• Exro generated revenue of $324,769 for the three months ended March 31, 2023
• Added additional strategic partnerships for its Coil Driver™ technology for electric vehicles in the period in Wolong and an undisclosed European partner, which are expected to help accelerate Exro's market penetration
• Entered into additional channel sales partnerships for its Cell Driver™ technology for stationary energy storage and subsequent to the quarter secured an exclusive manufacturing partner which is anticipated to meet "buy America" incentives available to Exro customers
• Strong financial position as of March 31, 2023, with cash of $12.1 million, bolstered by the exercise of approximately 4.7 million warrants in Q1 for proceeds of approximately $6.7 million
• As of March 31, 2023, the Company had approximately 17.1 million warrants outstanding, all of which are exercisable at the current share price, which if exercised equate to proceeds of approximately $34 million
Exro Technologies Inc., a leading clean technology company developing new generation power control electronics that expand the capabilities of electric motors and batteries, announced its financial results for the quarter ended March 31, 2023.
"Through the first quarter of 2023 we continued to make steady progress towards commercialization of our Coil Driver™ technology for electric vehicles and Cell Driver™ technology for energy storage, both of which remain on track to begin series production in Q3 2023" said Exro CEO Sue Ozdemir. "The value proposition offered by our technology solutions in solving real world challenges to electrification continues to grow in relevance and reach across our market verticals. As we approach the start of series production, we remain focused on separating the signal from the noise amid the macro environment and focused on building the most sustainable, and valuable, company possible on behalf of shareholders."
2023 Scorecard Check-In
As Exro kicked-off its launch year, with a Q1 Letter to Shareholders the Company outlined 10 strategic objectives for 2023 (LINK). The purpose in setting these objectives was to continue transparency efforts with investors while aligning with what management believes are demonstratable value drivers for the Company's shareholders. A status update on these objectives is included below:
1. Signing additional Coil Driver™ strategic partners that amplify its market presence. In Q1 2023, Exro announced signing a large European tier-1 OEM supplier as partner. Still currently under non-disclosure agreement ("NDA"), Exro and partner are working towards partner motor-Exro Coil Driver™ inverter integration and testing in Q3 2023. Following successful testing it is anticipated the identity of the 25,000+ employee partner will be announced along with commercialization plans. Subsequent to the quarter, Exro announced signing the world's third largest motor manufacturer, Wolong Electric Group, as a strategic partner. The companies are collaborating towards motor-inverter integration and testing in Q4 2023 across a variety of low voltage and high voltage applications. Exro continues discussions with other potential strategic partners.
2. Delivery of low-voltage and high-voltage design-for-manufacture (DFM) samples for customer validation. On March 25, 2023, Exro delivered an initial batch of low-voltage DFM samples to Italian OEM supplier and partner HB4. These samples will be used to market the HB4 powertrain to potential customers and have been integrated into vehicles and showcased in recent European trade shows. Exro remains on track to deliver an initial batch of DFM high-voltage samples to customers by the end of Q2 2023.
3. Delivery of 48V hybrid-diesel samples to our European off-highway NDA-partner in Q1. Of note, this project includes two NDA's under one umbrella partnership – one is a large European OEM which supplies vehicles for off-highway applications, the second is a large European-based motor supplier. NDA partner timing has bumped sample delivery into Q2 2023. Integration of the partner motor-Exro inverter solution for the OEM's hybrid-diesel platform has been proceeding well with all parties scheduled to be in Calgary in May to collaborate commercialization efforts and witness final testing.
4. Signing additional multi-year commercial agreements that build our Coil Driver™ order back-log. With the roll out of low-voltage DFM samples at the end of Q1 2023, and the planned roll-out of high-voltage DFM samples by the end of Q2 2023, Exro is engaged in commercial agreement discussions with numerous parties. Following customer vehicle integration and in-field validation, it is anticipated discussions will translate into supply agreements in H2 2023 and into 2024.
5. Work through phase-2 validation and towards commercialization agreement with Linamar. Linamar continues to be an excellent partner. Phase-2 testing of the co-developed integrated motor-inverter powertrain solution for commercial vehicle e-beam axles continues to progress well and on schedule. Upon successful validation and testing, the partners anticipate moving to a definitive agreement which would outline multi-year volume production beginning in H2 2024.
6. Growing contract services for software engineering and vehicle integration through Exro Vehicle Systems. With Q1 results today, Exro is pleased to announce a contract award by its Exro Vehicle Systems division valued at US$2.35 million. The contract is for design services, including a custom battery pack solution, for a light-duty on-road electric vehicle for a leading automotive Tier-1 supplier. Delivery is scheduled for Q4 2023.
7. Achieve Cell Driver™ UL Certification in Q2. As announced on May 8, 2023, Exro's Cell Driver™ Energy Storage System has successfully completed two of the three major certification phases. The system is on track to complete UL certification in early Q3 2023, pushed back by approximately three weeks due to scheduling at UL's certification laboratories. UL certification is required prior to connecting to the grid in North America.
8. Signing US Cell Driver™ distribution and installer partnerships and build order back-log. On February 7th 2023, Exro announced a distribution partnership with Greentech Renewables Southwest, the largest distributor of renewable energy products in the southwestern United States with more than 80 sales centers. On May 8th 2023, Exro provided an update naming Re:Build Manufacturing as exclusive manufacturing partner for the company's Cell Driver cabinets while also announcing four new channel sales partnerships: PVCA, ProSolar, Shaw Solar, and High Point Electric which provide access to customer networks in California, Colorado, Florida, the Caribbean, and regions within Canada. Channel partners are being trained on Cell Driver™ and are currently marketing and quoting the technology with solar energy, electric vehicle charging infrastructure and energy management projects.
9. Achieve first deliveries and revenues for Coil Driver™ and Cell Driver™ products in Q3. Exro remains on schedule to begin series production of its Coil Driver™ and Cell Driver™ products in Q3 2023. Low-voltage Coil Driver™ products are on schedule for deliveries by September which will be followed by the start of high-voltage products by early Q4 2023. Following UL Certification for Exro's Cell Driver™ Energy Storage System, the company is on track to start series production in Q3 2023 with initial customer deliveries and in-field pilots.
10. Continue to evaluate market conditions for a Nasdaq up-list. Exro's letter of acceptance from Nasdaq to up-list to the exchange remains in good standing. The company remains committed to an eventual up-list and will do so when it deems an opportune time to do so and in the best interest of shareholders.
First Quarter and Subsequent Operating Highlights
In its Q1 Letter to Shareholders released on January 17, 2023, Exro announced a new commercial agreement and purchase order with Italian OEM supplier HB4. Under a non-disclosure agreement ("NDA") for more than two years, the parties had successfully piloted an HB4 motor and Exro Coil Driver™ in a small passenger truck with Casalini Motors. Within the letter, Exro also announced a new commercial agreement for Coil Driver™ Systems with a private Brazil-based retrofitter which includes a pilot program with a major global beverage company. Identities withheld under NDA until successful pilot validation.
On February 7, 2023, Exro announced it has entered into a channel partnership agreement with Greentech Renewables Southwest ("Greentech"), a division of Consolidated Electrical Distributors (CED) Greentech, one of the largest solar equipment distributors in the United States. The agreement aligns with Exro's targeted go-to-market strategy for its Cell Driver™ Energy Storage System product offering, partnering with leading clean energy integrators that provide expertise and scalability to amplify and accelerate market penetration to commercial and industrial customers.
On February 27, 2023, the Company announced it had signed a memorandum of understanding for a strategic partnership with an undisclosed development partner, a multi-national company that is a direct supplier to the global automotive industry. Under phase one of the agreement, the partner's electric motors will be calibrated with Exro's L040 800V Coil Driver™ for prototype samples in Q3 2023. Upon successful completion of automotive dynamometer testing, including achievement of mutually agreed to performance targets, the parties shall transition to a definitive agreement for strategic partnership which will outline volume targets, sales and marketing plans, price and production targets, and compensation models. Dynamometer testing remains on schedule to be completed by the end of Q3 2023.
On April 17, 2023, the Company announced it has entered into a strategic partnership with Wolong Electric Group Ltd. The partnership aligns directly with Exro's targeted go-to-market strategy for its patented Coil Driver™ inverter technology partnering with leading global tier-1 automotive suppliers that accelerate and amplify Exro's market presence. The strategic partnership is intended to leverage Exro's Coil Driver™ technology and Wolong's motor design and manufacturing capabilities to develop next-generation electric vehicle powertrain solutions from light to heavy duty applications in the Americas, with the potential to expand globally. The agreement consists of two phases: 1) System development, whereas Exro will test motors provided by Wolong and develop a complete motor-drive system offering, and 2) Commercial plan to market, sale, and supply the motor-inverter solution. Target key customers for the partnership's powertrain solutions include Mercedes-Benz, Geely Automotive, ZFGroup, and others.
On May 8, 2023, the Company announced Re:Build Manufacturing as Exro's exclusive manufacturing partner for its Cell Driver™. The partnership with Re:Build Manufacturing provides Exro the ability to quickly scale to capture the significant opportunity in energy storage while removing all future capital expenditure and inventory working capital requirements associated with Cell Driver™ manufacturing from Exro's balance sheet. The Company also announced new channel sales partnerships with Photovoltaics California, ProSolar, Shaw Solar, and High Point Electric, renewable energy and energy management integrators that cover customer networks in California, Colorado, Florida, the Caribbean, and regions within Canada.
First Quarter 2023 Financial Highlights
For the three months ended March 31, 2023
• Revenue of $324,769 (2022 – $104,260)
• Comprehensive loss of $8,111,961 (2022 – $10,172,003)
• Selling, general and administration expense decreased by $1,211,888 to $1,442,110
• Payroll and consulting fees increased by $752,236 to $3,649,496
• Research and development decreased by $373,574 to $1,909,664
The Company saw revenue generated of $324,769 for the three months ended March 31, 2023, through the execution on engineering services agreements.
Exro saw an overall decrease in operating costs for the three months ended March 31, 2023, which was driven largely by lower selling, general and administration costs incurred in the period, offset by higher payroll costs compared to the same period in 2022. The Company continues to invest in talent to gear up for the start of production in 2023.
Liquidity and Capital Resources
As of March 31, 2023, the Company had cash of $12,090,984 and amounts receivable of $435,933. The Company had accounts payable and accrued liabilities of $2,590,513.
