy by demonstrating U.S.-based production capacity, supply chain compliance, and disciplined execution and operational control in support of government contracts.

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Our Strategy

Our strategy is focused on building a diversified, power-backed hardware and infrastructure platform centered on markets where energy availability, compute density, and execution capability are critical constraints. In response to market conditions during 2025, we refined our strategic priorities to emphasize scalable infrastructure, margin durability, and selective acquisition-driven expansion.

Our strategy is guided by the following pillars:

Manufacturing, Operations, and Facilities

We maintain an operational footprint designed to support the development, integration, and deployment of power-backed hardware systems across our core business lines. Our manufacturing and operations strategy emphasizes proximity to skilled labor, access to energy infrastructure, supply chain efficiency, and logistical connectivity to customers and partners.

Transition of Manufacturing and Operations

Our decision to exit Arkansas was driven by a combination of operational and economic considerations, including the condition and cost structure of available facilities, limitations on workforce availability for specialized technical and manufacturing roles, logistical constraints, and the overall scalability of operations in a remote geographic location. While we had previously explored the potential for expanded operations in Arkansas, we ultimately determined that this location did not align with our long-term operational requirements or growth objectives. The transition of our operations from Arkansas to Houston, Texas is still ongoing and is expected to be complete in the first half of 2026.

Establishment of Houston, Texas as the Primary Operating Hub

We selected Houston, Texas as our primary operating hub based on our strategic advantages as a major energy, industrial, and logistics center. Houston serves as a global hub for the energy, power, and industrial sectors. The region provides direct access to natural gas infrastructure, refineries, pipelines, and energy counterparties, as well as a deep ecosystem of suppliers and service providers relevant to power-intensive infrastructure projects.

Workforce and Operational Scale

Since relocating operations to Houston, we have expanded our workforce and operational capacity. We believe the region offers a large, educated, and skilled labor pool across engineering, manufacturing, information technology, energy systems, and industrial operations. We have been able to recruit personnel across a broad range of technical and operational disciplines necessary to support our evolving business lines.

We have scaled our workforce significantly compared to prior periods and have established multiple functional operations in the Houston area, including corporate headquarters, manufacturing and assembly operations, drone testing facilities, logistics, and warehousing. We have implemented multiple assembly and production lines to support our medical supplies manufacturing and hardware integration activities.

Operational Alignment with Strategic Focus

Our relocation to Houston aligns with our strategic emphasis on power-driven infrastructure, AI data center development, and advanced hardware systems. Houston’s position within the U.S. energy corridor supports our efforts to integrate compute infrastructure with reliable power solutions, including natural gas-based generation and hybrid power models. The region also supports collaboration with energy producers, infrastructure developers, and industrial customers.

Facilities

Our current facilities include corporate headquarters located in downtown Houston, Texas, as well as manufacturing, assembly, testing, logistics, and warehousing facilities within the greater Houston metropolitan area. These facilities are intended to support current operations and provide flexibility for future expansion as market conditions and strategic initiatives evolve. Our 86,000square foot facility in Houston is subleased from Maddox Defense, Inc. ("Maddox Defense"), of which Jason Maddox, our President and Interim Chief Financial Officer is the sole stockholder, with a three-year term (with renewal options), for approximately $20,000 per month.

During 2025, we undertook a strategic evaluation of our manufacturing and operational footprint. As part of this process, we discontinued our plans to further expand operations in Arkansas and relocated our primary corporate, manufacturing, and operational activities to Houston, Texas. The transition of our operations from Arkansas to Houston is still ongoing and is expected to be complete in the first half of 2026.

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Our Customers

Our customer engagement strategy is designed to align each of our business lines with customers whose operational requirements, procurement processes, and economic drivers are well suited to our potential power-backed hardware platforms. We focus on customers with mission-critical use cases, high utilization requirements, and long-term infrastructure or equipment needs.

AI Data Infrastructure

Our power-driven computing and data infrastructure initiatives are intended to serve customers requiring reliable, high-density computing environments where access to power, uptime, and deployment speed are critical constraints. Our target customer categories for this business line are intended to be:

We expect that customer engagements in AI compute business will typically involve extended evaluation and planning cycles and may include discussions related to long-term capacity requirements, power sourcing, site development, cooling technologies, and infrastructure integration. These initiatives remain in development, and we have not yet commenced commercial sales or recognized revenue from any AI data infrastructure deployments.

Drone Systems (Agricultural, Fire, and Forestry Applications)

Our drone systems initiatives are focused on the development of heavy-lift, industrial-grade drone platforms designed for demanding commercial and public-sector applications. Our target customer categories for this segment include:

During 2025, following our public announcement of our heavy-lift agricultural drone development program, we engaged with prospective customers regarding anticipated operational requirements and use cases. In connection with these early engagements, we received limited, refundable customer deposits from certain prospective customers seeking priority access to initial production units once the platform becomes commercially available. These deposits are intended to secure a position in a prospective delivery queue and do not constitute firm purchase commitments, backlog, or guaranteed delivery timelines. No revenue has been recognized in connection with these deposits, and we have not commenced commercial manufacturing or sales of drone products.

Commercial Electric Vehicles

Our commercial EV customers primarily include:

Sales in this segment are driven by defined use cases and are often influenced by the availability of state or local incentive programs. During 2025, customer purchasing behavior became more selective, with extended sales cycles and heightened sensitivity to total cost of ownership. We continue to support our existing vehicle lineup and customer relationships while prioritizing deployments where electrification provides measurable economic benefits.

Manufacturing, Product Delivery and Service Model

We manufacture and deliver our products and services through a combination of in-house system assembly, system integration, and development activities, supported by third-party manufacturing partners and strategic suppliers. Our delivery and service model is tailored by business line and is designed to maintain control over product specifications, performance standards, and compliance requirements while preserving operational flexibility and capital efficiency.

Commercial Electric Vehicles

For the manufacture of our commercial EVs, we utilize a semi-knocked-down (“SKD”) assembly model in which vehicles are produced to our designs, technical specifications, and component requirements. Under this model, vehicle chassis, bodies, and subassemblies are sourced from the OEMs located in China and Malaysia and delivered in SKD form, after which we perform final assembly, integration, and configuration.

Our SKD assembly process includes the integration of Company-specified components and systems, which may include powertrain elements, battery systems, electrical architecture, software, telematics, and application-specific hardware, depending on vehicle class and customer requirements. This approach allows us to maintain control over vehicle design standards, performance specifications, regulatory compliance, and quality assurance while leveraging external manufacturing capacity.

In addition to final assembly, we support customers through vehicle customization, delivery coordination, and post-delivery service arrangements. Service and support activities may include maintenance coordination, parts support, and technical assistance, provided directly by us or through qualified third-party service providers.

Drone Systems

Our drone systems activities are currently focused on product design, engineering, and development. We are developing heavy-lift, industrial-grade drone platforms intended for agricultural, fire suppression, and forestry applications. These products are being designed for U.S.-based manufacturing and are not yet in commercial production. Commercial manufacturing, sales, and post-delivery support models have not yet been finalized and will depend on product readiness, regulatory approvals, and market demand.

AI Data Infrastructure

Our initiatives related to power-driven computing and data infrastructure are currently in the development and planning phase. These activities include system design, infrastructure planning, power integration, thermal management evaluation, and customer engagement related to high-density compute deployments. Future delivery models may include integrated hardware deployment, infrastructure development, power integration, and ongoing operational support, subject to customer requirements, regulatory considerations, and capital availability. We have not yet commenced commercial sales or recognized revenue related to these initiatives.

Medical Supplies (Maddox Industries)

Through our wholly owned subsidiary, Maddox Industries, we maintain U.S.-based, semi-automated manufacturing capabilities to produce medical supplies for Maddox Medical in support of its government contracts.

While Maddox Industries is not a primary growth segment for us, its operations provide operational validation of our ability to design, deploy, and manage semi-automated manufacturing processes within regulated environments. We believe these capabilities support our broader manufacturing strategy by demonstrating execution discipline, domestic production capacity, and compliance with government procurement requirements.

Manufacturing and Service Flexibility

Across all business lines, our product delivery and service model emphasizes disciplined execution, modular deployment, and adaptability to customer and market requirements. We may adjust our delivery, assembly, and service approaches over time based on operational scale, customer needs, and strategic priorities.

Marketing Approach and Sales Cycles

Across all business lines, our marketing activities are primarily relationship-driven and technical in nature. We do not rely on mass-market advertising and instead focus on direct engagement with customers, industry participants, and strategic partners. Sales cycles vary significantly by segment and customer type and may range from several months to multiple years, particularly for infrastructure-related initiatives. Marketing expenditures are managed conservatively and aligned with our strategic priorities and stage of development.

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Backlog

As of December 31, 2025, we had a backlog of two zero-emission Class 4 trucks and 38 zero-emission Class 4 cargo vans, which consists of unfilled firm orders for products undersigned by contracts with customers.

Employees

As of December 31, 2025, we employed 293 full-time employees across our operations. Our workforce currently supports commercial EV integration, medical supplies manufacturing, product development initiatives, power-driven infrastructure planning, manufacturing and assembly activities, logistics, and corporate and administrative functions.

During 2025, we significantly expanded our workforce, adding more than 250 manufacturing and machine-operator roles in connection with the relocation and scale-up of our manufacturing operations in Houston, Texas. This expansion was undertaken to establish and support production capacity for our medical supplies segment.

In addition to manufacturing personnel, we added highly skilled technical staff, including production and manufacturing design engineers, electrical engineers, computer systems engineers, and logistics professionals to support system design, assembly processes, power management, automation, quality control, and infrastructure integration across our business lines.

Our workforce includes engineers, technicians, manufacturing and assembly personnel, machine operators, logistics and supply chain staff, information technology professionals, sales and business development personnel, and corporate management and administrative employees. Certain functions may also be supported by contractors, consultants, or temporary labor, depending on project requirements and operational needs.

We are not a party to any collective bargaining agreements. We place emphasis on workplace safety, regulatory compliance, training, and maintaining a professional work environment consistent with applicable labor laws and industry standards.

Our workforce size and composition may continue to evolve based on operational scale, product development progress, development and commercialization activity, and strategic priorities.

Competition

The markets in which we operate are highly competitive and characterized by rapid technological change, evolving regulatory environments, and shifting capital availability. Competitive dynamics vary significantly across our business lines, and competitors range from large, well-capitalized enterprises to smaller, specialized technology providers.

Commercial Electric Vehicles

The commercial EV market has experienced significant contraction and consolidation in recent periods. Competition in this segment includes established vehicle manufacturers, specialized EV developers, and integrators serving fleet and institutional customers. During 2025, a number of EV-focused companies reduced operations, restructured, exited the market, or were delisted from public markets, due to capital constraints, margin pressure, and sensitivity to changes in policy and incentive programs.

Competition in the commercial EV segment is influenced by factors including total cost of ownership, availability of incentives, vehicle performance and reliability, service and support capabilities, and access to capital. While competitive pressure remains, we believe that fewer participants, combined with increased selectivity by customers, has shifted the market toward use-case-driven deployments rather than broad adoption initiatives.

Drone Systems

The drone systems market includes a mix of domestic and foreign manufacturers offering products across a wide range of payload capacities and applications. In agricultural and industrial use cases, competition has historically been dominated by foreign-manufactured platforms, particularly in smaller payload classes.

Recent regulatory and procurement trends discussed above have altered the competitive landscape in certain markets, particularly for use of drones by federal agencies and federally funded projects. We believe that these developments have reduced the number of viable suppliers for high-payload, industrial-grade drone systems intended for agricultural, fire suppression, and forestry use cases.

Competition in this segment is driven by payload capacity, durability, operational reliability, software integration, and regulatory compliance. Many competitors offer lighter-duty systems that may not address the operational requirements of large-scale or industrial applications targeted by our development efforts.

AI Data Infrastructure

The power-driven computing and data infrastructure market is highly competitive and includes large technology companies, data center developers, infrastructure providers, and specialized system integrators. Competition is influenced by access to computing hardware, availability of reliable power, speed of deployment, and ability to support high-density workloads.

We believe that demand for AI-driven compute infrastructure has intensified competition for power resources and suitable sites, particularly for large-scale deployments. In this environment, competitive differentiation increasingly depends on the ability to integrate compute systems with reliable power solutions, advanced cooling technologies, and scalable infrastructure. Barriers to entry include capital requirements, supply chain access, technical expertise, and regulatory approvals.

Competitive Positioning

Across our business lines, we compete based on our ability to integrate power systems, hardware, and software into cohesive solutions tailored to specific operational requirements. We believe our experience in power management, electrification, system integration, and domestic manufacturing provides a competitive foundation, particularly in markets where reliability, compliance, and execution capability are critical.

However, we compete with entities that may have greater financial, technical, or operational resources, and increased competition could adversely affect pricing, margins, and market share. We expect competitive conditions to continue to evolve as markets mature, technologies advance, and regulatory frameworks change.

Technology

Our business relies on a combination of proprietary designs, engineering know-how, system integration expertise, software development, and licensed or third-party technologies. Our intellectual property strategy is focused on protecting critical elements of our designs and processes while maintaining flexibility to incorporate third-party components and technologies where appropriate.

Technology Platform

Our technology platform is centered on power-backed hardware systems, including electrification, power management, thermal regulation, and integrated hardware-software architectures. These capabilities are applied across our commercial EVs, unmanned aerial systems, and power-driven computing and data infrastructure business lines.

Core technical competencies include:

● Power system design and integration;

● Electrical architecture and controls;

● Hardware-software integration;

● Thermal management and cooling solutions;

● System-level design for reliability and uptime; and

● Manufacturing process design and automation.

Commercial Electric Vehicles

For our commercial EVs, we develop and maintain vehicle designs, performance specifications, and system requirements that are implemented through our SKD assembly model. We specify key vehicle attributes, components, and system integrations, including battery systems, powertrain elements, electrical architecture, telematics, and application-specific hardware.

While certain vehicle components and subassemblies are sourced from third-party OEMs, we retain control over system-level design, integration standards, quality requirements, and regulatory compliance. Our intellectual property in this area consists primarily of proprietary design documentation, engineering specifications, software configurations, and integration processes rather than patents on individual components.

Drone Systems

Our drone systems involve the design and development of heavy-lift, industrial-grade drone platforms intended for agricultural, fire suppression, and forestry applications. Technology development efforts in this area include:

● Airframe and structural design optimized for heavy payloads;

● Power and propulsion system integration;

● Flight control systems and redundancy architecture;

● Payload deployment mechanisms; and

● Software and control systems for autonomous and semi-autonomous operation.

We are also evaluating and developing advanced software capabilities, including geospatial mapping, coordinated multi-drone operations (“swarming”), and AI-enabled sensing and analytics. These technologies remain in development, and we have not yet commenced commercial production or sales of drone products.

AI Data Infrastructure

Our power-driven computing and data infrastructure initiative involves the design and integration of high-density computing platforms and supporting infrastructure. These efforts focus on:

● Integration of computing hardware with reliable power systems;

● Thermal management solutions, including advanced cooling technologies; and

● Infrastructure layouts designed for scalability, uptime, and efficiency.

The goal of our technology development in this area emphasizes system integration rather than development of proprietary semiconductor technologies. We expect to rely on a combination of commercially available computing hardware, licensed software, and proprietary integration methodologies.

Medical Supplies (Maddox Industries)

Through our wholly owned subsidiary Maddox Industries, we have developed manufacturing process knowledge related to semi-automated production, quality control, and compliance with government contracting requirements. This know-how includes production line design, automation workflows, documentation, and process controls. While our processes are not protected by patents, we consider this operational expertise to be valuable.

Intellectual Property

We seek to protect our intellectual property through a combination of confidentiality agreements, employee and contractor assignment agreements, trade secret protections, and selective use of intellectual property registrations where appropriate. We also rely on contractual protections in our relationships with suppliers, manufacturing partners, and customers. We maintain a trademark portfolio including common law trademarks and service marks and have three service marks registered and two trademark registrations in the United States with respect to our EV segment. We do not currently hold any other patents, trademarks, franchises or concessions.

Following the delivery of the initial drone model by our U.S. manufacturer, we will also own accompanying intellectual property rights in any work product resulting from the delivered drone, including, but not limited to, copyright and trademark rights.

Our success depends in part on our ability to protect our proprietary designs and processes and to avoid infringing on the intellectual property rights of others. There can be no assurance that our intellectual property protections will be sufficient or that will not be subject to claims of infringement or misappropriation.

Government Regulations

We operate in markets that are subject to extensive regulation at the federal, state, local, and international levels. These regulations affect product design, manufacturing, sales, deployment, and ongoing operations. Compliance with applicable regulatory requirements is an integral part of our business, and regulatory changes may impact demand, costs, or the timing of commercial activities.

Commercial Electric Vehicles

Our commercial EV operations are subject to regulations governing motor vehicle safety, emissions, transportation, and environmental compliance. In the United States, these include regulations administered by federal and state transportation and safety authorities, as well as state and local vehicle registration and operational requirements.

Emission and Fuel Economy Standards

Government regulation related to climate change is under consideration at the U.S. federal and state levels. The Environmental Protection Agency ("EPA") and National Highway Traffic Safety Administration (the “NHTSA”) issued a final rule for greenhouse gas emissions and fuel economy requirements for trucks and heavy-duty engines on August 9, 2011, which had an initial phase-in starting with model year 2014 and a final phase-in occurring in model year 2017. NHTSA standards for model years 2014 and 2015 were voluntary, while mandatory standards first went into effect in 2016. In August 2016, the EPA and NHTSA jointly finalized Phase 2 standards for medium- and heavy-duty vehicles through model year 2027 to improve fleet fuel efficiency and cut carbon emissions. On March 29, 2024, the EPA announced a final rule, “Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles – Phase 3,” that sets stronger standards to reduce greenhouse gas emissions from heavy-duty vehicles beginning in model year 2027. The new standards will be applicable to heavy duty vocational vehicles, such as delivery trucks, refuse haulers, public utility trucks, transit, shuttle, school buses, etc., and tractors, such as day cabs and sleeper cabs on tractor-trailer trucks.

The EPA and NHTSA rule also establishes multiple flexibility and incentive programs for manufacturers of alternatively fueled vehicles, including an engine averaging banking and trading (“ABT”) program, a vehicle ABT program and additional credit programs for early adoption of standards or deployment of advanced or innovative technologies. The ABT program allows for emission and/or fuel consumption credits to be averaged, banked or traded within defined groupings of the regulatory subcategories. The additional credit programs allow manufacturers of engines and vehicles to be eligible to generate credits if they demonstrate improvements in excess of the standards established in the rule prior to the model year the standards become effective or if they introduce advanced or innovative technology engines or vehicles.

On March 12, 2025, the EPA announced that it would be reconsidering medium-duty and heavy-duty vehicle emissions regulations, signaling a rollback of emissions standards. The extent to which these regulations will be changed is unknown, but it is likely that restrictions on vehicle emission limits will be reduced or eliminated.

Demand for commercial EVs may be influenced by government incentive programs, grants, rebates, and procurement policies at the federal, state, and local levels. Such programs are subject to modification, reduction, or elimination based on legislative, regulatory, or budgetary changes. We do not control the availability or terms of these programs, and changes in incentive structures may affect customer purchasing decisions.

Vehicle Safety and Testing

The National Traffic and Motor Vehicle Safety Act of 1966 (“Safety Act”), regulates motor vehicles and motor vehicle equipment in the United States in two primary ways. First, the Safety Act prohibits the sale in the United States of any new vehicle or equipment that does not conform to applicable motor vehicle safety standards established by NHTSA. Meeting or exceeding many safety standards is costly, in part because the standards tend to conflict with the need to reduce vehicle weight in order to meet emissions and fuel economy standards. Second, the Safety Act requires that defects related to motor vehicle safety be remedied through safety recall campaigns. A manufacturer is obligated to recall vehicles if it determines that the vehicles do not comply with a safety standard. Should we or NHTSA determine that either a safety defect or noncompliance exists with respect to any of our modified vehicles, the cost of such recall campaigns could be substantial.

Battery Safety and Testing

We believe our battery packs conform to mandatory regulations that govern transport of “dangerous goods,” which includes lithium-ion batteries that may present a risk in transportation. The governing regulations, which are issued by the Pipeline and Hazardous Materials Safety Administration, are based on the United Nations ("UN") Recommendations on the Safe Transport of Dangerous Goods Model Regulations, and related UN Manual of Tests and Criteria. The requirements for shipments of these goods vary by mode of transportation, such as ocean vessel, rail, truck and air.

Drone Systems

Our drone systems initiatives are subject to aviation, safety, and operational regulations. In the United States, commercial drone operations are regulated by the Federal Aviation Administration (the “FAA”), including requirements related to aircraft certification, operator licensing, airspace use, and operational limitations.

National Defense Authorization Act and American Security Drone Act

In December 2024, Congress passed the National Defense Authorization Act (“NDAA”), which includes the American Security Drones Act (“ASDA”). The bill prohibits, starting in January 2026, federal agencies and federally funded programs from purchasing or using drones manufactured in countries that are viewed as threats to U.S. national security, such as China. The basis for the legislation is that purchases from these countries (i) pose a significant threat to national security, (ii) represent efforts to infiltrate and influence American society, and (iii) risk the theft of personal and business data. Specifically, the American Security Drone Act: (i) prohibits federal departments and agencies from procuring and operating certain foreign commercial off-the-shelf drone or covered unmanned aircraft system manufactured or assembled in countries identified as national security threats, and provides a timeline to end current use of these drones; (ii) prohibits the use of federal funds awarded through certain contracts, grants, or cooperative agreements to state or local governments from being used (1) to procure a covered unmanned aircraft system that is manufactured or assembled by a covered foreign entity or (2) in connection with the operation of such a drone or unmanned aircraft system; (iii) requires the Comptroller General of the United States to submit a report to Congress no later than 275 days after the enactment of the NDAA detailing the amount of foreign commercial off-the-shelf drones and covered unmanned aircraft systems procured by federal departments and agencies from countries identified as national security threats. We believe that the NDAA will help to drive manufacturing of drone systems for government use to the U.S.

Federal Aviation Administration ("FAA")

The FAA is responsible for the regulation and oversight of civil aviation within the U.S. Its primary mission is to ensure the safety of civil aviation. In December 2015, the FAA announced that all drones weighing more than 250 grams, or 0.55 pounds, must be registered with the FAA. In January 2021, the FAA finalized rules requiring that drones be identifiable remotely. These rules are effective for drone manufacturers beginning in September 2023 and for drone pilots beginning in September 2024. The FAA believes that remote ID technologies will enhance safety and security by allowing the FAA, law enforcement, and federal security agencies to identify drones flying in their jurisdiction. These efforts lay the foundation for more complex operations, such as those beyond visual line of sight at low altitudes, as the FAA and the drone industry move toward a traffic management ecosystem for drone system flights separate from, but complimentary to, the air traffic management system.

In the United States, commercial drone operations are regulated primarily by the FAA under Part 107 of the Federal Aviation Regulations. These regulations govern pilot certification, aircraft registration, operational limitations, and airspace access. Current FAA regulations generally limit commercial drone operations to visual line-of-sight (VLOS) conditions, operations during daylight hours, and altitudes below 400 feet above ground level. Operations beyond these limitations require waivers or special authorizations from the FAA. The regulatory environment for beyond visual line-of-sight (BVLOS) operations is evolving, with the FAA implementing new frameworks to enable broader commercial drone deployment. In June 2024, the FAA revised BVLOS criteria to facilitate commercial drone operations for delivery and inspection applications.

Our drone systems will require appropriate FAA certifications and authorizations for commercial operation. The specific regulatory pathway will depend on the intended use case, operating environment, and level of autonomy. We are designing our drone systems with regulatory compliance as a key consideration and intend to work closely with the FAA and other relevant agencies throughout the development process.

International Markets

In international markets, including the European Union, agricultural drone operations are permitted under applicable aviation and safety frameworks, subject to country-specific regulations, operator certification, and operational approvals. Regulatory requirements may vary by jurisdiction and may impose limitations on payloads, flight operations, or use cases.

Government Procurement

In addition, procurement policies and regulatory frameworks emphasizing domestic sourcing, cybersecurity, and national security considerations may influence market access for drone systems, particularly for government and government-adjacent customers.

AI Data Infrastructure

The regulatory landscape surrounding AI, data center infrastructure and cloud computing is evolving rapidly, and we anticipate increased scrutiny and potential regulation in the near and long term as we develop our power-driven computing and data infrastructure initiatives. In the realm of cloud computing, there are growing concerns about the ethical implications and potential misuse of these technologies, particularly in association with AI and machine learning. Governments and regulatory bodies are considering measures to ensure the responsible development and deployment of AI systems, including transparency, accountability, and fairness guidelines.

In addition, our power-driven computing and data infrastructure initiatives are currently subject to laws and regulations governing energy production, power generation, environmental compliance, land use, zoning, construction, and data security. Data center operations may also be subject to cybersecurity, privacy, and data protection requirements, depending on customer use cases and jurisdiction.

In particular, our evaluation of grid-connected and on-site power generation solutions for modular computing infrastructure is subject to extensive federal, state, and local regulatory frameworks.

If we deploy grid-connected systems, interconnection to the transmission or distribution grid is governed by applicable state public utility commissions and regional transmission organizations (“RTOs”), including queue processes that may involve technical studies, capacity allocation determinations, and cost-sharing obligations for system upgrades. Interconnection timelines can extend multiple years depending on regional grid congestion and infrastructure constraints.

For projects incorporating on-site generation, including natural gas–fired generation, we would be subject to environmental permitting requirements under federal and state law. These may include:

● State-level air quality permits and operating permits;

● Water discharge permits, if applicable;

● Local land-use approvals and zoning compliance; and

● Building permits and fire safety approvals.

Projects utilizing natural gas infrastructure may also require compliance with federal and state pipeline safety regulations, including oversight by the Pipeline and Hazardous Materials Safety Administration, where applicable.

Additionally, depending on project structure, generation facilities could be subject to:

Certain jurisdictions also impose greenhouse gas reporting requirements, emissions offset programs, or renewable portfolio standards that may affect permitting, capital costs, or operating expenses. We may also be subject to federal and state environmental review requirements, including assessments under the National Environmental Policy Act if federal lands, federal funding, or federal permits are involved.

Data center operations may also be subjected to cybersecurity, privacy and data protection requirements, depending on customer use cases and jurisdiction.

Delays in obtaining required permits or regulatory approvals could impact the timing, cost, or feasibility of certain deployments.

Regulatory requirements related to emissions, environmental impact, and safety may affect the design, cost, and timing of infrastructure deployment. We continue to evaluate regulatory requirements applicable to grid-connected, off-grid, and hybrid power solutions.

Medical Supplies (Maddox Industries)

Through our wholly owned subsidiary Maddox Industries, we manufacture medical supplies for Maddox Medical in support of fulfillment of a government contract with certain federal government agencies. Such government contracts and related programs are subject to extensive regulations governing procurement processes, pricing, quality standards, reporting obligations, and compliance requirements.

As a subcontractor, our participation in government programs may require compliance with laws and regulations related to domestic sourcing, labor standards, cybersecurity, and ethics. Our medical supplies segment relies on Maddox Medical’s primary government contract, and such government contract may be subject to modification, termination, audit, or review. There can be no assurance that Maddox Medical’s future program participation will be awarded or renewed.

Regulatory Compliance and Risk

We devote resources to monitoring regulatory developments and maintaining compliance with applicable laws and regulations. However, regulatory requirements may change, and compliance may involve significant costs or operational constraints. Failure to comply with applicable regulations could result in fines, penalties, delays, or restrictions on operations.

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Item 1A.RISK FACTORS

Investing in our securities involves significant risks, including the potential loss of all or part of your investment. These risks could materially affect our business, financial condition and results of operations and cause a decline in the market price of our common stock. You should carefully consider all of the risks described in this Annual Report, in addition to the other information contained in this Annual Report, before you make an investment in our securities. In addition to other matters identified or described by us from time to time in filings with the SEC, there are several important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or results that are reflected from time to time in any forward-looking statement.

Summary Risk Factors

The following is a summary of the principal risks that could adversely affect our business, operations and financial results. Such risks are discussed more fully below and include, but are not limited to, risks related to:

● Our future growth being dependent upon demand for our products and services;

● Our ability to compete successfully against current and future competitors;

● Volatility of demand in our industries;

● Our management team’s limited experience in operating as a public company;

● The possibility of being compelled to undertake product recalls;

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● The adequacy of our warranty reserves to cover future warranty claims;

● The adequacy of our insurance strategy to protect us from all business risks;

● The dependence of our medical supplies segment on a single customer;

● Our intent to not pay dividends for the foreseeable future; and

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Risks Related to Our Business

We have a history of losses and we may not achieve and/or sustain profitability in the future.

For the years ended December 31, 2025 and 2024, we incurred net losses of $39.1 million and $8.8 million, respectively. The 2025 net loss included approximately $13.4 million of non-cash goodwill impairment charges and impairment of intangibles. As of December 31, 2025, we had negative working capital of approximately $9.8 million and an accumulated deficit of approximately $112.6 million. To date, we have financed our operations primarily through capital raises from issuing common stock. We may not achieve profitability in the future as we anticipate that our operating expenses will increase significantly in the foreseeable future as we:

• successfully develop and commercially market new products and services;

• acquire and maintain market share in our EVs and drones segments;

• achieve and manage growth in our operations;

• keep pace with technological developments;

• increase our sales and marketing to acquire new customers; and

These efforts may prove more expensive than we currently anticipate and we may not succeed in increasing our revenue sufficiently to offset these higher costs. Even if we are successful in generating revenue and increasing our customer base, we may not become profitable in the future or may be unable to maintain any profitability achieved if we fail to increase our revenue and manage our operating expenses or if we incur unanticipated liabilities. Even if our revenue increases, we may not be able to sustain the rate of revenue growth. Revenue growth may be slower than anticipated or revenue may decline for a number of reasons, including continued problems accessing various incentive programs to assist our customers with their purchase of our vehicles, recent elimination of certain federal and state incentive programs, lack of demand for our products and services, increasing competition, lengthening sales cycles, decelerating growth of, or declines in, our overall market, or our failure to capitalize on growth opportunities or to introduce new offerings. Any failure by us to achieve and maintain revenue or profitability could cause the price of our common stock to decline.

Management has concluded that there is substantial doubt about our ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As of December 31, 2025, we had cash and cash equivalents of $0.4 million and negative working capital of $9.8 million. To date, we have financed our operations primarily through capital raises from issuing common stock. We believe that our existing cash and cash equivalents may not be sufficient to allow us to operate for the next 12 months due to our current and potential liabilities. We may need to raise additional capital through equity or debt issuances. There can be no assurance that any required future financing can be successfully completed on a timely basis or on terms acceptable to us. Based on these circumstances, management has determined there is substantial doubt about our ability to continue as a going concern.

The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations.

We may experience quarterly fluctuations in our operating results due to a number of factors, many of which are outside our control, which make our future results difficult to predict and could cause our operating results to fall below expectations.

Additionally we expect our period-to-period operating results to vary based on our operating costs, which we anticipate will increase significantly in future periods as we, among other things, develop and commercially market new products and services, open new design, sales and service facilities, hire additional personnel, increase our travel and operational budgets, increase our facility costs, hire and train service personnel, increase our sales and marketing activities, and increase our general and administrative functions to support our growing operations. As a result comparing our operating results, on a period-to-period basis may not be meaningful. You should not consider our past results in any projected growth rate or as indicative of our future performance. We have limited ability to forecast our future revenue, costs and expenses and, as a result, our operating results may from time to time fall below our estimates.

In addition, recent changes to our business model as a result of the Maddox Acquisition (as defined under Item 8, Part II of this Annual Report), the addition of our drone segment and the introduction of our initiative to develop high-performance, energy-integrated AI compute infrastructure make it difficult to evaluate our current business and our future prospects. We have limited insight into other trends that may emerge and affect our business. Our operating results may not meet expectations of equity research analysts or investors. If any of this occurs, the trading price of our common stock could decline, either suddenly or over time.

Our future growth is dependent upon demand for our products and services in markets that are rapidly evolving.

Our growth is highly dependent upon the market acceptance of, and we are subject to an elevated risk of any reduced demand for, our products and services, including the commercial adoption of zero-emission trucks and other fleet vehicles and heavy lift drones. We are also developing, but have not yet commercialized, our high-performance, energy-integrated AI compute infrastructure. If any of these markets does not develop as we expect or develops slower than expected, our business, prospects, financial condition and operating results will be harmed, and we may need to raise additional capital. Each of these markets is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new technological and product announcements and changing consumer demands and behaviors. Factors that may influence the market acceptance of our products include:

• perceptions about the limitations in the technology in our products;

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• the availability of service for our products;

To the extent that we are not able to build our products in accordance with customer expectations, our future sales could be harmed.

We may also become subject to regulations that require us to alter the design of our products, which could negatively impact consumer interest in our products.

The influence of any of the factors described above may cause current or potential customers not to purchase our electric vehicles or heavy lift drones, as applicable, which would materially adversely affect our business, operating results, financial condition and prospects.

We may not be able to compete successfully against current and future competitors.

The market for commercial zero-emission EVs is rapidly evolving and characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors.

Similarly, the UAV and drone industry is highly competitive and rapidly evolving, particularly in the areas of defense, public safety, industrial inspection, and autonomous logistics. Once we begin distributing our heavy-lift, industrial-grade drone platforms designed for agricultural, fire suppression, and forestry applications, we will compete with both legacy agricultural drone companies and newer drone-focused entrants. We expect this competition to intensify as regulatory pathways for UAVs and drones become more defined and commercial drone applications expand globally.

Most of our existing and potential competitors have substantially greater financial resources, more extensive engineering, manufacturing, marketing and customer service and support capabilities, longer operating histories and greater name recognition than we do. They may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products. Particular to our drone segment, our competitors may be able to provide customers with different or greater capabilities or benefits than we can provide in areas such as technical qualifications, past contract performance, geographic presence, price and the availability of key professional personnel, including those with security clearances. Virtually all of our competitors have more extensive customer bases and broader customer and industry relationships than we do. Our competitors may be in a stronger position to respond quickly to new technologies and may be able to design, develop, market and sell their products more effectively. As a result, our competitors may be able to compete more aggressively and sustain that competitive advantage over a longer period of time than we can. Each of these competitors has the potential to capture market share in our target market, which could have an adverse effect on our position in our industry and on our business and operating results. In order to secure contracts successfully when competing with larger, well-financed companies, we may be forced to agree to contractual terms that provide for lower aggregate payments to us over the life of the contract, which could adversely affect our margins.

We expect competition in the EVs industry to intensify in the future in light of anticipated increased demand for alternative fuel vehicles, continued globalization, and consolidation in the worldwide automotive industry as well as recent elimination of certain federal and state incentives for EVs. Increased competition may lead to lower vehicle unit sales and increased inventory, which may result in further downward price pressure which may materially and adversely affect our business, financial condition, operating results and prospects. There can be no assurances that we will be able to compete successfully in our markets. If our competitors introduce new products or services that compete with or surpass the quality, price or performance of our products or services, we may be unable to satisfy existing customers or attract new customers at the prices and levels that would allow us to generate attractive rates of return on our investment. A disruptive technology advancement in the EV or drone industry by a competitor could adversely affect the sales of our products.

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Demand in our industries is volatile, which may materially and adversely affect our business, prospects, operating results and financial condition.

The markets in which we currently compete and plan to compete in the future have been subject to considerable volatility in demand in recent periods. We have fewer financial resources than more established market participants have to withstand changes in the market and disruptions in demand. Volatility in demand may lead to lower sales of our products and increased inventory, which may result in further downward price pressure and adversely affect our business, prospects, financial condition and operating results. These effects may have a more pronounced impact on our business given our relatively smaller scale and financial resources as compared to many incumbent providers.

Our sales cycle can be long and unpredictable and require considerable time and expense before executing a customer agreement, which may make it difficult to project when, if at all, we will obtain new customers and generate revenue from those customers.

The sales cycle for our business, from initial contact with a potential lead to contract execution and implementation, typically takes significant time and is difficult to predict. Our sales cycle, in some cases, has lasted nine months or more. Our sales efforts involve educating our customers about the use, capabilities and benefits of our products and services. Some of our customers undertake a significant evaluation process that frequently involves not only our products and services but also the offerings of our competitors. This process can be costly and time-consuming. In addition, once a customer is inclined to purchase our products, their ability, in most cases, to issue a purchase order is dependent on being granted funding towards the purchase. It is very difficult for us or our customers to predict the timing of the release of such funding, or if they will receive at all. As a result, it is difficult to predict when we will obtain new customers and begin generating revenue from these new customers. As part of our sales cycle, we may incur significant expenses before executing a definitive agreement with a prospective customer and before we are able to generate any revenue from such agreement. The substantial time and money spent on our sales efforts may not generate significant revenue. If conditions in the marketplace generally or with a specific prospective customer change negatively, it is possible that no definitive agreement will be executed, and we will be unable to recover any of these expenses. If we are not successful in targeting, supporting and streamlining our sales processes, our ability to grow our business, and our operating results and financial condition may be adversely affected. If our sales cycles lengthen, our future revenue could be lower than expected, which would have an adverse impact on our consolidated operating results and could cause our stock price to decline.

We may not be able to keep pace with technological advances and we depend on advances in technology by other companies

Significant developments in alternative technologies, such as advanced diesel, ethanol and other renewable fuels, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. For example, compressed natural gas or propane, which are abundant and relatively inexpensive in North America, may emerge as consumers’ preference.

In addition, the drone industry continues to undergo significant changes, primarily due to technological developments. Because of the rapid growth and advancement of technology, shifting consumer tastes and the popularity and availability of other forms of activities, it is impossible to predict the overall effect these factors could have on potential revenue from, and profitability of, the broader drone industry. The development of specialized software and hardware is a costly, complex and time-consuming process, and investments in product development often involve a long wait until a return, if any, can be achieved on such investment. We might face difficulties or delays in the development process that will result in our inability to timely offer products that satisfy the market, which might allow competing products to emerge during the development and certification process.

It is impossible to predict the overall effect these factors could have on our ability to compete effectively in a changing market, and if we are not able to keep pace with these technological advances or to react to changes in customer preferences, then our revenues, profitability and results of operations may be materially adversely affected. However, if we struggle to adapt to an industry-shifting technological advancement or competitor offerings that render our products relatively less attractive or obsolete, it could have a material adverse effect on our business.

Further, we rely on and will continue to rely on components of our products that are developed and produced by other companies over which we have limited control. The commercial success of certain of our planned future products will depend in part on advances in these and other technologies by other companies, and our ability to procure them from such third parties in a timely manner and on economically feasible terms.

The demand for commercial zero-emission EVs depends, in part, on the continuation of current trends resulting from historical dependence on fossil fuels. Extended periods of low diesel or other petroleum-based fuel prices could adversely affect demand for vehicles that utilize our technology, which could adversely affect our business, prospects, financial condition and operating results.

We believe that much of the present and projected demand for commercial zero-emission EVs results from concerns about volatility in the cost of petroleum-based fuel, the dependency of the United States on oil from unstable or hostile countries, government regulations and economic incentives promoting fuel efficiency and alternative forms of energy, as well as the belief that poor air quality and climate change results in part from the burning of fossil fuels. If the cost of petroleum-based fuel decreased significantly, or the long-term supply of oil in the United States improved, the government may eliminate or modify its regulations or economic incentives related to fuel efficiency and alternative forms of energy, as we have seen with the impact of the recent presidential administration. If there is a change in the perception that the burning of fossil fuels does not negatively impact the environment, the demand for commercial zero-emission EVs could be reduced, and our business and revenue may be harmed. Diesel and other petroleum- based fuel prices have been extremely volatile, and we believe this continuing volatility will persist. Lower diesel or other petroleum-based fuel prices over extended periods of time may lower the current perception in government and the private sector that cheaper, more readily available energy alternatives should be developed and produced. If diesel or other petroleum-based fuel prices remain at deflated levels for extended periods of time, the demand for commercial EVs may decrease, which could have an adverse effect on our business, prospects, financial condition and operating results.

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The sizes of the markets for our current and future drone products or AI data compute infrastructure may be smaller than we estimate.

Our addressable market projections for heavy lift drones and AI data compute infrastructure are based on internal models and third-party data. While we believe our assumptions are sound, market conditions, regulatory changes, or customer adoption may diverge from these assumptions. If the actual demand, pricing structure, or target applications for our products fall short of expectations, this could materially impair our growth, financial performance, and operational results.

The market for heavy-lift drones is still emerging and may not scale as expected.

The heavy-lift drone sector, especially in agricultural and forestry applications, is evolving rapidly. The speed and scale of adoption will depend heavily on regulatory frameworks (e.g., the FAA and the European Union Aviation Safety Agency (“EASA”)), operational proof points, and customer confidence in our drone solutions. If this market develops more slowly than anticipated, or if drone-based operations face resistance due to safety, reliability, or cost concerns, our growth may be constrained.

We may not be able to reduce and adequately control the costs and expenses associated with operating our business, including our material and production costs.

If we are unable to reduce and/or maintain a sufficiently low level of cost for designing, manufacturing, marketing, selling, distributing and servicing our products relative to their selling prices, our operating results, gross margins, business and prospects could be materially and adversely impacted. We have made, and will be required to continue to make, significant investments in the design, manufacture, and sales of our products

For example, we incur significant costs related to procuring the materials and components required to build our EVs. As a result, without including the impact of government or other subsidies, incentives, or tariffs, our costs and therefore the purchase prices for our commercial zero-emission electric vehicles currently are higher than the purchase prices for gas or diesel-fueled vehicles with comparable features.

Additionally, in the future we may be required to incur substantial marketing costs and expenses to promote our products, even though our marketing expenses to date have been relatively limited. If we are unable to keep our operating costs aligned with the level of revenues we generate, our operating results, business and prospects will be harmed. Many of the factors that impact our operating costs are beyond our control. For example, global demand from all manufacturers of zero-emission vehicles for the same resources could create shortages and drive the costs of our raw materials and certain components, such as lithium-ion battery cells, to a higher level and reduce profit or create or increase losses. Indeed, if the popularity of zero-emission EVs exceeds current expectations without significant expansion in battery cell production capacity and advancements in battery cell technology, shortages could occur which would result in increased material and component parts costs to us and could also negatively impact our ability to meet production requirements if the batteries were simply not available.

If we fail to manage our anticipated growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately.

We have expanded our operations, including through the addition of our drone segment and medical supplies segment and the expansion of our business strategy to include AI data compute infrastructure, in the last several years and anticipate that further expansion will be required to achieve our business objectives. The growth and expansion of our business, combined with the requirements of being a public company, places a continuous and significant strain on our management, operational and financial resources. Our future operating results depend largely on our ability to manage this expansion and growth successfully. Risks that we face in undertaking this expansion include:

• forecasting production and revenue;

• controlling expenses and investments in anticipation of expanded operations;

• addressing new markets.

We may in the future hire a significant number of additional personnel as we expand our current and future product offerings, the timing of which will depend on the success of our sales efforts. Because our products utilize specialized technology, individuals with sufficient training in such technology may not be available to hire, and we may need to expend significant time and expense in training the employees we hire. Competition for individuals with experience designing, manufacturing and servicing our products is intense, and we may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future, which could seriously harm our business and prospects.

In this regard, we will be required to continue to improve our operational, financial and management controls and our reporting procedures and we may not be able to do so effectively. Further, to accommodate our expected growth we must continually improve and maintain our technology, systems and network infrastructure. We therefore may be unable to manage our expenses effectively in the future, which would negatively impact our gross margin or operating expenses in any particular quarter. If we fail to manage our anticipated growth and change in a manner that preserves the quality of our products and services and our ability to deliver in a timely manner, it will negatively affect our brand and reputation and harm our ability to retain and attract customers.

Public health crises and other global health pandemics, epidemics or disease outbreaks could adversely impact our business, results of operation and financial condition.

A significant public health crisis, pandemic or disease outbreak could adversely impact our business as well as those of our suppliers and customers. Any future significant public health crisis could adversely impact the global economy, our industries and the overall demand for our products. In addition, preventative or reactionary measures taken by governmental authorities may disrupt the ability of our employees, suppliers and other business partners to perform their respective functions and obligations relative to the conduct of our business. Our ability to predict and respond to future changes resulting from potential health crises is uncertain as are the ultimate potential impacts on our business. The extent to which a pandemic or similar significant health crises will impact our business in the future is uncertain. In addition, to the extent such significant health crises may adversely affect our business, financial condition, results of operations and cash flows, they may also have the effect of heightening many of the other risk factors in this section.

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Unfavorable conditions in the global economy, rising interest rates and capital market liquidity issues could limit our ability to grow our business and negatively affect our operating results.

Revenue growth and potential profitability of our business depend on the level of demand in the markets we serve. To the extent that weak economic conditions cause our customers and potential customers to freeze or reduce their capital expenditure or operational budgets, particularly those for zero-emission EVs, heavy-lift drones and AI data compute infrastructure, demand for our products and services may be negatively affected. Historically, economic downturns have resulted in overall reductions in these budgets and corresponding spending. If economic conditions deteriorate or do not materially improve, our customers and potential customers may elect to decrease their operational budgets or defer or reconsider product and service purchases, which would limit our ability to grow our business and negatively affect our operating results.

Our business depends on our Chief Executive Officer and management team, retaining and attracting qualified management, key employees and technical personnel and expanding our sales and marketing capabilities.

Our success depends upon the continued service of Mr. Phillip Oldridge, our Chief Executive Officer, as well as other members of our senior management team. It also depends on our ability to continue to attract and retain additional highly qualified management, technical, engineering, operating and sales and marketing personnel. We do not currently maintain key person life insurance policies on any of our employees. Our business also requires skilled technical, engineering, product and sales personnel, who are in high demand and are difficult to recruit and retain. As we continue to innovate and develop our products and services and develop our business, we will require personnel with expertise in these areas. There is increasing competition for talented individuals such as design engineers, manufacturing engineers, and other skilled employees with specialized knowledge in the markets that we serve. This competition affects both our ability to retain key employees and hire new ones. Key talent may leave us due to various factors, such as a very competitive labor market for talented individuals with appropriate industry experience and skills. Our success depends upon our ability to hire new employees in a timely manner and retain current employees. Additionally, we compete with both mature and prosperous companies that have far greater financial resources than we do and start-ups and emerging companies that promise short-term growth opportunities. The loss of any of our key members of management or other highly skilled employees or an inability to attract, retain and motivate additional highly skilled employees required for the planned development and expansion of our business could delay or prevent the achievement of our business objectives and could materially harm our business.

Our management has limited experience with operating a public company. If we fail to manage our growth effectively, we may not be able to develop, produce, make or sell our products or services successfully.

Most of our executive officers have limited experience in the management of a publicly traded company. Management may not successfully or effectively manage a public company that is subject to significant regulatory oversight and reporting obligations under federal securities laws. Management’s limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of our executive officers’ time may be devoted to these activities, which will result in less time being devoted to the management and growth of the Company. Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition.

Additionally, we may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies in the U.S. The development and implementation of the standards and controls necessary for us to achieve the level of accounting standards required of a public company in the U.S. may require costs greater than expected. Competition for individuals with this experience is intense, and we may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business, prospects, financial condition and operating results.

The forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business may not grow at similar rates, if at all.

Growth forecasts are subject to significant uncertainty and are based on assumptions and estimates, which may not prove to be accurate. Forecasts relating to the expected growth in zero-emission EVs, electric drivetrain systems and conversions, heavy-lift drones, AI data compute infrastructure and other markets may prove to be inaccurate. Even if these markets experience the forecasted growth, we may not grow our business at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.

We may selectively pursue acquisitions of complementary businesses and technologies, which could divert capital and our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and adversely affect our operating results.

We may selectively pursue acquisitions of complementary businesses and technologies that we believe could complement or expand our applications, enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential future acquisitions may divert the attention of management and cause us to incur expenses in identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.

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In addition, we have limited experience with acquiring other businesses or technologies. If we acquire businesses or technologies, we may not be able to integrate the acquired personnel, operations and technologies successfully, or effectively manage the combined business following the acquisition. We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including:

• unanticipated costs or liabilities associated with the acquisition;

• incurrence of acquisition-related costs;

• diversion of management’s attention from other business concerns;

• the potential loss of key employees;

• use of resources that are needed in other parts of our business; and

In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets, which must be assessed for impairment at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to record impairment charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations.

Acquisitions could also result in dilutive issuances of equity securities and/or the incurrence of debt, which could adversely affect our operating results. We may also unknowingly inherit liabilities from acquired businesses or assets that arise after the acquisition and that are not adequately covered by indemnities. In addition, if an acquired business fails to meet our expectations, our operating results, business and financial position may suffer.

Expansion of our business strategy into the AI infrastructure market could increase competitive, operational, legal and regulatory risks to our business in ways we cannot predict.

At the beginning of 2026, we announced a partnership with Azio AI Corporation (“Azio”), an AI infrastructure provider, to pilot a joint immersion-cooled energy infrastructure for AI data centers. As we continue to enter the AI data center market, competitive, operational, legal and regulatory risks may be exacerbated as there is substantial uncertainty about the extent to which AI will result in changes that come with risks that we may not be able to anticipate, prevent, mitigate or remediate.

Through the expansion of our business to include AI data compute infrastructure, we will face new sources of competition and new customer relationships, and our competitors may be larger, have longer operating histories and significantly greater resources than we do. As a result, there can be no assurance that any AI data compute infrastructure solutions we develop will be adopted by the market or be profitable or viable. Our limited experience with respect to the provision of AI data compute infrastructure solutions could limit our ability to successfully execute on this growth strategy or adapt to market changes. If we are unsuccessful in continuing to develop and offer AI data compute infrastructure, our business, results of operations and financial condition could be adversely affected. Further, an increased focus on AI data compute infrastructure could displace or reduce our existing operations related to EVs, medical supplies and drones, which may adversely affect our business, results of operations and financial condition.

Our investments in developing and offering AI data compute infrastructure may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns or other complications that could adversely affect our business, reputation, results of operations or financial condition. The increasing focus on the risks and strategic importance of certain AI or machine learning technologies has already resulted in regulatory restrictions that target products and services capable of enabling or facilitating AI and machine learning and may in the future result in additional restrictions impacting any infrastructure solutions we may develop. Complying with multiple evolving laws, rules and regulations from different jurisdictions related to such new solutions could increase our cost of doing business or may change the way that we operate in certain jurisdictions. We may not be able to adequately anticipate or respond to these evolving laws and regulations, and we may need to expend additional resources to adjust our products in certain jurisdictions if applicable legal frameworks are inconsistent across jurisdictions.

For example, in April 2023, the U.S. Federal Trade Commission, Department of Justice, Consumer Financial Protection Bureau and Equal Employment Opportunity Commission issued a joint statement on AI, demonstrating their interest in monitoring the development and use of automated systems and enforcement of their respective laws and regulations. In December 2025, the presidential administration issued an executive order aimed at challenging and preempting state AI laws that are inconsistent with federal policy with respect to AI regulation and calling for federal AI legislation.

Such future regulatory frameworks, as well as developing regulatory guidance and judicial decisions in this area, may affect our use of AI and our ability to provide and to improve our products, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us and could adversely affect our business, financial condition and results of operations.

Furthermore, concerns regarding third-party use of AI for purposes contrary to governmental and societal interests, including concerns relating to the misuse of AI applications, models, and solutions, could result in restrictions on AI products. Any such restrictions could reduce the demand for our intended AI data compute infrastructure, and negatively impact our business, financial condition and operating results, and damage our reputation.

It is also unclear how our strategy to provide infrastructure for customers developing and deploying AI applications could affect the applicability of these existing or proposed regulatory frameworks and other restrictions with respect to any solutions we may offer from time to time. However, it is possible that such regimes will impose obligations on infrastructure providers, such as us, to oversee, monitor or restrict the use of AI systems that are trained or deployed on their systems, and/or to ensure compliance with such regulatory frameworks and other restrictions. If our customers violate existing or proposed regulatory regimes or other restrictions, or if they use our services for unlawful, harmful or non-compliant purposes, we could be subject to regulatory investigations, regulatory fines, reputational damage or contractual liability for any such actions, even if we do not control the customer applications. Further, AI data compute customers increasingly are looking to pass through their regulatory obligations and other liabilities to their outsourced data center providers, and we may not be able to limit our liability or damages in the event of loss suffered by such customers whether as a result of our breach of an agreement or otherwise.

These competitive, operational, legal and regulatory risks are evolving and uncertain and could impact our business in ways we cannot predict. Any of the foregoing could limit our ability to offer, or grow our partnership in, AI data center infrastructure solutions and continue to grow our business, which could have a material adverse effect on prospects, results of operations and financial condition.

Risks Relating to the Design, Supply and Manufacturing of our Products

Due to the nature of our products and services, a product safety failure, quality issue or other failure affecting our or our customers’ or suppliers’ products or systems could seriously harm our business

Our products may not perform in a manner that is consistent with our customers’ expectations for a variety of reasons. If our products were to contain defects in design and manufacture that cause them not to perform as expected or that require repair, or experience any other failure to perform as expected, it could harm our reputation and result in delivery delays, product recalls, product liability claims, significant warranty and other expenses, which could have a material adverse impact on our ability to develop, market and sell our products. Technical, mechanical, quality, electronic, and other failures may occur from time to time, whether as a result of manufacturing or design defect, operational process, or production issue attributable to us, our customers, suppliers, partners, third-party integrators, or others. Product design changes and updates could also have associated cost and schedule impacts. In addition, our products could fail as a result of cyber-attacks, such as those that seize control and result in misuse or unintended use of our products, or other intentional acts. A product or system failure, or perceived failure, could lead to negative publicity, a diversion of management attention, and damage to our reputation that could reduce demand for our products and services. It could also result in product recalls and product liability and warranty claims (including claims related to the safety or reliability of our products) and related expenses, other service, repair and maintenance costs, labor and material costs, customer support costs, significant damages, and other costs, including fines and other remedies, and regulatory and environmental liabilities. For example, should we have a significant sale of either new vehicles or re-power conversion kits and a defect (from a supplier-purchased product or internally assembled components) were to be discovered after delivery that could not be corrected in a timely manner, we could suffer an adverse public relations event that harms the company in a way that it may not be able to recover from, or which turns out to be so costly as to cause a significant loss. We may also incur increased costs, delayed payments, reputational harm, or lost equipment or services revenue in connection with a significant issue with a third party’s product with which our products are integrated. Further, our insurance coverage may not be adequate to cover all related costs and we may not otherwise be fully indemnified for them. Any of the foregoing could have a material adverse effect on our competitive position, results of operations, financial condition, or liquidity.

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We are dependent on third parties to deliver raw materials, parts, components and services in adequate quantity in a timely manner and at reasonable prices, quality levels and volumes acceptable to us. Our business, prospects, financial condition and operating results could be adversely affected if we experience disruptions in our supply chain.

Our zero-emission EVs are assembled from components supplied by third parties. For example, we rely on third parties for batteries, traction motors, power electronics, connectors, cables, and metal fabrication for battery storage boxes. As a result, we are particularly dependent on those third parties to deliver raw materials, parts, components and services of adequate quality and quantity in a timely manner and at reasonable prices. Some components of our vehicles and drivetrain systems include materials such as copper, lithium, rare-earth and strategic metals that have historically experienced price volatility and supply interruptions. In addition, we do not currently maintain long-term agreements with our suppliers with guaranteed pricing because we cannot at this time guarantee them adequate volume, which exposes us to fluctuations in component, materials and equipment prices and availability.

There have been significant changes to U.S. trade policies, including tariffs affecting China, Canada and Mexico, and there continues to be significant discussion regarding other potential changes to U.S. trade policies, treaties and tariffs, including the potential for additional tariffs. In addition, retaliatory tariffs have been imposed, and additional retaliatory tariffs are likely. These changes have resulted in uncertain economic and political conditions that have made it difficult for us and our suppliers to accurately forecast and plan future business activities. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity and have a material adverse effect on the business and financial condition of our suppliers, which, in turn, would negatively impact us.

Furthermore, currency fluctuations weakening the U.S. dollar against foreign currencies may adversely affect our purchasing power for such raw materials, parts and components and manufacturing equipment from foreign suppliers. Substantial increases in the prices for such raw materials, components and equipment would increase our operating costs and could reduce our margins if we cannot recoup the increased costs through increased prices. We may not be able to recoup these increased costs by increasing the prices of our products.

In cases where we rely on a sole supplier for a component or system, if there is an interruption of supply or increased industry demand it may be difficult for us to substitute one supplier for another, increase the number of suppliers or change one component for another in a timely manner or at all. Additionally, many of our current suppliers are small companies that produce a limited number of specialized products. If any of these suppliers were to go out of business or be acquired by a competitor of ours or any other third party that decides to discontinue our supply relationship, we would need to find an alternative supplier, which we may not be able to do.

This limited supply chain exposes us to multiple potential sources of delivery failure or component shortages for the production of our zero-emission electric products. We may experience delays due to supply chain disruptions with respect to any of our zero-emission electric products we may produce. In addition, our currently ongoing transition from low to high volume production tooling for our zero-emission electric products may take longer than expected, which may adversely impact our short-term financial results.

Furthermore, if we experience significantly increased demand, or need to replace certain existing suppliers, there can be no assurance that additional supplies of component parts will be available when required on terms that are favorable to us, or that any supplier would allocate sufficient supplies to us in order to meet our requirements or fill our orders in a timely manner, or that we could engineer replacement components ourselves.

Changes in our supply chain may result in increased future costs. We have also experienced cost increases from certain of our suppliers in order to meet our quality targets and development timelines as well as due to design changes that we made, and we may experience similar cost increases in the future. Additionally, we are negotiating with existing suppliers for cost reductions, seeking new and less expensive suppliers for certain parts, and attempting to redesign certain parts to make them less expensive to produce. If we are unsuccessful in our efforts to control and reduce supplier costs, our operating results will suffer.

If we encounter unexpected difficulties with our current suppliers, and if we are unable to fill these needs from other suppliers, we could experience production delays, which could have a material adverse effect on our financial condition and operating results.

The inability of these suppliers to deliver, or their refusal to deliver, necessary raw materials, parts and components of our zero-emission drivetrain systems and services in a timely manner at prices, quality levels, and volumes acceptable to us would have a material adverse effect on our financial condition and operating results. Our business, prospects, financial condition and operating results could be adversely affected if we experience disruptions in our supply chain.

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The facilities or operations of our third-party providers could be damaged or adversely affected as a result of disasters or unpredictable events.

If major disasters such as earthquakes, tornadoes, fires, floods, hurricanes, wars, terrorist attacks, computer viruses, pandemics or other events occur, the production facilities of some of our third-party providers may be seriously damaged, or they may have to stop or delay production and shipment of our products. We may also experience downtime due to a third-party provider’s delay in production and shipment of our products due to, among other reasons, their inability to obtain supplies and materials. Either of these delays could have a material adverse impact on our business, operating results and financial condition.

We depend on information technology, and any breakdown, interruption or breach of our information technology systems could subject us to liability or interrupt the operation of our business, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.

We increasingly depend on information technology systems and infrastructure in connection with the conduct of our business. We must routinely update our information technology infrastructure and our various information technology systems throughout the organization may not continue to meet our current and future business needs. Furthermore, modification, upgrade or replacement of such systems may be costly. In addition, any breakdown, interruption, corruption or unauthorized access to or cyber-attack on these systems could create system disruptions, shutdowns or unauthorized disclosure of confidential information. While we attempt to take appropriate security and cyber-security measures to protect our data and information technology systems and to prevent such breakdowns and unauthorized breaches and cyber-attacks, these measures may not be successful and these breakdowns and breaches in, or attacks on, our systems and data may not be prevented. Such breakdowns, breaches or attacks may cause business interruption and could have a material adverse effect on our business, financial condition, cash flows and results of operations and could cause the market value of our common stock to decline, and we may suffer financial damage or other losses as a result of lost or misappropriated information.

If our suppliers fail to use ethical business practices and comply with applicable laws and regulations, our brand image could be harmed due to negative publicity.

We do not control our independent suppliers or their business practices and, as such, they may not comply with ethical or legal business practices, such as environmental responsibility, fair wage practices, appropriate sourcing of raw materials, and compliance with child labor laws, among others. A lack of demonstrated compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations.

Violation of labor or other laws by our suppliers or the divergence of an independent supplier’s labor or other practices from those generally accepted as ethical in the U.S. or other markets in which we do business could also attract negative publicity for us and our brand. This could diminish the value of our brand image and reduce demand for our products and services if, as a result of such violation, we were to attract negative publicity. If we, or others in our industry, encounter similar problems in the future, it could harm our brand image, business, prospects, financial condition and operating results.

Our business success will depend in part on the success of our joint ventures, partnerships and other strategic relationships with third parties. We may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future. The anticipated benefits of potential strategic relationships may not be fully realized or take longer to realize than expected.

Our business success will depend in part on our ability to continue to successfully manage and enter into productive strategic relationships with third parties. For example, at the beginning of 2026, we announced a partnership with Azio to pilot a joint immersion-cooled energy infrastructure for AI data centers. This partnership is at a very early stage, as we have only commenced a pilot of the proposed infrastructure. The success of this partnership will depend, in part, on the successful development of the data center infrastructure, and we may not realize all of the anticipated benefits. Such development may be more difficult, time-consuming, or costly than expected and could result in increased costs, decreases in the amount of expected revenues, and diversion of management's time and energy, which could materially impact our business, operating results, financial condition, and prospects.

In February 2025, we engaged a U.S. drone manufacturer for the manufacture of a U.S.-made heavy-lift drone in accordance with our detailed specifications and, following delivery of the drone, for transfer of the associated intellectual property rights. This initial heavy-lift drone is purpose-built for the agricultural market, with advanced spraying and mapping functionality. As part of our business strategy, following delivery of the model drone, we intend to open our U.S. drone manufacturing facility and commence commercial sales, subject to regulatory approvals. Any delay or failure on the part of our U.S. drone manufacturer to perform, whether due to factors within its control or otherwise, may adversely affect our ability to commercialize and sell our heavy lift drones, thereby adversely affecting our growth and operational results.

The success of any partnership, joint venture or other strategic relationship will depend, in part, on the successful relationship between us and our business partners. A failure to successfully partner, or a failure to realize our expectations for the strategic relationship, including any contemplated exit strategy from such relationship, could materially impact our business, operating results, financial condition, and prospects. These strategic relationships could also be negatively impacted by inflation, supply chain issues, an inability to obtain financing on favorable terms or at all, an inability to market and sell the infrastructure to customers as planned, and development and construction delays.

We also depend on various third parties to provide critical parts for our process. For example, we currently maintain strategic relationships with key manufacturers of components we require for our zero-emission EVs. Maintaining and expanding our strategic relationships with third parties is critical to our continued success. Further, our relationships with these third parties are typically non-exclusive and do not prohibit the other party from working with our competitors. These relationships may not result in additional customers or enable us to generate significant revenue. Identifying suitable business partners and negotiating and documenting relationships with them require significant time and resources. If we are unsuccessful in establishing or maintaining our relationships with these third parties, our ability to successfully sell our products and services, compete in the marketplace or to grow our revenue could be impaired and our operating results would suffer.

While we may be able to establish alternate supply relationships or engineer replacement components for any single source components, we may be unable to do so in the short term, or at all, at prices or costs that are favorable to us. In particular, while we believe that we will be able to secure alternate sources of supply for most of our single sourced components in a relatively short time frame, qualifying alternate suppliers or developing our own replacements for certain highly customized components of our products may be time consuming, costly and may force us to make additional modifications to a product’s design, or at a minimum require us to delay delivery of orders.

We may not be able to identify or secure suitable business relationship opportunities in the future or to ensure that our competitors will not capitalize on such opportunities before we do.

Further, in the future, we may co-invest with other third parties through partnerships, joint ventures, or other entities. These joint ventures could result in our acquisition of non-controlling interests in, or shared responsibility for, managing the affairs of a partnership, joint venture, or other entity. We may be subject to additional risks, including:

Each of these factors may result in returns on these investments being less than we expect or in losses, and business, operating results, financial condition, and prospects may be adversely affected.

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Our suppliers must scale their zero-emission vehicle manufacturing and assembling processes effectively and quickly from low volume production to high volume production.

Our existing production model utilizing third parties may not be well suited for the high-volume production required to scale our business. We do not know whether we or our existing suppliers will be able to develop efficient, low-cost manufacturing and assembly capability and processes, and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes required, to successfully develop our business. Any failure by us or our suppliers to develop such manufacturing and assembly processes and capabilities and reliable sources of component supply within our projected costs and timelines could have a material adverse effect on our business, prospects, operating results and financial condition.

The ability of our suppliers to scale their manufacturing and assembling processes is in part dependent on ours and their supply chain and on our collective ability to execute our decentralized production strategy. Even if we and our suppliers are successful in developing our high-volume manufacturing and assembly capability and processes, and reliable sources of component supply, we do not know whether we will be able to do so in a manner that avoids significant delays and cost overruns, including, as a result of factors beyond our control, such as problems with suppliers and vendors, in time to meet our commercialization schedules or to satisfy the requirements of customers. In addition, certain components we or our third-party suppliers integrate into may not be available on a consistent basis or in large quantities. Our business, prospects, financial condition and operating results could be adversely affected if we or our suppliers experience disruptions in our respective supply chains or if we or they cannot obtain materials of sufficient quality at reasonable prices.

The complexity in our business is expected to continue growing as we introduce new products and services. We have limited experience in simultaneously designing, testing, manufacturing, upgrading, adapting and selling our products as well as limited experience allocating our available resources among the design and production of our products. We are also planning to develop multiple new product lines simultaneously, which will increase the complexity and importance of our execution in establishing the processes, operations and procedures necessary for the commercialization, marketing, sale and distribution of these products. As we add complexity to our product line and introduce new products and services, we may experience unexpected delays.

If we and our suppliers are unable to scale our respective existing assembly processes and systems quickly while maintaining our current quality level, including supply chain constraints and the inability to manage complexity in our business, we may be unable to meet our customers’ vehicle quality and quantity requirements or our forecasted production schedule or lower our cost of sales. As a result, we may not be able to meet our customers’ delivery schedules and could face the loss of customers or be exposed to liability to customers to which we promised delivery, which could adversely affect our business, prospects, financial condition and operating results.

We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.

We may become subject to product liability claims, which could harm our business, prospects, operating results and financial condition if we are not able to successfully defend or insure against such claims. Our industries may experience significant product liability claims and we face inherent risk of exposure to claims in the event our products do not perform as expected or malfunction and personal injury or death results. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our products and business and inhibit or prevent commercialization of other future products, which would have a material adverse effect on our brand, business, prospects and operating results. We have product liability insurance on a claims-made basis for all our zero-emission products with appropriate annual limits. However, our insurance may not be sufficient to cover all potential product liability claims. Any lawsuit seeking significant monetary damages either in excess of our coverage, or outside of our coverage, may have a material adverse effect on our reputation, business and financial condition.

We may be compelled to undertake product recalls.

Any product recall in the future may result in adverse publicity, damage our brand and adversely affect our business, prospects, operating results and financial condition. We may at various times, voluntarily or involuntarily, initiate a recall if any of our products or components prove to be defective. Such recalls, voluntary or involuntary, involve significant expense and diversion of management attention and other resources, which would adversely affect our brand image in our target markets and could adversely affect our business, prospects, financial condition and results of operations.

Our warranty reserves may be insufficient to cover future warranty claims, which could adversely affect our financial performance.

If our warranty reserves are inadequate to cover future warranty claims on vehicles that utilize our technology, our business, prospects, financial condition and operating results could be materially and adversely affected. We provide a three-year warranty on parts and workmanship and a five-year warranty on powertrain and batteries with every zero-emission electric product. Most of our warranty offering, with the exception of workmanship, is covered by the component manufacturers’ warranty. In addition, customers have the opportunity to purchase an Extended Service Plan for the period after the end of the standard warranty to cover additional services for an additional three-year period or 100,000 miles, whichever comes first. The warranty is similar to other providers’ warranty programs and is intended to cover all parts and labor to repair defects in material or workmanship in the product. We plan to record and adjust warranty reserves based on changes in estimated costs and actual warranty costs. However, because we have only recently begun delivering our first zero-emission vehicles, and we have extremely limited operating experience with them, we therefore have little experience with warranty claims for these zero-emission vehicles or with estimating warranty reserves. We will monitor our warranty reserves based on our actual warranty claim experience. We may be required to provide for increases in warranty reserves in the future. Our future warranty reserves may not be sufficient to cover all claims or our limited experience with warranty claims may not adequately address the needs of our customers to their satisfaction.

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Our insurance strategy may not be adequate to protect us from all business risks.

We may be subject, in the ordinary course of business, to claims resulting from products liability, employment-related actions, class-action lawsuits, accidents, acts of God and other actions against us. Additionally, our insurance coverage may be insufficient to cover all existing and future claims against us. We may be compelled to expend significant time and resources defending any such claims, and a loss that is uninsured or which exceeds policy limits may require us to pay substantial amounts, which could adversely affect our financial condition and operating results.

If we are unable to design, develop, market and sell other product offerings that address additional market opportunities, our business, prospects and operating results will suffer.

We will need to address additional markets and expand our customer demographic in order to further grow our business. In particular, we have transitioned to target owners of trucks (all classes inclusive of 3–7) and vans between 10,000 pounds GVWR to 19,500 pounds GVWR, commercial fleets, including white fleets of school districts and other fleet users of these vehicles, including government entities. Successfully offering all EVs in this market requires delivering a vehicle with different characteristics than an ICE-powered vehicle at a price that is competitive with other similar vehicles. Because the markets are still growing in their acceptance of our products and demand for our products may be volatile, it is difficult to project increases in market acceptance and our ability to generate sales in volumes as we currently intend. Our failure to address additional market opportunities would harm our business, financial condition, operating results and prospects.

Our growth depends in part on the availability and amounts of government subsidies and incentives and the application of regulations that encourage conversion to EVs. These subsidies and incentives are limited and unpredictable and could expire or change to benefit competing technologies.

We believe that the availability of government subsidies, rebates, and economic incentives is currently a critical factor considered by our customers when purchasing our zero-emission systems or converting their existing vehicles to zero-emission-electric or hybrids, and that our growth depends in large part on the availability and amounts of these subsidies and economic incentives. Any unavailability, reduction, elimination or adverse application of government subsidies, rebates, and economic incentives because of administrative mistakes made by those in charge of the programs, budgetary challenges, expiration, policy changes, the reduced need for such subsidies, rebates, and incentives due to the perceived success of electric or hybrid vehicles or other reasons may result in the diminished price competitiveness of the alternative fuel vehicle industry generally and our zero-emission electric and hybrid vehicles in particular, especially prior to our ability to significantly reduce our costs. The elimination of certain regulations and programs that encourage sales of zero-emission electric and hybrid vehicles could adversely impact sales of our commercial zero-emission electric and hybrid vehicles, either currently or at any time in the future. In 2025, the presidential administration rescinded federal support for EVs, with agencies like the EPA and DOT moving to roll back emission standards, revoke California’s zero-emission waiver, and freeze funding for charging infrastructure. Through the One Big Beautiful Bill Act, the presidential administration terminated the IRA's $7,500 consumer EV tax credit for vehicles acquired after September 30, 2025, while also clawing back unspent IIJA funding for charging networks. If government subsidies and economic incentives to produce and purchase zero-emission EVs were no longer available to us or our customers, or the amounts of such subsidies and incentives were reduced or eliminated, it would have a negative impact on demand for our vehicles and our business, prospects, financial condition and operating results would be materially and adversely affected.

In addition, we anticipate that in the future there may be new opportunities for us to apply for grants, loans and other incentives from federal, state, local and foreign governments on our own behalf and on behalf of our customers. Our ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of our applications to participate in such programs.

The application process for these funds and other incentives is and will continue to be highly competitive, and there is no guarantee that we will obtain such funds or incentives

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Our decentralized assembly, sales and service model for our EVs business presents numerous challenges and we may not be able to execute on our plan to establish sales, service and assembly facilities in the urban areas we have targeted and our facilities in any of those markets may underperform relative to our expectations.

Our strategy of establishing sales, service, and assembly facilities for our zero-emission EVs in selected urban areas in the United States is substantially different from the prevailing centralized manufacturing and franchised distribution and service model used currently by our zero-emission manufacturing competitors. For example, we may not be able to utilize long established sales channels developed through a traditional franchise system to increase our sales volume, which may harm our business, prospects, financial condition and operating results. Moreover, we will be competing with companies with well established distribution channels. If we determine that our decentralized model is inadequate, opening our own sales, service and assembly facility in any market generally will be capital intensive and require, among other things, establishing a local order volume that is sufficient to support the facility, finding a suitable and available location, negotiating a satisfactory lease agreement for the facility, obtaining permits and approvals from local and state authorities (which, in the case of facilities to be opened in foreign countries, may require obtaining approvals from national governments), building out the facility to our specifications and hiring and training employees to assemble, sell and service our zero-emission EVs and converting existing vehicles to zero-emission EVs. If we decide we must open our own facilities, we plan to seek state and local government incentives to defray the costs of opening facilities in the markets we have selected, but we may not be successful in this effort, or the incentives may no longer be available or may not be as significant as we would like. As with any development project, the development and build-out of a facility will subject us to the risk of cost overruns and delays, which may be significant. Once our sales, service and assembly facilities are open for business, we will need to ensure that they maintain a high level of quality in order to satisfy customers and enhance the brand. Even if we are able to address all of the challenges discussed above, we have little experience in sales, service or assembly and our sales, service and assembly facilities in one or more markets may not adequately address customer service needs or be profitable and we may lose sales and our entire investment in such facilities, and therefore, damaging our reputation in the process. If we are unable to establish the local order volume we require in order to open new sales, service and assembly facilities or are unable to successfully assemble, sell, and service our zero-emission electric commercial vehicles adequately for customers and profitably operate these new facilities in our target markets, our business, prospects, financial condition and operating results may be adversely affected. If we do not adequately address our customers’ service needs, our brand and reputation will be adversely affected, which in turn could have a material and adverse impact on our business, financial condition, operating results and prospects.

In many of our zero-emission EVswe use battery packs composed of lithium-ion battery cells, which, if not appropriately managed and controlled, on rare occasions have been observed to catch fire or vent smoke and flames. If any such events occur in our commercial EVs, we could face liability for damage or injury, adverse publicity and a potential safety recall.

The battery packs in our manufactured vehicles use lithium-ion cells, which have been used for years in laptop computers, cell phones and EVs. On rare occasions, if not appropriately managed and controlled, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. Highly publicized incidents of laptop computers, cell phones, and Tesla, Inc.’s EVs bursting into flames have focused consumer attention on the safety of these cells. In addition, a limited number of side-impact tests carried out by NHTSA on non-commercial passenger vehicles containing lithium-ion batteries and thermal management systems containing liquid coolant have resulted in post-collision fires under certain conditions. Any failure of a competitor’s electric vehicle may cause indirect adverse publicity for us and our EVs. These events have raised questions about the suitability of lithium-ion cells for automotive applications. A field failure of our battery packs may occur, particularly if one of our manufactured or converted vehicles is involved in a collision, which could damage the vehicle or lead to personal injury or death and may subject us to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Furthermore, there is some risk of electrocution if individuals who attempt to repair battery packs on our manufactured or converted vehicles do not follow applicable maintenance and repair protocols. Any such damage or injury would likely lead to adverse publicity and potentially a safety recall. Any such adverse publicity or negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells such as a vehicle or other fire, even if such incident does not involve vehicles that utilize our technology, could seriously harm our business, prospects, financial condition and operating results.

Our medical supplies segment is solely dependent on a single customer.

Our medical supplies segment derives all of its revenue from a single customer, Maddox Medical, of which Jason Maddox, our President and Interim Chief Financial Officer, is the founder and a stockholder, and Elgin Tracy, our Chief Operating Officer, is a stockholder. The loss of this customer or a significant amount of business from this customer would materially and adversely affect our results of operations until such time, if ever, as we are able to replace the lost business. We are also subject to the risks faced by Maddox Medical to the extent that such risks impede its ability to stay in business and make timely payments to us.

Risks Relating to the Legal and Regulatory Matters

We are subject to substantial regulations, which are evolving, and unfavorable changes or any failure by us to comply with these regulations could substantially harm our business and operating results.

Our zero-emission EVs, heavy lift drones, and certain of their components are subject to substantial regulation under international, federal, state and local laws. We may incur in the future increased costs in complying with these regulations. Regulations related to the EV industry, alternative and renewable energy and drones currently are evolving and we face risks associated with changes to these regulations or new regulations. These risks include the following:

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To the extent the laws governing our business and products change, some or all of our products may not comply with applicable international, federal, state or local laws, and certain of the competitive advantages of our products may be reduced or eliminated, which could have an adverse effect on our business. Furthermore, compliance with changing regulations could be burdensome, time consuming, and expensive. To the extent compliance with changes in regulations or new regulations is cost prohibitive, our business, prospects, financial condition and operating results will be adversely affected.

Our drones business is highly regulated and our ability to generate revenues and profit may be limited by regulatory restrictions and/or changes and the speed with which such restrictions and/or changes occur.

Drone manufacturers and operators are subject to extensive regulatory and legal requirements that involve significant compliance costs. The civil aviation authorities, including the FAA and the EASA, may issue regulations relating to the operation of drones that could require significant expenditures. Implementation of the requirements created by such regulations may result in increased costs for our customers and us. Additional laws, regulations, taxes and airport rates and charges have been proposed from time to time that could significantly increase the cost of our operations or reduce the demand for drones. If adopted, these measures could have the effect of reducing revenue and increasing costs. Moreover, the nature of and the speed with which these regulations are completed and implemented pose a risk for our financial performance and condition, timing of growth and overall potential. As a result, we cannot ensure that these and other laws or regulations enacted in the future will not have a negative impact on our business, financial condition, and results of operations.

Governments and regulatory agencies in the markets where we manufacture and sell drone products may enact additional regulations relating to product safety and consumer protection in the future and may also increase the penalties for failure to comply with product safety and consumer protection regulations. In addition, one or more of our customers might require changes in our products, such as the non-use of certain materials, in the future. Complying with any such additional regulations or requirements could impose increased costs on our business. Similarly, increased penalties for non-compliance could subject us to greater expenses in the event any of our products were found to not comply with such regulations. Such increased costs or penalties could have a negative impact on our business, financial condition, and results of operations.

Vehicle dealer and distribution laws could adversely affect our ability to sell our commercial zero-emission EVs.

Envirotech Vehicles, Inc. EVTV US Equity

EVTV · 10-K · period ended 2025-12-31

Item 1. BUSINESS

Item 1A.RISK FACTORS

Envirotech Vehicles, Inc. EVTV US Equity☆

EVTV · 10-K · period ended 2025-12-31

Item 1. BUSINESS

Item 1A.RISK FACTORS

Envirotech Vehicles, Inc. EVTV US Equity