Taiga Motors Corporation

Good morning. Welcome to TIGA's third quarter 2021 conference call. Joining us today are TIGA's CEO, Sam Bruno, and CFO, Mark Orsmond. Following their remarks, we will open the call for your questions. Then, before we conclude, I'll provide you the necessary cautions regarding the forward-looking statements made by management during this call. I would like to remind everyone that this call will be recorded and made available for replay via a link available at the investor relations section of the company's website, at ir.tigamotors.ca. Now, I would like to turn the call over to TIGA's CEO, Sam Bruno. Sir, please proceed.

Thank you. Welcome, everyone, and thank you for joining today. Before the market opened, we issued a press release announcing our results for the third quarter ended September 30th, 2021. A copy of the press release is available in the investor relations section of our website. I encourage all listeners to view our release for additional information on what we'll be discussing today. And with that, we'll get started. Before we begin, I do have a quick note. Earlier this week, we announced via press release that we'd be making a transition on the CFO position. Effective next week, Derek Bouchard will be joining Tiger as our new CFO. Eric will be taking over from our current CFO, Mark Orsman, who has agreed to remain on board as an advisor through November to ensure a smooth transition. I'd like to take a moment to recognize Mark for as many contributions since joining us this past year. His hard work and dedication has helped guide us on our journey from a startup to becoming a publicly traded company, and we wish him the best in his new pursuit. Now, understanding that many of you might be used to the entire story, I'd like to begin with a brief overview of our business. After that, I'll discuss operations from the quarter, and then I'll turn the call over to Mark to discuss financial results for the period. Following Mark's commentary, I'll come back on to provide closing remarks before turning the call over to questions. Let's get started. Since the company's inception in 2015, Tyga has been leading off-road power sport electrification by taking on the challenge of engineering electric powertrains and vehicles from a clean sheet up to deliver performance, reliability, and cost in vehicles operating on some of the harshest terrains on the planet. What sets us apart is our thousands of proprietary parts designed from the ground up, including our motors, inverters, battery modules, packs, electronics, thermal management systems, chassis, and software, all optimized together to offer leading power to weight ratios and durability in extreme off-road conditions. And it is that technology and our ability to innovate unconstrained from legacy combustion products that continues to create a significant pioneering advantage for Tyga in leading power sport electrification. As a reminder of our business strategy, today we are currently focused on ramping up production for both electric snowmobiles and personal watercraft that share the same Tiger powertrain. To get these products to market, we employ a four-pillar approach. The first two pillars are the core of our business and are, first, the direct sales of our snowmobiles and personal watercraft to recreational customers. Second, the sales of our vehicles to fleet operators, such as ski resorts, tour operators, commercial fleet operators, and the energy, resource, and transportation industry. The other two pillars of our business business. Certainly, the third pillar revolves around supplying our modular powertrain assemblies to OEMs and adjacent industries. Our multi-generation powertrain is a modular hardware and software platform that is designed to simplify production and assembly and decrease development time for both Tyga and our OEM partners. This approach broadens the scope of Tyga's efforts to electrify off-road vehicles. And lastly, we engage in aftermarket sales of parts, upgrades, apparel, and other accessories. With that overview completed, I'll now get into recent updates from the quarter. I'll begin by saying that the third quarter of 2021 was marked by transformational growth and several milestone achievements for Tyga. We officially passed 2,600 pre-orders across product lines as of October 31st, continued to build our fleet customer base, and added several key leadership positions and made continued progress as we look to ramp up our production capacity with a goal of beginning initial customer deliveries in the coming months. A standout moment for the quarter was being able to offer ORCA carbon test rides to customers and media on the St. Lawrence River on the shores of Montreal. Feedback was overwhelmingly positive. ORCA was highlighted as a new category of watercraft, one that is 100% electric, powerful, quiet, and fun to drive, reinforcing it has been in a class of its own. While we are moving quickly to take advantage of our first mover status in a new product category, Significant time and resources are being deployed to ensure we have the proper infrastructure, processes, and leadership to scale, create and fulfill worldwide demand. In support of our deliberate approach to growth, we have chosen to predominantly focus on three key areas of our business for the foreseeable future. The first is product and manufacturing innovation. Our teams have been working hard to ramp up production, navigating the current global supply shortage with agility and keeping us on track to begin initial deliveries in the next few months. Our second point of focus is on continuing to build a world-class team to deliver on our ambitious roadmap, pioneering electric power sports. This quarter, we made key additions to our executive team and continue to increase headcount across various departments to support our long-term growth goals. And the third area of focus is on growing worldwide pre-orders. Confirming public earlier this year, we've seen an increased awareness and interest in our products from fleets and individuals alike. The demand for electric power support solutions continues to grow. By executing in these three areas, we believe we can fulfill our mission to accelerate electrification of the off-road power support industry. I'll take a minute now to discuss updates within these initiatives more fully, beginning with manufacturing. Wrapping up operations towards production remains the main focal point this quarter, and we made meaningful progress. Currently, we remain laser focused on delivering the first watercraft and snowmobiles by end of this year. Production capabilities have been progressing as planned in Montreal at our 133,000 square foot facility as pilot vehicles, battery packs, and tractive unit lines have been installed. In response to global supply chain shortage, we have accelerated strategic insourcing and automation to decrease cost of goods and increase throughput to ramp up and meet Tyga delivery targets. This production-dedicated facility is situated near Tyga's secondary advanced R&D building for rapid manufacturing integrations during its initial ramp-up phase. In service of our expanded manufacturing plans, in July, we announced having received $50 million in government funding for our future mass production assembly facility in Chevalier, Quebec. Once fully operational, we expect this factory will allow Tiger to become the first Canadian EV manufacturer to integrate both automated electric powertrain assemblies, electric vehicle platforms under one roof, which we anticipate will increase efficiency and flexibility. The facility is planned to have a capacity to produce up to 60,000 vehicles and 20,000 powertrain assemblies per year, representing over three gigawatt hours of battery pack per year by 2025. Moving to our current production effort. Our engineering groups have been hard at work navigating the challenges associated with global supply shortages, and we have managed capability through a challenging period. Because we take full ownership in developing our integrated powertrain platform, we have been able to make iterative design improvements to both our hardware and software components. More specifically, we've introduced proactive enhancements to our software, enabling us to fully operate in a hardware-agnostic environment, which better insulates us from dependency on specific parts, which might be in high demand. The upgrades we've made to our modular technology system this quarter simplify the production assembly process and decrease development time for new vehicle models. Through rigorous testing and implementation, our team have demonstrated incredible flexibility, responsiveness to make this vision and reality in such a short time. During the quarter, we also introduced our next-generation integrated motor inverter tractive units to be used in production of our snowmobiles and watercraft. This next-gen technology achieves approximately 3% higher efficiency and approximately 11% higher power density than the previous generation. As we lay the groundwork for scaling our operations, We're continuing to target best-in-class hires to execute our business plan, which is our third area of focus. This quarter, we made additions to our executive management team that positioned Tyga for success in its next phase of growth. Earlier this week, we announced the appointment of Eric Bichir as chief financial officer. Eric joins Tyga with nearly three decades of experience in finance and M&A, most recently serving as executive vice president and CFO of Uniselect, a $1.7 billion corporation with over 4,000 employees. Previously, he spent over 10 years with CAE, a global leader in aviation security and healthcare services, where he held various roles that culminated in the position of vice president of finance, simulation products, civil training, and services. Having served in an executive management position since 2005, Eric has built a successful track record as an executive at publicly traded companies with global operations, making him an ideal fit to lead Tigard's finance and strategic planning efforts that drive our mission to accelerate electrification of off-road vehicles. In September, we welcome Doug Braswell as Vice President of Electrification Operations. Doug is a senior leader who has held several global engineering and R&D management positions at John Deere, Articat, and most recently led EV product development at CNH Industries. In addition to overseeing the build-out of the mass production assembly facility, he is responsible for overseeing Tiger's strategic growth in new vehicle platform launches and the acceleration of third-party vehicle platform electrification with their powertrain supply business. Doug's expertise in the power sport industry and decades of experience leading innovative teams and already proven to be effective in designing our manufacturing processes for long-term agility and scalability. Moving to our final area of focus, which is expanding pre-orders, during the quarter we saw sustained growth across geographies and customer segments. As of October 31st, we've grown our combined pre-order book to 2,632 units, a more than 100% increase from the beginning of the year. We now have Over 130 multi-unit fleet pre-orders from over 80 unique fleet customers across the world. Corporate prospects include ski hill operators, search and rescue, and tourism organizations. Our strategy of selling vehicles solely through own channels has allowed us to better understand our customers' needs and implement feedback. We are currently in active dialogue with an additional 200 global fleet operators, with several expressing interest for pre-order sizes north of 500 units. Given the environmental impact and electrification of commercial operators and the greater ROI we can derive from this customer segment in the near term. To continue driving pre-orders and the adoption of electric off-road vehicles, we believe that it's vital that we have infrastructure in place to support customers, not just during the purchase process, but also for the life of our vehicles. An industry-leading charging network and access to maintenance are essential services we need to be able to provide at scale in order for our products to be viable. In service of that mission, this fall we officially launched our off-road charging network in North America, with the first on-water charging locations completed in Ontario and Quebec, and on-land sites set to launch in Quebec soon. Matching the regional demand I noted earlier, we have thousands of charging locations targeted throughout North America first, with the goal of unlocking 75,000 kilometers of off-road trails and waterways by 2025. The charging network will Mine fully harnessed renewable energy in hard-to-reach Arctic locations, high mountain peaks, and undisturbed natural waterways, giving Tiger customers the freedom to explore the outdoors while limiting their impact on the environment. The launch of Tiger's charging network marks a meaningful step towards large-scale adoption of electric vehicles, as access to charging in remote locations mitigates range anxiety among those considering the switch from traditional combustion engines. Lastly, this fall we launched our Ride the Current Tour, which is taking place across the United States. These multi-city events give reservation holders the public and media chance to experience the ORCA, our electric personal watercraft, firsthand. And with that, I'd like to turn the call over to our CFO, Mark Orvman, to go over the financial results for the quarter. Mark.

Thanks, Sam. Firstly, I just want to say that I highly appreciate your kind words, and I'm very grateful for the opportunity to have contributed to target success and growth and maturity into a public company. Tiger currently is in its strongest financial position it's ever been, and I'm very confident that the team that's been put in place is going to lead this company to the next phase of evolution. With that, this morning we issued a press release which discussed the results of operations for the third quarter, and additionally our financial statements included and those filings included our MD&A statements. We strongly recommend that you read both of those materials in more detail for any additional information that's not being discussed on this call. Now to our results. As a note, the following amounts are in Canadian dollars unless otherwise indicated. Tyga is in the final stages now of transitioning to commercial production. Of its next generation snowmobile and personal watercraft products and the absence of significant revenues primary due to this transition. These financial results should not be treated as long-term indicator of the financial health and future performance of the business. In search and development, our R&D expenses increased to $1.1 million and a further $2.2 million approximately was capitalized. So our overall spend was around $3.2 million as we put a lot of effort into our R&D to stay ahead of this curve. And that was in comparison $551,000 for the same period last time. The increase in R&D expenses will accelerate the number of employees that we are able to retain and attract and dedicate to staying ahead of this curve. And it will also put an increase in the company's production output, shifting from a small number of proof-of-concept units to really production-ready prototypes. General and administration or G&A expenses increased to 2.7 million from 163,000 the same period last year. This increase in G&A expenses were primarily attributed to the increase in the number of employees for administration purposes, as well as the production manufacturing. G&A saw an important increase in professional fees to help the company support its growth efforts. Sales and marketing expenses were approximately 1.1 million, which is a massive increase over the $32,000 for the same period last time. The increase in sales and marketing expenses was primarily attributed to the increase in the number of employees in this department, and they've done a fantastic job in positioning the company as it moves forward towards an aggressive digital marketing strategy that has upgraded its website, streamlined more robust e-commerce capabilities, And if anybody is following the company on LinkedIn and social media, you can just see how evidence that how well this department is working. Our net loss was at $5.1 million compared to $2.7 million for the same period last year. An increase in the net loss primarily related to the increase in expenses, as we noted previously. As of September 30, 2021, the company had approximately $110 million in cash and cash equivalents compared with $7.8 million at December 31, 2020. So, you know, really strong financial position we are in, and we've been very prudent in what we've been spending our money on. We believe our current cash is sufficient to go forward, and we do not see any additional funds needed to execute our current operational strategy. With this, it concludes my financial review. I'll turn back the call to Sam to discuss the further operations and outlook. Thanks, Sam.