Electrovaya Inc (ELVA)

[BornAgain]

Excerpt from Prospectus filed on December 7, 2021

Revenue
The Company anticipates revenue of approximately $27 million for the twelve months ending September 30,
2022, to be generated from two primary sources: direct sales and sales through the Company’s OEM partner dealer
network. Included in this anticipated 2022 revenue is some revenue from the Vicinity Strategic Supply Agreement.
Direct Sales
Direct sales are generated by the Company’s own direct sales team. The direct sales team is responsible for
customers including those with significant warehousing, logistics and material handling requirements, such as Walmart and Mondelez, as well as other customers in Canada and the United States. This sales channel is for replacement
batteries and has generated significant orders in the past such as the CDN$7.3 million order delivered to Walmart in
fiscal 2020. The Company is also experiencing growth in the number of new and existing customers placing orders. In
December 2021, a key customer indicated that they will be placing orders valued at approximately $9 million for 2022
with deliveries beginning in the first quarter of the calendar year.
This sales channel is distinct from the OEM partner sales channel as these customers are generally ordering
replacement batteries for existing forklifts, which may be for forklifts other than our OEM partner’s. This therefore
represents a complementary sales channel to our OEM partner sales channel, as opposed to a competitive sales
channel.
OEM Partner Sales
Sales through the Company’s OEM partner are for new forklift sales and replacement sales. The Raymond
Strategic Supply Agreement, which was signed in December 2020, is for the supply of battery systems for Raymond’s
Energy Essentials Battery line. The agreement provides Raymond with exclusively distributed Raymond branded
lithium-ion batteries that are UL 2580 Listed and compatible with most class I, II and III Raymond lift trucks.
The Agreement is for an initial term of three years. The Agreement does not constitute a guarantee of
minimum orders but does include an exclusivity provision, pursuant to which Raymond must make annual purchases
in the minimum amount of $15 million in order to maintain exclusivity. This annual period commences January 1,
2022. While there is no assurance that Raymond will achieve over $15 million of purchases in 2022, given the sales
initiatives underway with Raymond, management anticipates achieving or even possibly exceeding this minimum
purchase level in 2022 and has accordingly included it in the 2022 forecasted revenue of $27 million.
Sales Channel Split Assumption
While the company does not disclose the revenue by sales channel for commercial competitive reasons, the
Company strives to achieve a balance between the two sales channels of approximately 40% direct and 60% OEM.
The forecasted sales include the assumption this balance will be maintained in 2022. Actual sales may, however, vary
materially from this based on actual purchase orders received.
Fulfilling orders through the Company’s OEM sales channel under the Raymond Strategic Supply Agreement
is not expected to affect the ability to make sales and fulfill orders under the direct sales channel. The direct sales
channel is for replacement batteries and has historically been focused on the Canadian market and non-OEM partner
forklifts. The OEM partner sales channel is focused on the US market and historically OEM new forklift sales. While
the OEM partner can sell replacement batteries it is generally for specific corporate accounts with no overlap to the
direct sales customers.
E-bus & E-truck Sales Channel
The Vicinity Strategic Supply Agreement is for the supply of battery systems for Vicinity’s line of EV buses
and trucks. The Vicinity Strategic Supply Agreement has no minimum purchase level and offers no guarantee of any
orders, however, it does include guidance as to possible annual demand from Vicinity from 2022 to 2025. The
Company has included only what it believes is a conservative number of batteries sold under this agreement in its 2022
revenue forecast, based on Vicinity’s published guidance for 2022 deliveries.