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Ion Mobile
Elizabeth Dossous, Carla Alford, Travis King, Nathaniel Roach, Nicholas Abdool
MBA515 – Accounting for Management Decisions
Park University
March 2nd, 2022
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Board members, Welcome. Our company has been growing substantially, and
our revenue is through the roof. We are in dire need of increasing our field of view and
expanding our business. Our positive cash flow can be increased by innovative and
strategic thinking. With this in mind, we have discovered an option regarding a merger
to move forward and bring this company to the next level. The companies we intend to
discuss with you today could be viable options for integration. The acquisition and
stabilization of the markets are optimized for an ideal merger. We will discuss the
options moving forward in this regard during this presentation.
As you know, iON Mobile has proven itself in the industry by posting positive
gains for shareholders for the last five years. We are in the middle of the biggest
revolution in motoring since Henry Ford’s first production line started turning back in
1913. Our experts and analysts believe we have already passed the tipping point where
sales of electric vehicles (EVs) will very rapidly overwhelm petrol and diesel cars. The
migration from vehicles powered by fossil fuels to electric cars is inevitable. Given this
information, our companies growth is paramount to keep up with demand.
We are a full-service company proudly servicing local and international
customers, offering our clients affordable electric vehicles, while being committed to
customer service and individualized client attention. We have excelled in partnering with
other environmentally concerned companies while reducing the overall Carbon Footprint
of manufacturing. However, we need to move beyond partnerships and complete a
merger to solidify our companies growth and profit margins while maintaining our core
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values. This merger could put us at the forefront of the manufacturing and distribution of
fully electric vehicles worldwide. It would allow us to maintain a firm hold in the industry
by fostering innovative growth and expansion. We will introduce you to the companies
that have been vetted and are ripe for mergers and acquisitions.
When calculating the percentages on the vertical statements, the percentages
were based on the totals. When it says zero it is not exactly that it’s just below two
decimal places to be rounded up to 1. Some percentages were negative depending on
whether the total was a net gain or loss. A negative percentage indicates that subtracts
from the net income or adds to it. We had issues with information being relatively low
because of a lack of filing from the company itself. We did use some financial sites for
certain references that we could not get from the SEC filings. It is assumed that
because of the SPAC mergers, previous filings were disposed of or put in locations
where we could locate them. Other data was provided from financial sites that gave
information on the companies although not official. With this in mind, the information
disclosed will need to be considered with a grain of salt.
The balance sheets for both companies rely heavily on assets that are bound to
equity such as the common stocks that can be subjected to redemption. The liabilities
that are used the most are warrant liabilities. Lucid did disclose much on the Sec reports
except for the income loss and the loss from operations. Combined with the common
stock reliance it can be assumed that the majority of the losses were from the loss of
financing activities.
We have more insight into Proterra’s income statement through other sources
rather than their Sec statement. Their estimated incomes suggest that they are losing
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money per year more and more. Proterra, regardless of increasing income loss, is still
better off than Lucid’s income loss. Proterra also gives insight into the issues of why the
loss is increasing. Proterra’s revenue has been increasing despite the losses which
show how badly the costs have gone up for the company. Their cost of revenue is the
biggest source of expense while their general expenses and administration are the
second.
When Calculating the Net present value of the company. There wasn’t enough
information for a five-year calculation for the net present value. I did take takes for each
company and used the formula of (Net Annual Free cash flows/(1+Discount rate)^years
total.) It was hard to determine a future value that would work with the negative cash
flows. The NPV for Lucid is (1196058) and for pro terra (271922). With this in mind, we
can assume that the current cash flows for the company are going deeper into debt
rather than paying off any liabilities. If our company acquires either of these companies
they will still have to fix the negative cash flows causing the NPV to be negative.
Proterra is the most likely easiest to deal with although the years used to calculate
Proterra’s NPV was one more than Lucid’s NPV. This does bring a small concern of
discrepancies between the calculations.
When comparing the statements of operations for both companies, one thing
became very clear. Warrant liabilities were the biggest source of expense in the net
loss. Warrant liabilities were classified as another expense. These warrant liabilities are
above more than 90% of expenses used to create the income deficit. Once again the
statements show the losses in Proterra are less than the losses in Lucid. The
statements overall suggest that Proterra has the least amount of costs compared to
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Lucid. Proterra, being in this situation, will most likely, if bought, recover quicker with
costs than Lucid.
As one of the main financial statements, the cash flow statement shows the
companies’ cash position and the cash on hand available. The research was done in
thousands. While evaluating the last five years for Proterra and Lucid Motor, Proterra’s
cash flow from operating activities has been negative for four years. According to
Proterra’s annual report (2021), operating activities have decreased from $82,663 to
$(72,251) from 2017 to 2021. The investing operations also suffered a considerable
decrease from $(43,978) to $(391,865) within 2017-2021. However, the financing
activities significantly increased by 6352% since 2017, which played an important role in
contributing to the increase in Net cash by 590%.
Although Lucid Motors was founded in 2007, it was impossible to find financial
reports for the company earlier than 2019. SEC Filing Lucid Group, Inc. (n.d.) shows
that the Cash Flow statement has shown a decrease in operating from $(235,299) to
$(745,401) within 2019-2021. Investing activities also suffered a considerable decline
from $(10,429) to $(299,294) within the last three years. However, similar to Proterra,
Lucid Motors also increased the financing activities equivalent to 843% since 2019,
contributing to the increase in net income by 1487%.
Proterra’s current net worth is $1.87 billion, and the enterprise is $1.25 billion (Lucid
Group, Inc. (LCID), n.d).
Other financial analyses for the companies include Lucid Group has a net worth
of $43.10 billion, and the enterprise is considered to be $38.31 billion. The company has
a 1.65 billion value of shares outstanding, contributing to an increase of 4,912.53% in
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one year. Additionally, the company has a current ratio of 18.51, with a Debt ratio of
0.00. Proterra has $218.31 million valued shares outstanding, which increased by
4,713.23% in one year. Additionally, the company has a current ratio of 10.20, with a
Debt ratio of 0.16 (Proterra, Inc. (PTRA) n.d).
Both companies have recorded losses in the operating activities and currently
rely heavily on financing activities, including proceeds received when a company issues
its stock or bonds. However, it is anticipated that both companies will have enormous
growth within the next five years. It is estimated that the companies will have a
significant context in the EV industry. With the expectation of having about 50% of
buses Electrified by 2025, Proterra is anticipating reaching $2,566M by 2025, Proterra.
(n.d.). Similarly, Lucid Motors anticipates having a revenue estimated to be $14 billion
by 2025 (Levine, 2021).
Lucid’s SPAC, or special-purpose acquisition company, is a deal that is valued at
up to $15 billion and is backed by Saudi Arabia’s sovereign wealth fund. Lucid Air
recently won the 2022 Motor Trend Car of the Year. Customer reservations rose to
13,000 in the 3rd quarter, reflecting an order of approximately $1.3B, and have since
increased beyond 17,000 reservations. Customer vehicle production started in the 3rd
Quarter at Lucid’s Advanced Manufacturing Plant in Arizona, and the second phase of
construction broke ground to add 2.85 million square feet of space. Proterra Inc,
formerly known as Arclight Clean Transition Corp., is a leading developer and producer
of electric vehicle technology for commercial applications. Proterra designs develop,
manufactures, and sells electric transit buses as an original equipment manufacturer for
the North American public transit agencies, airports, universities, and other commercial
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transit fleets. It also designs, develops, manufactures, sells, and integrates proprietary
battery systems and electrification solutions for global commercial vehicle
manufacturers. Additionally, Proterra provides fleet-scale, high-power charging
infrastructure solutions for its customers.
Reports and Graphs:
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References
Doll, S., Lambert, F., & Dow, J. (2021, November 9). Lucid Motors: Models, Specs,
Price, release dates, more. Electrek. Retrieved February 21, 2022, from
https://electrek.co/guides/lucid-motors/
Investor relations. Proterra Inc. – Investor Relations. (n.d.). Retrieved February 16,
2022, from https://ir.proterra.com/home/default.aspx
Journal, W. S. (n.d.). PTRA | Proterra Inc.. financial statements – WSJ. The Wall Street
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Lambert, F., & Fred Lambert @FredericLambert Fred is the Editor in Chief and Main
Writer at Electrek.You can send tips on Twitter (DMs open) or via email:
[email protected] Zalkon.com. (2021, January 14). Lucid (CCIV) and
Proterra (ACTC) become latest EV companies looking to go public. Electrek.
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Levine, S. (2021, May 28). Where will lucid motors be in 5 years? The Motley Fool.
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