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spk_0: the morning ladies and gentlemen and thank you for standing by welcome to the arrow incorporated year and twenty twenty two financial results incorporate update conference call at this time all participants are analysts and only mode should you need assistance policing all conference specialist by pressing the starkey followed by zero after today's presentation it will be an opportunity to ask questions asked a question in a press star and then one on a cell phone keypad to withdraw your questions you may press aren't too it's it's been so this car advise that the audio of this conference call is being broadcast live over the internet is also being recorded for playback purposes a webcast replay of the call be available approximately one hour after the end of the call through june twenty third twenty twenty three at the time i'd like to turn the floor over to joey delicacy of core i are the company's investor relations from starfleet go ahead
spk_1: becky jamie good morning and thank you for participating in today's conference on joining me from a rose leadership team or and hum when slugger chief executive officer and dave hollingsworth chief financial officer during this call management will be making forward looking statements including statements that address a rose expectations for future performance or operational result forward looking statements about risk and other factors that may cause actual results to differ materially from those statements for more information about these risk please refer to the risk factors described and arrows most recently filed annual report on form think a and subsequent periodic reports filed with
spk_2: he has he seen in a rose press release that accompanies as cause and particularly the cautionary statements in it they found call includes adjusted the without a non gap financial measures that era of can be useful in evaluating of former
spk_1: he should not consider this additional information in isolation or is a substitute for results prepared in accordance with gap for reconciliation of is non gaap financial measures to net loss it's most directly comparable gap financial measure please see the reconciliation table located and arrows earnings press release which is available on it's website at www a room that come under the investor cat the content of this call contains time sensitive information that is accurate only as had a march twenty third two thousand and twenty three except as required by law hero disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occurred after this call it is now my pleasure to turn the call over to feel time which slugger
spk_3: i thank you joe is and good morning to everyone on other call the fourth quarter of twenty twenty two capped off a year before we feel is significant progress at era we generated sales of our legacy products the club her current and made additional progress in a design and sourcing of the url vanished along with the build out and tooling of her manufacturing facility right here in round rock texas as i've discussed before the vanish is our first low speed electric vehicle to be designed and developed based on a new common core chassis strategic road map the vanish is a utility c are low speed electric vehicle with a lightweight architecture and adaptable bed configurations to support both light duty and heavy duty applications it was designed to leave minimal impact on the environment has your omissions making well suited for both indoor and outdoor uses such as in stadiums and arenas campuses recent words and last mile delivery environments as well as out of other situations where toxic fumes are safety concern it will be street legal and will be governed to max speed of twenty five mph the vanish grid discreet components and a very large majority of these are being sourced from north america the msrp other vanished cassie is anticipated to be about thirty four thousand dollars while we intend to salvage interchangeable payloads for roughly a thousand dollars to five thousand dollars each in terms of her performance or the end of twenty twenty two revenue in the fourth quarter came from continued sales of a legacy clunker current units and we've now sold out nearly all of the inventory of this product while we anticipate that some sales of the current will trickle into the first and second quarters of twenty twenty three if peace will likely be minimal minimal however we expected and planned for this gif in revenue is we aim to complete the transition from the legacy current to the next generation vanish in the first half of twenty twenty three while revenue may decline these next two quarters until the vanishes in production we believe our quarterly cash burned will be in the same range as it has been over the last three or four quarters or team is done a great job of managing total operating expenses as evidenced by nearly eleven million dollar decline in total hop x in twenty twenty two over twenty twenty one cash and marketable securities of the end of twenty twenty two were approximately forty nine million dollars implying a cash runway that exceeds two years occurred current spending levels the reduction in operating expenses and casper is not an insignificant feed my do given this is occurred even as we were running at breakneck speed to design a new platform design the first vehicle on our platform and begin the manufacturing doled out of her round rock texas for sylvie another major chains going into twenty twenty three that we no longer rely on centro or any other suppliers from china to source any vehicle components when a lot to rely on karma automotive in california for vehicle assembly nor on club card for exclusive distribution instead we have an entirely new supply chain that is that largely eliminates shipments from asia and we're developing in the house manufacturing capabilities so we believe will allow us to control our own destiny so as to speak as well as enjoy higher margins per vehicle at scale as i've always maintained a long term success of hero should be based on the success of the entire common core chassis family of vehicles of which the vanish is expected to be the first have to read can be launched this success will be driven by the hard work experience in january and creativity of our entire team customer acceptance and market penetration of our vehicles is paramount and we believe this will ultimately be reflected on are anticipated future sales and profits not in how we performed in the rearview mirror for editor different strategic direction crucially this is why there's considerable optimism and anticipation within our own ranks despite the tenuous economic backdrops and a stock market malays currently the vanish is preparing is preparing to enter the homologation face which is of certification approval process and all vehicles must go through that involves crashing crushing and rolling a vehicle to ensure it safe and that it complies with llc be governed speed requirements prior to it being allowed into the marketplace furthermore come out against will also ensure that the vanish me to california carb requirements for zero emission transportation homologous is generally a twelve week process and we believe that we will successfully exit from allegations sometime in june love margaret promulgation is underway will be simultaneously focused on efficiently ramping our supply chain which is a pivotal step in being able to maximize the production and sell through of the vanished and placing additional vanish units with dealers for demo purposes following homologation we expect to enter l rep are low rate initial production by the end of june does any initial sales of the vanish will likely be rather small until the second half of twenty twenty three however do not take that to mean we haven't yet begun our sales and marketing outreach for the manage on the contrary we've already announced our first authorized dealer where in various stages of negotiation with more than fifty additional dealers in the us and canada and have what appears to be a substantial expression of interest for the very first units off our assembly line that's we believe our pipeline of potential dealers as strong as his deal or interest in advantage products which we believe offers numerous design ergonomic and technological with enhancements on with a total cost of ownership advantages over the status quo products currently found in the marketplace bringing a new vehicle the market takes time but i firmly believe that the last fifteen months of effort by the euro team was necessary to lay a proper foundation for what we believe will be are sustainable growth phase the real beauty of our strategic road map is a subsequent vehicle launches we use essentially the same critical components as the vanished meaning there should be very little design effort and retooling needed for future potential vehicles which would substantially shorten the time the market for those vehicles that can address a completely different segments of the tv marketplace also important and our corporate strategy is the development of a strong ip portfolio intellectual property can act as barriers to entry by competitors and contributed greatly to stockholder value hopefully you've seen some of our recent press release is highlighting or ip progress we continue to gain momentum and ip as some patents said already been issued multiple matters are currently an examination and we filed certain patrick insinuations and will be filing even more as and trademark applications in the future to help strengthen our corporate most creating a sustainable sizzle solution in the the space motivates us and our solutions are neither trivial nor obvious we believe the road will increasingly the trend toward successful sustainability and having an ip around our assets should only make this more valuable company that concludes my opening remarks now and like to turn the call over today hollingsworth who overview our financial results in more detail faith thanks tom and good morning everyone here's a summary of our fiscal year twenty twenty two financial results revenue for the year ended december thirty first twenty twenty two was two million nine hundred ninety thousand and four hundred ninety seven dollars an increase of eleven point four percent year over year the sells recorded in a fourth quarter of twenty twenty to represent the run off of our of our club card current inventory as we transition to the arrow vanish annual sales increased due to growth in sales of the outgoing arrow products
spk_4: total operating expense for the year twenty twenty two were approximately twenty point two million as compared to thirty one million in twenty twenty one year over year decrease in total operating expenses was due primarily to research reduced research and development expense resulting from discontinuation of the previous three
spk_3: eleven six product development
spk_4: and reduce general administrative expenses do to reduce general spending implemented during the corporate as your teach review by the management team
spk_3: adjusted ebitda a non gap measure for twenty twenty two two a loss of approximately eighteen point five million versus a loss of approximately twenty five million in twenty twenty one net loss and twenty twenty two was approximately twenty two point nine million which was an improvement from a net loss of approximately thirty three point one million in twenty twenty one the decrease was a result of a top cutting measures implemented by the management team but was impacted by a two point three four five million in adjustments namely be and cm failure and certain write offs cash and marketable securities a december thirty one twenty twenty two with approximately forty nine million versus sixty one nine point one million at the end of twenty twenty one total that was arrow and december thirty one twenty twenty two as it was december third twenty twenty one as of december thirty one twenty twenty two the company has thirty seven million three hundred fifty two thousand and two and three common shares outstanding
spk_5: that includes my prepared remarks and like a turn according to tom for any remaining comments
spk_3: thank you dave in summary twenty twice he was a year of progress at arrow on many fronts revenue grew eleven percent year over year we now have very few remaining units left of our legacy vehicle the club corporate for sale however and i would contend more importantly total operating expenses were down nearly eleven million dollars in twenty twenty two vs twenty twenty one which we feel is a testament to our team's ability to prudently manage expenses even while building a platform that we believe will provide sustainable growth lastly and and most importantly we made significant progress in the design of the common core chassis platform and our first internally developed vehicle the like to the utility vehicle the old vanished we believe were very close during production and achieving sales of this new generation of vehicles it is my belief that this next phase where corporate huge trajectory will be a much better barometer of our future that anything else in our corporate history furthermore once the vantage has successfully launched we intend to turn our efforts to finishing the design of our next two vehicles a people mover kabir over l a and a personal transport vehicle or pcb which should have similar functionality to traditional golf carts that we call the arrow vapor however we believe the vapor will be unlike any other golf cart on the market today
spk_6: lol have much more to say about those initiatives at a later time
spk_3: as always
spk_7: i like to thank all of our stock holders for their continued support and i look forward to sharing additional corporate updates overtime and with that i like to turn the car over to the operator so we can begin the question and answer sessions
spk_0: operator ladies and gentlemen at this time will begin the question and answer session he wish to ask a question on today it's false you simply need to press the starkey and then the number one on your telephone if your question as an address and you would like to a guy or a question may do so by pressing star and que if you are using a speaker phone you ask you please pick up the handset before entering your numbers to ensure the best sound quality once again that a star in that one ask a question our first question today comes from brian's lands here from zack's we go ahead with your question
spk_2: a girl my german arms i think it's really encouraging that stance ace sounds to me see initial deliveries of the vanished and three
spk_3: one cause i guess i have is about see a future models will they the old lady subject and same amount jason process for of the ballet the vapor frank the morning
spk_8: the answer your question is yes homologation is a platform specific activity
spk_3: we expect and stuff a geisha process which generally spends twelve weeks to remain relatively constant a lot all platforms obviously you know as we proceed through homologation on a common core platform architecture we expect very few surprises
spk_9: so the timeframe remains the same a we anticipate you know literally flying through homologation without without many issues on go forward basis
spk_2: rates of study or
spk_3: i guess suddenly that are there any particular industries or use cases that are coming out when you're talking to potential dealers or customers that are in line with your initial expectations or maybe even surprising you were some of the initial of interest says are being shown for the van well that's very good question brian and and today the the segments the we expected are you know showing brisk interest so if i had to categorize some i will i would start with segment such as we would call fleet refreshed said reef refresh of commodity fleets with jack which generally a refreshed whether you're in the resort business in the of business in the marina business in that any of those businesses they generally refreshed every three or four years and and those refreshed cycles are necessary because the quality of their commodity products is is such that that's their effective lifetime we're we're seeing a lot of interest harris especially because this the lifetime of our product is anticipated to be more than double that so so the economics of the refresh cycle change dramatically we're we're seeing fairly fairly substantial interest from the expected places from resorts from off from from that those segments so in the bigger picture you know there there aren't any startling surprises
spk_2: cause there's always a surprise from the distribution and aware be a little expressions of interest are but that's just part of launching a brand new products
spk_9: i'll touch and arms i found the ten tell you that you're unhealthy into position on the gs a schedule
spk_3: did think that is outdoor the employee twenty three well it it certainly is and and the way the way we're beginning that positioning is through partners that already have she has a presence that would add are offering to their existing he has a schedule position so it it's not the case bri that we're going to ourselves try to get on the schedule but rather we're going to to so
spk_2: focus on being and addition to the schedule with select partners and already have that presence great thank you for clearing that up
spk_9: i just one quick question for david says in the tuncay it says the central inventories about two hundred and forty four thousand and so i back out that number from the inventory the bulk of the inventory is
spk_3: it's fleet new vanish related inventory
spk_2: it is that correct we have we have like tom said a few holdovers of the the legacy product a roll into this this first half the next year but none of the vast majority of our fighters or build up for for inventory to to complete the l rent for the vanish
spk_3: gray fantastic take you so much as
spk_0: rock o'brien have a great week once again if he would like to ask the question please press star and then one to withdraw your questions you may press start and su well poised momentarily to assemble the roster
spk_2: in our next question comes from my finland from cnc please your head with your question a gentleman thanks for the calculator real positive stuff object is one real quick question i noticed in the tank k and i'm will come up on april third which i believe is the the hundred a the extension for the nasdaq limited role as i guess my question is have you applied for an extension is an extension be granted we being that will be a less than ten trading days away from april third and get new a dollar would would honestly be realistic is array any strategy to to cure
spk_3: that or or kind of what is your strategy in terms of the the outstanding shares their
spk_4: others there's to question their my god i'll take the first one and we've we've been in constant contact with the nasdaq and and to filling all the rules
spk_3: that that are going to be applied to us as would still remain below one dollar share
spk_4: so so they are up today with us and and we know that that will continue to and for some further rules i'm into the year
spk_3: now this is the second question more of how we want to combat that will be for us a delivery of the sales of as the and vanish we believe that investors want to see this product
spk_2: the verified by the marketplace and by delivering those units and and and finding those those dealers the see their stock price of reflect that that hard work of last fifteen months okay you get on it dissipated the listing on the surgery or to go for granted the other at editor extends beyond
spk_10: clutch gags exactly as we're we're of am i use it for hundreds the business
spk_0: thank you
spk_3: you're welcome might and ladies and gentlemen with that we've reached the end of today's question and answer session likes to turn the floor back over to management funny closing remarks
spk_0: i'd like to i'd like to thank all of you for participate or alternate call and for your interest in arrow we look forward to sharing our progress on the next quarterly conference call with when we were for a fourth quarter twenty twenty three results likely in may twenty twenty three
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