Arcimoto, Inc.

Good afternoon, everyone, and welcome to Arcimoto's Q2 2022 Stakeholder Update Webinar. I'm Jesse Fittipaldi, Interim Chief Executive Officer. To start out, I want to call your attention to our safe harbor disclaimer regarding forward-looking statements. This note identifies risk factors that may cause our actual results to differ materially from the content of forward-looking statements for the reason we cite in our SEC filings. Today, we will hear from the executive team, who will give a snapshot of the business, our challenges, and rapid growth in key areas. For those of you that I haven't met yet, I look forward to meeting you soon. I've been with Arcimoto since 2015, and until my new role as interim CEO, I was the chief strategy officer. I'm delighted to be in this new role, and I'm thankful for the company employees, executives, and our board for believing in me to carry out the Arcimoto vision and mission. Our mission is to catalyze the shift to a sustainable transportation system. We've invented ultra-efficient electric vehicles on a platform capable of providing sustainable solutions to a wide range of modern transportation challenges. Since 2019, we have produced and delivered these vehicles to consumers. Our vehicles share the same key technology across all our platforms and the variation of each of these products is a different tool used to solve a specific logistics problem. They are designed to move the people, food, parcels, and equipment that in today's transportation ecosystem are moving with oversized, costly vehicles that cause significant environmental impact. Our next step is to scale our production volume, reduce the cost of our product, and prove out our factory design and automation strategy to accelerate sales and growth and achieve profitability. In the long term, we intend to leverage our replicable production model to expand manufacturing capabilities in other communities across the world. This is how we make a difference. Today, we will discuss financials, production, marketing, customer experience, and commercial sales. Our team recently achieved a production rate of six vehicles per day, which represents an annual run rate of 1,200 vehicles per year. While we have just achieved our highest production quarter to date, we continue to generate negative gross profit as we remain on the early phases of our production curve. We expect gross profit to improve as we continue to scale our production volume and implement key cost-down initiatives. As we ramp up production, we have deployed a comprehensive marketing sales strategy to meet our production cadence. These initiatives are laying the groundwork for future sales. This quarter, we're also announcing a revision to our full-year production target. As with many of our peers in the vehicle manufacturing space, we have faced various supply chain headwinds in 2022 that have created bottlenecks in the production, including inverter chip shortages. To be clear, more important than the aggregate number of vehicles produced while we remain at a gross margin deficit is that we plan to reach the production rate of 12 vehicles a day by the end of the year, representing an annual run rate of 2,400 vehicles per year. Focusing on making and selling more product to achieve profitability is how we plan to become a great company. We face the same challenges as most American manufacturers, but we have a firm grasp around the key issues, and our team has a clear plan to address these challenges. Doug Campoli will kick us off with the financials.

Hi, my name is Doug Campoli. I'm Arcimoto's Chief Financial Officer and Treasurer. 102 FUVs were produced in the second quarter of 2022, an almost 16% increase over our previous quarterly record. 41 were sold at an average sales price of $21,658. Four were deployed into marketing or other company use, and 20 were deployed into rental operations. And the balance will be moved into rental or fixed assets. Diltic Motorworks sold a quarterly record of 35 units with an average sales price of $12,296. As of June 30, 2022, there are 400 happy customers on the road as brand ambassadors. We now have 98 FUVs in our growing rental fleet available for revenue generation, along with a total of 79 FUVs allocated to marketing, R&D, and internal fleet use. Second quarter revenue increased 109% year over year. Even with production shut down for most of the first quarter during the move to the ramp, year to date revenue increased by 2% compared to the same period in 2021. Tilting Motorworks' second quarter revenue grew over 10 times compared to the same period in 2021 and accounts for almost 26% of total year-to-date revenue. Rentals started gaining revenue traction in tourist locations, and we expect continued quarterly revenue growth across all reporting segments. We generated negative gross profit of $4.6 million in the quarter. However, cost of goods sold as a percentage of revenue has decreased sequentially in each of the last two quarters. The main driver behind the year-over-year increase in COGS is increased production volume and increased overhead as we build the infrastructure to ramp production. Year to date, the FUV average sales price was $23,544. As we ramp production and continue to increase efficiencies in our manufacturing processes, we anticipate leveraging our fixed cost structure to drive improved gross profit per vehicle. Year to date, Tilting Motorworks has had an average sales price of $12,296 and an average COGS of $8,847, which is a 36% margin. Operating expense also increased as we build out the infrastructure for higher production volume. The three main drivers of this increase were one, increased headcount, two, increased sales and marketing efforts, and three, increased research and development spend to reduce the per vehicle cost of the FUV, develop new products, and scale production. We ended the quarter with approximately $5 million cash and cash equivalents. Year to date, June 30, 2022, net cash received from the sale of equity was approximately $16.4 million. Cash from the issuance of debt consisted of approximately $4.5 million from a long-term convertible note and approximately $65,000 from equipment financing. Approximately $103,000 cash was received from the exercise of employee options and warrants. We have successfully utilized the at-the-market offering with minimal impact on the stock price.

Hi, I'm Terry Becker, Chief Operating Officer at Artimoto. As anticipated, Q2 showed a significant increase in production over Q1. Q1 was intentionally slated to move the production assembly line from the amp to the larger ramp facility. Also, the first four months of 2022 were dedicated to designing an upgraded battery configuration along with the required validation testing. While production of vehicles in Q1 was minimal, these efforts resulted in a record quarter of production in Q2. Supply chain issues have certainly made the continuous flow of production difficult in the past two years. The supply chain in Q2, through the present, continues to challenge us with the uncertain availability of some critical parts. As a result, we are revising the anticipated production schedule for the remainder of 2022. Automation is key to Arcimoto's ability to scale. The machines and fabrication equipment that have been put into service since the company went public have been with the intent to minimize labor and maximize efficiency and quality. Fabrication of metal parts and machining have been in place since building the AMP facility in 2017, and those solutions continue to scale as we grow. Coming online presently is our own state-of-the-art automated vacuum forming plant for body panels which should eliminate the struggles of scaling production with an outside source. As well, the coating processes that are needed for paint and powder coat application are being brought in-house over the next three quarters to overcome the challenges and logistics of outside suppliers. Battery assembly automation is another vertical integration decision that, when complete, will enable high-volume production with minimal labor requirements. Going forward, the planned scale-up for production capability supports the company forecast. With the addition of fabrication equipment, vertical integration, and added labor to the final assembly line, we are focused on intentional phases that increase production capacity as we grow.