Arcimoto Annual Report 2017

FY2017 Annual Report · Arcimoto
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2017 Annual Report

Included in the 2017 Annual Report:
Form 10-K ﬁ led with the U.S. Securities and Exchange Commission on
March 30, 2018

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________

FORM 10-K
________________________

(Mark One)
(cid:54) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the ﬁ scal year ended: December 31, 2017
OR
(cid:133) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 001-38213

________________________
ARCIMOTO, INC.
(Exact name of registrant as speciﬁ ed in its charter)
________________________

Oregon
(State or other jurisdiction of 
incorporation or organization)

26-1449404
(IRS Employer 
Identiﬁcation No.)

2034 West 2nd Avenue, Eugene, OR 97402
(Address of principal executive offi  ces and zip code)
(541) 683-6293
(Registrant’s telephone number, including area code)
544 Blair Boulevard, Eugene, OR 97402
(Previous address of principal executive offi  ces and zip code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, no par value

Name of each exchange of which registered
NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act:
None
________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as deﬁ ned in Rule 405 of the Securities Act. Yes (cid:133) No (cid:54)
Indicate by check mark if the registrant is not required to ﬁ le reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:133) No (cid:54)
Indicate by check mark whether the registrant (1) has ﬁ led all reports required to be ﬁ led by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 
12 months (or for such shorter period that the registrant was required to ﬁ led such reports), and (2) has been subject to such ﬁ ling requirements for the past 90 days. Yes (cid:54) No (cid:133)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted 
and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required 
to submit and post such ﬁ les). Yes (cid:54) No (cid:133)
Indicate by check mark if disclosure of delinquent ﬁ lers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be 
contained, to the best of registrant’s knowledge, in deﬁ nitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment 
to this Form 10-K. (cid:133)
Indicate by check mark whether the registrant is a large accelerated ﬁ ler, an accelerated ﬁ ler, a non-accelerated ﬁ ler, a smaller reporting company or an emerging growth 
company. See the deﬁ nitions of “large accelerated ﬁ ler,” “accelerated ﬁ ler,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated ﬁler
Non-accelerated ﬁler

(cid:133)
(cid:133) (Do not check if smaller reporting company)

Accelerated ﬁler
Smaller reporting company
Emerging growth company

(cid:133)
(cid:54)
(cid:54)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised 
ﬁ nancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. (cid:133)
Indicate by check mark whether the registrant is a shell company (as deﬁ ned in Rule 12b-2 of the Exchange Act). Yes (cid:133) No (cid:54)
As of June 30, 2017, the last business day of the registrant’s most recently completed second ﬁ scal quarter, there was no established public market for the registrant’s common 
stock and, therefore, the registrant cannot calculate the aggregate market value of its common stock held by non-affi  liates as of such date. The aggregate market value of the 
registrant’s common stock held by non-affi  liates of the registrant on December 29, 2017 (based on the closing sale price of $4.01 per share on that date), was approximately 
$28,775,010. Common stock held by each offi  cer and director and by each person known to the registrant who owned 10% or more of the outstanding common stock have 
been excluded in that such persons may be deemed to be affi  liates. This determination of affi  liate status is not necessarily conclusive determination for other purposes.
The number of shares of the registrant’s common stock outstanding as of March 22, 2018 was 15,919,215.

Portions of the registrant’s deﬁ nitive Proxy Statement for its 2018 Annual Meeting of Stockholders currently scheduled to be held on June 9, 2017 are incorporated by 
reference into Part III hereof.

DOCUMENTS INCORPORATED BY REFERENCE

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Arcimoto, Inc.
FORM 10-K
For the Annual Period Ended December 31, 2017

TABLE OF CONTENTS

PART I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Business  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART II.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and 

Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.

Issuer Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . .
Quantitative and Qualitative Disclosures About Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements With Accountants on Accounting and Financial Disclosures . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 10.
Item 11.
Item 12.

Item 13.
Item 14.

Directors, Executive Officers and Corporate Governance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneﬁcial Owners and Management and 

Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . .
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 15.
Item 16.

Exhibits, Financial Statement Schedules  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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PART I

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains “forward-looking statements.” Forward-looking statements include, but 
are  not  limited  to,  statements  that  express  our  intentions,  beliefs,  expectations,  strategies,  predictions  or  any  other 
statements relating to our future activities or other future events or conditions. These statements are based on current 
expectations, estimates and projections about our business based, in part, on assumptions made by management. These 
statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are diffi  cult 
to predict. Therefore, actual outcomes and results may, and are likely to, diff er materially from what is expressed or 
forecasted in the forward-looking statements due to numerous factors discussed from time to time in this report and in 
other documents which we ﬁ le with the SEC. In addition, such statements could be aff ected by risks and uncertainties 
related to:

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overall  strength  and  stability  of  general  economic  conditions  and  of  the  automotive  industry  more 
speciﬁ cally, both in the United States and globally;

our ability to eff ectively execute our business plan and growth strategy;

unforeseen or recurring operational problems at our facility, or a catastrophic loss of our manufacturing 
facility;

our dependence on our suppliers;

the volatility of our stock price;

changes in consumer demand for, and acceptance of, our products;

changes in the competitive environment, including adoption of technologies and products that compete 
with our products;

our ability to generate consistent revenues;

our ability to design, produce and market our vehicles;

our reliance on key personnel;

changes in the price of oil and electricity;

changes in laws or regulations governing our business and operations;

our ability to maintain adequate liquidity and ﬁ nancing sources and an appropriate level of debt, if any, on 
terms favorable to our company;

the number of reservations and cancellations for our vehicles and our ability to deliver on those reservations;

our ability to maintain quality control over our vehicles and avoid material vehicle recalls;

our  ability  to  manage  the  distribution  channels  for  our  products,  including  our  ability  to  successfully 
implement our direct to consumer distribution strategy and any additional distribution strategies we may 
deem appropriate;

our ability to obtain and protect our existing intellectual property protections including patents;

changes in accounting principles, or their application or interpretation, and our ability to make estimates 
and the assumptions underlying the estimates, which could have an eff ect on earnings;

interest rates and the credit markets;

our ability to maintain our NASDAQ Capital Market listing; and

costs  and  risks  associated  with  litigation;  and  other  risks  described  from  time  to  time  in  periodic  and 
current reports that we ﬁ le with the SEC.

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The foregoing list does not contain all of the risks and uncertainties. Any forward-looking statements speak only as of 
the date on which they are made, and except as may be required under applicable securities laws; we do not undertake 
any obligation to update any forward-looking statement to reﬂ ect events or circumstances after the ﬁ ling date 
of this report.

Item 1. Business

Overview

Arcimoto’s  mission  is  to  help  catalyze  the  shift  to  a  sustainable  transportation  system.  Since  our  incorporation  in 
November  2007,  we  have  been  engaged  primarily  in  the  design  and  development  of  ultra-effi  cient  three-wheeled 
electric vehicles. Over the course of our ﬁ rst ten years, we designed built and tested eight generations of prototypes, 
culminating in the Fun Utility Vehicle® (“FUV”). The Fun Utility Vehicle is a pure electric solution that is approximately 
a quarter of the weight, takes up a third of the parking space of, and is dramatically more effi  cient than the average 
passenger car in the United States.

On September 21, 2017, we listed our shares of common stock on the Nasdaq Capital Market, following the conclusion 
of  a  Regulation A  off ering  that  netted  $18.1  million,  after  off ering  costs. We  anticipate  using  the  proceeds  of  that 
off ering to facilitate our transformation from a development-stage enterprise to production-stage venture.

Products

Arcimoto’s FUV® deﬁ nes the Fun Utility Vehicle category. We believe the FUV will deliver a thrilling ride experience, 
exceptional maneuverability for two passengers with gear, optimal urban parkability, and ultra-effi  cient operation, at 
an aff ordable target base model price of approximately $11,900. We anticipate off ering the FUV with several option 
packages to meet the needs of a variety of customers. Our plans call for escalating the scale of production through 
several distinct vehicle series:

Signature Series FUV

The  Signature  Series  FUVs  are  station-built,  low-volume  (planned  10  units  in  total),  high-cost  vehicles  that  are 
intended for very early customers and for our own internal use. As of December 31, 2017, we have built and delivered 
two Signature Series FUVs to paying customers.

Beta Series FUV

The Beta Series FUVs are line-built, low-volume (planned 15 units in total), high-cost vehicles that are intended for 
key high-utilization ﬂ eet deployments, in order to accelerate in-market awareness and market validation of the FUV. 
Primary diff erences between the Signature and Beta Series FUVs include vacuum-formed plastic parts for all body 
panels,  and  retail  production-intent  components  for  substantial  portions  of  the  vehicle  architecture,  including  the 
motors and motor controllers.

Pilot Series FUV

The Pilot Series FUVs are line-built, low-volume (planned 25 units in total), moderate-cost vehicles that are “retail 
production  intent”  (i.e.  have  frames  and  chassis  manufactured  using  our  automated  production  equipment),  have 
substantially all parts sourced for higher-scale production, and are externally validated for regulatory compliance.

Retail Series FUV

The Retail Series FUVs are line-built, aff ordable vehicles intended for Arcimoto’s retail customers. We expect Arcimoto 
Retail Series production to commence upon compliance validation of the Pilot Series FUV. As of December 31, 2017, 
we had 2,234 pre-orders for Retail Series FUVs, representing an increase of 1,158, or approximately 108%, from the 
1,076 pre-orders as of December 31, 2016. As of March 22, 2018, we had 2,421 pre-orders.

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Autonomous Arcimoto

We envision the future autonomous Arcimoto to be one of the lowest cost, most effi  cient “last mile” (transport to and 
from public transportation) platform solutions for the robotically-driven world. Because we have planned our base 
model to be capable of taking drive, brake and steer commands “by wire” from third party hardware and software 
autonomous  package  solutions,  we  anticipate  that  our  design  will  provide  a  ready  foundation  for  the  self-driving 
technology  deployment. We  imagine  urban  center  transportation  needs  being  served  by  small-form,  ultra-effi  cient 
driverless  GoGoMoto  FUVs,  which  we  believe  will  be  one  of  the  most  appropriately  designed  machines  for 
moving people in congested city centers. Our current design concepts are planned to be compatible with designated 
thoroughfares and future transportation network ﬂ eets.

Technology

Arcimoto’s technology platform enables the FUV vehicle. We anticipate that the Arcimoto Platform will comprise ﬁ ve 
core technologies:

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Arcimoto  Battery  System:  a  set  of  patent-pending  architectures  for  packaging  lithium-ion  batteries. 
Arcimoto’s  battery  technology  has  two  main  components:  a  novel  high  conductivity  interconnect  for 
mechanically and electrically interconnecting battery cells, and a novel cooling structure that we believe 
will reduce the cost and complexity of thermal management. As compared to some other approaches, we 
believe the Arcimoto Battery System will minimize overall battery system weight, material and assembly 
costs, and provide additional driving range for the customer.

FutureDrive: Arcimoto’s  electric  drive  train  technology.  FutureDrive  combines  two  electric  motors,  a 
custom dual-motor direct drive gearbox and vehicle power electronics.

Arcimoto  Generation  8:  the  culmination  of Arcimoto’s  vehicle  platform  development  eff orts  to  date, 
which can comfortably accommodate two passengers and packages electric vehicle drive train components 
and vehicle body features in a lightweight, ultra-compact form. We have two issued utility patents covering 
novel aspects of the vehicle architecture and have a third utility patent application in process covering the 
speciﬁ c advances made to the platform on Generation 8.

Arcimoto Switchboard: Arcimoto’s on-board and back-end service platform for data and controls. On 
the  vehicle  systems  level,  Switchboard  controls  the  FUV’s  auxiliary  power  system  and  tracks  vehicle 
performance  data  over  time,  while  providing  the  foundation  for  integration  of  autonomous  driving 
capabilities. On the back end, Switchboard should allow for vehicle sharing services using the planned 
Arcimoto mobile app.

VCU: Currently in concept design, we plan to create a custom Vehicle Control Unit (VCU) to supervise the 
safety-critical electronic components in the FUV, and allow for future upgrades as well as torque-vectored 
motor control of the front wheels.

Distribution and Vehicle Sales

Arcimoto’s sales and distribution model is direct. Our customers will place vehicle orders on the Company’s website 
and the vehicle product will be delivered directly to the end user via common carrier or Company delivery vehicle. 
In the future, we plan to augment this direct web purchase process with small-footprint experience retail in select 
key markets. This retail model will give prospective customers a direct experience with the physical product before 
purchasing. Although our initial focus is on delivery to the U.S. market, we plan to expand worldwide in the future. 
We  believe  that  the  FUV  is  well-suited  to  European  and  emerging  markets  in  terms  of  size,  cost,  capabilities  and 
environmental effi  ciency.

We will deliver the initial FUVs to customers in the three west coast states of Washington, Oregon and California. 
This geography was chosen both for proximity to Arcimoto’s headquarters as well as for these states’ status as leading 
adopters for effi  cient transportation solutions. We are targeting the ﬁ lm and television capital of Southern California, 
Silicon Valley (the world’s leading technology hub), and the Paciﬁ c Northwest’s centers of sustainability leadership. 
According  to  the  2017  U.S.  Department  of  Energy  report  titled  “National  Plug-In  Electric Vehicle  Infrastructure 
Analysis”,  the  top  seven  urban  areas  for  electric  vehicle  adoption  are  Los  Angeles-Long  Beach-Anaheim,  CA; 
San Francisco-Oakland, CA; San Jose, CA; New York-Newark, NY-NJ-CT; Atlanta, GA; San Diego, CA; and Seattle, 

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WA. Most of these areas lie within Arcimoto’s initial deployment region. Oregon and California are currently leading 
the  nation  in  electric  vehicle  adoption  and,  as  important,  are  acting  aggressively  on  a  governmental  level  to  spur 
adoption.  We  believe  targeting  west  coast  states  will  allow  Arcimoto  to  effi  ciently  distribute  the  ﬁ rst  production 
vehicles, result in lower costs of early product service, and provide an early-adoption region halo. Although we have 
pre-order reservations in all 50 states, California, Oregon, and Washington residents comprise almost half of the total. 
Once in Retail Series production, we plan to progress to nation-wide distribution.

Pursuant to this market-entry strategy, we delivered two Signature Series vehicles to paying customers, one in Oregon 
and one in California, in the fourth quarter of 2017. One of the two Signature FUVs was purchased by our Chief 
Executive  Offi  cer  and  Director. These  vehicles  were  purchased  through  our  Signature  Series  Program,  with  early 
adopters agreeing to pay in excess of our projected Retail Series price to get the ﬁ rst vehicles produced.

Vehicle Service and Warranty

The Company is pursuing three diff erent models for service of the FUV:

Service-on-demand.  Our  initial  model  is  on-demand  and  on-site  vehicle  service  by  Company  technicians  or  a 
Company-authorized third party. Where this model is available, we intend for the Arcimoto mobile app to be able to 
summon service on-demand.

In-market  partnership.  The  Company  is  currently  reviewing  potential  partners  located  in  our  key  distribution 
regions.

Retail facility service.  We plan to employ Arcimoto service technicians at some of our retail locations. Customers 
near those retail locations would be able to deliver their vehicle to that location for service needs.

The Company expects to begin recording warranty reserves with the commencement of Retail Series production of the 
FUV in the second half of 2018. We plan to provide a warranty, based on the warranty in eff ect at the time of purchase, 
which  will  generally  include  certain  production  powertrain  components  and  battery  pack  sales. We  plan  to  accrue 
warranty reserves at the time a vehicle or production powertrain component is delivered to the customer. Warranty 
reserves will include management’s best estimate of the projected cost to repair or to replace any items under warranty, 
based on actual warranty experience as it becomes available and other known factors that may impact our evaluation 
of historical data. We will review our reserves quarterly to ensure that our accruals are adequate in meeting expected 
future  warranty  obligations,  and  we  will  adjust  our  estimates  as  needed.  Warranty  expense  will  be  recorded  as  a 
component of cost of revenues in the statement of operations. The portion of the warranty provision which is expected 
to be incurred within 12 months from the balance sheet date will be classiﬁ ed as current, while the remaining amount 
will be classiﬁ ed as long-term liabilities.

Manufacturing

In October 2017, we took possession of our new factory and immediately began retroﬁ tting the space. In December 
2017, all of our employees relocated to the space and we began operations there. To make the new factory usable 
for our purposes, we updated the building with new energy effi  cient lighting, remodeled the employee facilities and 
commenced installation of the manufacturing equipment. We anticipate the majority of our manufacturing equipment, 
key for reducing cost of most sheet metal and tube parts on the FUV, will be in place in mid-2018.

Governmental Programs, Incentives and Regulations

Many governmental standards and regulations relating to safety, fuel economy, emissions control, noise control, vehicle 
recycling, substances of concern, vehicle damage, recall, and theft prevention are applicable to new motor vehicles, 
engines, and equipment manufactured for sale in the United States, Europe, and elsewhere. In addition, manufacturing 
and other vehicle assembly facilities in the United States, Europe, and elsewhere are subject to stringent standards 
regulating  air  emissions,  water  discharges,  and  the  handling  and  disposal  of  hazardous  substances.  In  addition, 
regulations in this area are constantly evolving, especially with the entry of new vehicles into the market.

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The most signiﬁ cant of the standards and regulations aff ecting us are discussed below:

Motor Vehicle Safety

The National Highway Traffi  c Safety Administration (the “NHTSA”) deﬁ nes a motorcycle as “a motor vehicle with 
motive power having a seat or saddle for the use of the rider and designed to travel on not more than three wheels in 
contact with the ground.” In order for a manufacturer to sell motorcycles in the United States, the manufacturer has to 
self-certify to meet a certain set of regulatory requirements promulgated by the NHTSA in its Federal Motor Vehicle 
Safety Standards.

Arcimoto has contracted a regulatory compliance expert to ensure that the FUV production vehicles are designed to 
meet Federal Motor Vehicle Safety Standards requirements for motorcycles.

Operator’s License and Helmet Requirements

Since the FUV is a motorcycle by NHTSA deﬁ nition, laws and regulations pertaining to the operation of a motorcycle 
and wearing a helmet apply to Arcimoto’s customers. As of December 31, 2017, ﬁ ve states required the use of helmets 
while operating an enclosed three-wheel vehicle if the operator is under a speciﬁ ed age (generally under 18, although 
one state requires a helmet if under the age of 21) and two states required the use of helmets regardless of age. However, 
the strong majority of states have some form of exemption for helmet requirements and motorcycle endorsements 
for  three-wheeled  vehicles.  In  our  initial  market  states  of  California  and  Oregon,  three  wheeled  vehicles  that  are 
“fully enclosed” or “enclosed cab” are exempt from helmet requirements and motorcycle endorsement requirements. 
Washington’s helmet law, by contrast, requires compliance with rollover safety regulations and the presence of a steering 
wheel to exempt riders. Arcimoto’s advocacy strategy is to work with state legislatures to advocate the normalization 
of these rules to reduce consumer confusion in the marketplace that comes from conﬂ icting state-by-state regulations.

Pollution Control Costs

We are required to comply with stationary source air pollution, water pollution, and hazardous waste control standards 
that are now in eff ect or are scheduled to come into eff ect with respect to our future manufacturing operations. We do 
not yet have an estimate of the cost of compliance.

Motor Vehicle Manufacturer and Dealer Regulation

State  laws  regulate  the  manufacture,  distribution,  and  sale  of  motor  vehicles,  and  generally  require  motor  vehicle 
manufacturers and dealers to be licensed in order to sell vehicles directly to consumers in the state. Our distribution 
model may require that in some instances we have to obtain a dealer license, and we have applied for the appropriate 
license  in  our  initial  distribution  states.  In  any  event,  we  plan  to  conduct  sales  out  of  the  state  using  our  website, 
phone or mail. We do not yet have an estimate of the cost of compliance with motor vehicle manufacturer and dealer 
regulations.

Tesla  Motors  has  faced  considerable  opposition  in  some  states  from  existing  motor  vehicle  dealer  associations. 
We intend to work proactively in market entry points to ensure our direct business model is allowed. Because the 
Company’s products do not directly compete with typical existing motorcycle-class vehicles, we expect signiﬁ cantly 
less initial resistance from established motorcycle dealers.

We  intend  to  pursue  a  legislative  approach  to  amend  current  laws,  which  would  permit  motorcycle  manufacturers 
to sell motorcycles directly to consumers in locales where such retail sales are currently prohibited. We expect that 
certain customers may be deterred from purchasing exclusively online.

We intend to initially focus advocacy eff orts at the federal level and at the state level in the market launch states of 
Oregon and California for maintenance and improvement of purchase tax incentives. Although both state and national 
governments have moved aggressively to support the growth of the electric vehicle market, not all of these incentives 
apply or apply equally to motorcycle class vehicles. We intend to employ pilot ride-and-drive days as well as direct 
discussion to help educate lawmakers about the advantages of this new class of vehicles.

5

Competition

Nearly  every  major  automotive  manufacturer  in  the  world  is  developing  electric  or  ultra-effi  cient  vehicles,  and  a 
handful  of  new  entrants  are  doing  the  same.  Further,  the  traditionally  staid  transportation  marketplace  is  facing 
disruption from the rapid advent of new technologies: vehicle sharing, autonomous driving and the rapidly declining 
cost of energy storage.

The following case studies compare and contrast the approaches and products of adjacent market players with those 
of Arcimoto.

Tesla

Over the span of 14 years, Tesla Motors (“Tesla”) has advanced from a clean sheet startup to the undisputed electric 
car leader worldwide. Tesla adopted a sequential three-product development strategy to achieve the completion and 
release of the Model 3, its ﬁ rst mass-market adoptable vehicle. With over 400,000 reservations since it was unveiled 
on March 31, 2016, the Model 3 demonstrates both the pent-up demand for aff ordable, high-quality electric vehicles 
and the high price and performance sensitivity of the electric car marketplace.

We believe the FUV will take advantage of both of these market factors: with its target base model price of approximately 
$11,900, the FUV opens up the electric vehicle market to an even wider base of adopters, and its feature set and ride 
experience have been ﬁ nely-tuned to the needs and desires of everyday drivers. Like Tesla, Arcimoto has adopted a 
direct sales model to provide both a lower cost of sales and a cohesive, hassle-free purchasing experience.

Elio Motors

Founded in 2009, Elio Motors (“Elio”) is developing a gas-powered three-wheeled vehicle. The key Elio platform 
advantages  are  effi  ciency  and  low  cost:  84  MPG  and  a  $7,450  projected  price. Through  a  combination  of  online 
advertising and experience tours, Elio had garnered more than 65,000 preorders for its vehicle as of July 2017.

While  we  see  Elio’s  signiﬁ cant  reservation  traction  as  a  positive  indicator  of  the  accelerating  market  interest  in 
lightweight three-wheeled vehicles, we believe there are perils in their overall capital-intensive approach to this market 
space.

Our focus on a motorcycle-class product line and power-sport construction methods off er a market entry pathway with 
a small fraction of the capital intensity of either Tesla’s “luxury-ﬁ rst” or Elio’s automotive-style product introduction 
strategies. Our capital-effi  cient approach has allowed us to bring the FUV from a clean sheet in 2007 to our recent 
delivery of ﬁ rst customer units and the build out of our production facility.

Uber, Lyft, Getaround, Zipcar, Waymo, etc.

Arcimoto’s long-term vision is to develop a low-cost, ultra-effi  cient platform for delivery, rideshare companies, and the 
autonomous ﬂ eets of the future. The rapid proliferation of app-capable mobile devices over the last decade, alongside 
advances in computing capability and artiﬁ cial intelligence, have led to the rise of a slew of new models for vehicle 
ownership and sharing, from ride-hailing startups such as Uber and Lyft, to autonomous driving innovators including 
Waymo, Cruise Automation and Comma.ai.

As such, we see the advent of this new wave of transportation disruptors as off ering a diverse range of partnership 
opportunities. For example, Arcimoto is currently engaged in a test program with Uber in Oregon, reviewing potential 
company policy changes to allow the FUV vehicle platform to participate in Uber Eats, their existing food delivery 
ﬂ eet. A successful collaboration would result in the launch of a ﬂ eet of vehicles to test how the ultra-effi  cient low cost 
FUV changes the Uber Eats revenue structure.

Toyota iRoad, Renault Twizy, Smart Car

Toyota and Renault have made initial forays into the urban vehicle market space with the iRoad and Twizy, respectively. 
Compared  to  both,  we  believe  the  FUV  features  a  superior  ride,  higher  top  speed  (classiﬁ ed  as  a  “neighborhood 
electric vehicle”, the Twizy is limited to 25 miles per hour in the U.S. market), more aggressive industrial design and 
comparable cost and effi  ciency. We believe the FUV stays competitive on ecological footprint and wins on function, 
with a good range, comfortable seating for two, and delivery capability.

6

The Smart Fortwo further exempliﬁ es the automotive approach to vehicle downsizing: after driving the electric version, 
Forbes vehicle analyst Matthew de Paula reﬂ ected that it “doesn’t handle like a small car should. The steering ratio is 
too slow. The brake and accelerator pedals are mushy and oddly positioned. The suspension can feel a bit ponderous 
and ﬂ oaty. Some of that is by design. With such a short wheelbase, an overly edgy or aggressive ride could make the 
car unstable.”

While its overall length is similar to the Smart Fortwo, the FUV has a longer wheelbase and we believe the placement 
of mass elements gives the FUV the feel of a small sports car: agile, stable, smooth, zippy, and powerful. And although 
the Smart can technically ﬁ t when parked nose-in in parallel parking spots, many domestic jurisdictions do not allow 
automobile-class vehicles to park this way. With its motorcycle class and tapered reverse-trike form, the FUV also has 
a park-ability advantage over the Smart Car.

Intellectual Property

Patents

Our  policy  is  to  protect  our  competitive  position  by,  among  other  methods,  ﬁ ling  patent  applications  to  protect 
technology  and  improvements  that  we  consider  important  to  the  development  of  our  business. We  have  generated 
several patents and expect this portfolio to continue to grow as we actively pursue additional technological innovation. 
As of December 31, 2017, we have three issued utility patents, two covering novel aspects of the vehicle architecture 
expiring in 2031 and 2035 and one covering Arcimoto’s novel dual-motor gearbox design expiring in 2035. The USPTO 
has sent the Company a Notice of Allowance for a fourth utility patent covering the advances made to the platform 
through the current model FUV and expiring in 2035. The Company has ﬁ led an additional non-provisional utility 
patent application covering advances in the dual-motor gearbox. We have also ﬁ led three utility patent applications 
related to the Arcimoto Battery System, an architecture for packaging lithium-ion batteries, covering novel approaches 
to battery cell interconnection, housing, and thermal management.

In  addition  to  this  intellectual  property,  we  also  rely  on  our  proprietary  knowledge  and  ongoing  technological 
innovation to develop a competitive position in the market for the FUV. Each of these patents, patent applications, and 
know-how are integral to the conduct of our business, the loss of any of which could have a material adverse eff ect on 
our business.

Trademarks

We own several trademarks that contribute to the identity and recognition of our Company and its products. Certain of 
these marks are integral to the conduct of our business, a loss of any of which could have a material adverse eff ect on 
our business. We have registered the following with the United States Patent and Trademark Offi  ce:

“The Everyday Electric” (mark consisting of standard characters without claim to any particular font, style, size or 
color) — registered on October 23, 2012, Registration number 4230594

“SRK” (mark consisting of standard characters without claim to any particular font, style, size or color) — registered 
on July 16, 2013, Registration number: 4369026

“ARCIMOTO” (mark consisting of standard characters without claim to any particular font, style, size or color) — 
application ﬁ led May 3, 2017, Trademark application serial number 87435643. This application is currently under 
examination.

“FUV” (mark consisting of standard characters without claim to any particular font, style, size or color) — registration 
applied for, no conﬂ icting marks noted on offi  ce action received. Registration Number: 87166994. Statement of Use 
ﬁ led on August 31, 2017.

“Fun  Utility  Vehicle”  (mark  consisting  of  standard  characters  without  claim  to  any  particular  font,  style,  size  or 
color) — registration applied for, no conﬂ icting marks noted on offi  ce action received. Registration Number: 87260318. 
Statement of Use ﬁ led on August 31, 2017.

Segment Information

We operate as one reportable segment which is the design, development, manufacturing and sales of electric vehicles.

7

Employees

Beginning in late 2017, following the completion of our Tier 2 Regulation A off ering, we have focused on recruiting and 
hiring key staff  to increase support of our existing design and engineering team, as well as our accounting team. Our 
new employees have enabled us to move faster in key areas to optimize parts for manufacturing. In addition, we have 
hired additional employees to focus on quality control of our manufacturing drawings by validating parts manufactured 
and assembled against drawing details. We also hired new employees in key positions along the chain of leadership and 
management of the engineering and operations departments. These new employees bring years of valuable experience 
to Arcimoto from the manufacturing sector. As of December 31, 2017, we had 34 full-time employees. None of our 
employees are represented by a labor union, and we consider our current relations with our employees to be good.

Geographic Areas

We operate solely in the United States. As such, we held substantially all our assets and generated all our revenue in 
the United States during the ﬁ scal year ended December 31, 2017.

Corporate Information

We were originally formed on November 21, 2007 as WTP Incorporated, an Oregon Corporation. On December 29, 
2011,  we  changed  our  name  to Arcimoto,  Inc.  Our  principal  executive  offi  ces  are  located  at  2034  West  2nd Ave., 
Eugene, Oregon 97402, and our phone number is (541) 683-6293. Our website address is www.arcimoto.com. The 
information on, or that can be accessed through, our website is not part of this report.

Executive Offi  cers

The following table sets forth information concerning our executive offi  cers as of March 30, 2018:

Name
Mark Frohnmayer
Douglas M. Campoli
Terry Becker

Age
43
54
57

Position

President, Chief Executive Officer and Chairman of the Board of Directors
Chief Financial Officer, Treasurer and Secretary
Chief Operating Officer and Director

Mark Frohnmayer — President, Chief Executive Offi  cer and Chairman of the Board of Directors

Mark  Frohnmayer  has  been  our  President,  Chief  Executive  Offi  cer  and  Chairman  of  our  board  of  directors  since 
our  founding  in  November  2007.  Previously,  he  was  one  of  the  founders  of  GarageGames.com,  Inc.,  a  software 
development company successfully sold to IAC, Inc. in 2007. Mr. Frohnmayer holds a B.S. in Electrical Engineering 
and Computer Science from UC Berkeley.

Douglas M. Campoli — Chief Financial Offi  cer, Treasurer and Secretary

Douglas M. Campoli has been our Chief Financial Offi  cer since June 2015. Prior to joining Arcimoto, he was the 
Founder of Strategic Financial Consulting from February 2013 to June 2015, providing ﬁ nancial consulting services 
for  startup  and  existing  businesses.  From  September  2012  to  September  2013,  Mr.  Campoli  was  Chief  Financial 
Offi  cer of ManaFuel, bringing energy independence to Paciﬁ c Island Nations. From May 2007 to February 2011, he 
was Chief Financial Offi  cer of GarageGames.com, Inc. From 2004 to May 2007, Mr. Campoli was Chief Financial 
Offi  cer of SeQuential Biofuels, Inc. Prior to 2004, he held various ﬁ nancial positions at Genuity Inc. (previously GTE 
Internetworking) and AT&T Paradyne Corp. Mr. Campoli holds a B.S. in Business and Finance from the University of 
South Florida and an M.B.A. with a concentration in Finance from the University of Tampa.

Terry Becker — Chief Operating Offi  cer and Director

Terry Becker has been a director since May 2015 and Chief Operating Offi  cer since September 2017. From February 
2014 to September 2017, Mr. Becker was Director of Engineering and Global Product Support at Peterson Paciﬁ c 
Corporation. Prior to that, from October 2012 to February 2014, Mr. Becker worked at the Company as its Engineering, 
Manufacturing  and  Operations  Manager.  From  December  2008  to  September  2012,  Mr.  Becker  was  the  Deputy 
Director of Operations for an AeroTech segment of John Bean Technologies Corporation. Mr. Becker holds an A.S. 
degree in engineering physics from Loma Linda University and a B.S. in Mechanical Engineering from Walla Walla 
University.

8

Item 1A. Risk Factors

Investing  in  our  common  stock  involves  a  high  degree  of  risk.  Investors  should  consider  carefully  the  risks  and 
uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including 
the  ﬁ nancial  statements  and  the  related  notes,  before  deciding  to  invest  in  shares  of  our  common  stock.  If  any  of 
the  following  risks  were  to  materialize,  our  business,  ﬁ nancial  condition,  results  of  operations,  and  future  growth 
prospects could be materially and adversely aff ected. In that event, the market price of our common stock could decline 
and investors could lose part or all of their investment in our common stock.

The notes to our ﬁ nancials for the ﬁ scal year ended December 31, 2017 and 2016 includes an explanatory paragraph 
expressing substantial doubt as to our ability to continue as a going concern.

The  notes  accompanying  our  December  31,  2017  and  2016  audited  ﬁ nancial  statements  contain  an  explanatory 
paragraph  expressing  substantial  doubt  about  our  ability  to  continue  as  a  going  concern. The  ﬁ nancial  statements 
have been prepared “assuming that the Company will continue as a going concern.” Our ability to continue as a going 
concern is dependent on raising additional capital to fund our operations and ultimately on generating future proﬁ table 
operations. There  can  be  no  assurance  that  we  will  be  able  to  raise  suffi  cient  additional  capital  or  eventually  have 
positive cash ﬂ ow from operations to address all of our cash ﬂ ow needs. If we are not able to ﬁ nd alternative sources 
of cash or generate positive cash ﬂ ow from operations, our business and shareholders may be materially and adversely 
aff ected.

We are an early stage company and have not yet generated signiﬁ cant revenues.

We have incurred a net loss in each year since our inception, have ten years of operating history and have generated 
limited revenues since inception. Our limited operating history makes evaluating our business and future prospects 
diffi  cult, and may increase the risk of your investment. Arcimoto was founded in 2007, and we have only recently 
delivered  the  ﬁ rst  Signature  Series  vehicles. We  intend  in  the  longer  term  to  derive  substantial  revenues  from  the 
sales of our vehicles, but we do not expect to start small scale Retail Series production of the FUV vehicles until the 
second half of 2018. Our vehicle requires signiﬁ cant investment prior to commercial introduction, and may never be 
commercially successful.

Unforeseen or recurring operational problems at our facility, or a catastrophic loss of our manufacturing facility, 
may cause signiﬁ cant lost or delayed production and adversely aff ect our results of operations.

Our manufacturing process could be aff ected by operational problems that could impair our production capability and 
the timeframes within which we expect to produce our vehicles. Our manufacturing facility contains high cost and 
sophisticated machines that are used in our manufacturing process. Disruptions or shut downs at our facility could be 
caused by:

• 

• 

• 

• 

• 

• 

• 

maintenance outages to conduct maintenance activities that cannot be performed safely during operations;

prolonged power failures or reductions;

breakdown, failure or substandard performance of any of our machines or other equipment;

noncompliance with, and liabilities related to, environmental requirements or permits;

disruptions in the transportation infrastructure, including railroad tracks, bridges, tunnels or roads;

ﬁ res,  ﬂ oods,  earthquakes,  tornadoes,  hurricanes,  microbursts  or  other  catastrophic  disasters,  national 
emergencies, political unrest, war or terrorist activities; or

other operational problems.

If our manufacturing facility is compromised or shut down, it may experience prolonged startup periods, regardless of 
the reason for the compromise or shutdown. Those startup periods could range from several days to several weeks or 
longer, depending on the reason for the compromise or shutdown and other factors. Any disruption in operations at our 
facility could cause a signiﬁ cant loss of production, delays in our ability to produce our vehicles and adversely aff ect 

9

our results of operations and negatively impact our customers. Further, a catastrophic event could result in the loss of 
the use of all or a portion of our manufacturing facility. Although we carry property insurance, our coverage may not 
be adequate to compensate us for all losses that may occur. Any of these events individually or in the aggregate could 
have a material adverse eff ect on our business, ﬁ nancial condition and operating results.

We may not be able to obtain adequate ﬁ nancing to continue our operations.

The design, manufacture, sale and servicing of vehicles is a capital-intensive business. At December 31, 2017 and 2016, 
our working capital (deﬁ cit)/surplus was approximately $13,348,000 and $(350,000), respectively. We have previously 
raised funds through equity investment and convertible notes to meet our cash needs, but there is no guarantee that our 
current cash reserves will be suffi  cient to become proﬁ table or that we will be able to raise enough additional capital 
in the future to meet our ongoing cash needs until we become proﬁ table. Our need to raise additional funds to reach 
our vehicle production goals and to be operationally cash ﬂ ow positive is dependent on how quickly we can reduce the 
cost of our vehicles. We may raise additional funds in the future through the issuance of equity, equity-related, or debt 
securities or through obtaining credit from government or ﬁ nancial institutions. This capital may be necessary to fund 
ongoing operations, continue research, development and design eff orts, establish sales centers, improve infrastructure, 
and make investments in tooling and manufacturing equipment. We cannot assure anyone that we will be able to raise 
additional funds when needed. We cannot be certain that additional funds will be available to us on favorable terms 
when required, or at all. If we cannot raise additional funds when we need them, our ﬁ nancial condition, results of 
operations, business and prospects would be materially and adversely aff ected.

If  we  are  unable  to  eff ectively  implement  or  manage  our  growth  strategy,  our  operating  results  and  ﬁ nancial 
condition could be materially and adversely aff ected.

As part of our growth strategy, we may open new manufacturing, retail, research or engineering facilities, expand our 
existing facility, add additional product lines or expand our businesses into new geographical markets. There is a range 
of risks inherent in such a strategy that could adversely aff ect our ability to achieve these objectives, including, but not 
limited to, the following:

• 

• 

• 

• 

• 

• 

• 

• 

• 

the potential disruption of our business;

the potential for increased regulatory compliance;

the uncertainty that new product lines will generate anticipated sales;

the uncertainty that we may not be able to meet or anticipate consumer demand;

the uncertainty that a new business will achieve anticipated operating results;

the diversion of resources and management’s time;

our cost reduction eff orts, which may not be successful;

the diffi  culty of managing the operations of a larger company; and

the diffi  culty of competing for growth opportunities with companies having greater ﬁ nancial resources 
than we have.

We depend on our senior management team, and the loss of one or more key employees or an inability to attract and 
retain highly skilled employees could adversely aff ect our business.

Our  success  depends  largely  upon  the  continued  services  of  our  key  executive  offi  cers  and  other  employees.  We 
also rely on our leadership team in the areas of ﬁ nance, research and development, marketing, services, and general 
and administrative functions, and on mission-critical individual contributors in sales and research and development. 
From time to time, there may be changes in our executive management team resulting from the hiring or departure of 
executives, which could disrupt our business.

10

None of our key employees is bound by an employment agreement for any speciﬁ c term and we may not be able to 
successfully attract and retain senior leadership necessary to grow our business. Our future success depends upon our 
ability to attract and retain executive offi  cers and other key technology, sales, marketing, engineering, manufacturing 
and support personnel and any failure to do so could adversely impact our business, prospects, ﬁ nancial condition and 
operating results.

To continue to execute our growth strategy, we also must attract and retain highly skilled personnel. Competition is 
intense for sales people and for engineers with high levels of experience in designing and developing electric vehicles. 
The pool of qualiﬁ ed personnel with engineering or manufacturing experience and/or experience working with the 
electric vehicle market is limited overall and speciﬁ cally in Eugene, Oregon, where our principal offi  ce is located. In 
addition, many of the companies with which we compete for experienced personnel have greater resources than we 
have and are located in metropolitan areas that may attract more qualiﬁ ed workers.

In addition, in making employment decisions, particularly in high-technology industries, job candidates often consider 
the  value  of  the  equity  awards  they  are  to  receive  in  connection  with  their  employment. Volatility  in  the  price  of 
our stock might, therefore, adversely aff ect our ability to attract or retain highly skilled personnel. Furthermore, the 
requirement to expense certain stock awards might discourage us from granting the size or type of stock awards that 
job candidates require to join our Company. If we fail to attract new personnel or fail to retain and motivate our current 
personnel, our business and future growth prospects could be severely harmed.

Recent political trends in the United States have created new uncertainty regarding the continuation of the ATVMLP.

Recent announcements regarding budgeting and appropriations from the federal government have created uncertainty 
regarding whether the Advanced Technology Vehicles Manufacturing Loan Program (the “ATVMLP”) will continue 
to exist in its current form. We intend to submit an application to the ATVMLP in the second quarter of 2018. The 
ATVMLP program provides for low-cost loans that can be used to reequip, expand, or establish manufacturing facilities 
for advanced technology vehicles in the United States. There is no guarantee that we would receive such a loan and are 
not dependent on receiving such a loan. If we do not receive ﬁ nancing under the ATVMLP, we may be required to seek 
ﬁ nancing from other sources at terms that are not as favorable to us.

Future disruptive new technologies could have a negative eff ect on our business.

We are subject to the risk of future disruptive technologies. If new vehicle technologies (electric or otherwise) develop 
that are superior to our vehicles, or are perceived to be superior by consumers, it could have a material adverse eff ect 
on us.

The  markets  in  which  we  operate  are  highly  competitive,  and  we  may  not  be  successful  in  competing  in  these 
industries. We currently face competition from new and established domestic and international competitors and 
expect to face competition from others in the future, including competition from companies with new technology.

The worldwide vehicle market, particularly for alternative fuel vehicles, is highly competitive today and we expect 
it will become even more so in the future. There is no assurance that our vehicles will be successful in the respective 
markets in which they compete. Many established automobile manufacturers such as Audi, BMW, Daimler, General 
Motors, Tesla, Toyota  and Volvo,  as  well  as  other  newer  companies  such  as  Elio,  Sondors  and  Electra  Meccanica, 
have entered or are reported to have plans to enter the alternative fuel vehicle market, including hybrid, plug-in hybrid 
and fully electric vehicles. In some cases, such competitors have announced an intention to produce electric vehicles 
exclusively now or at some point in the future. Most of our current and potential competitors have signiﬁ cantly greater 
ﬁ nancial, technical, manufacturing, marketing, vehicle sales networks and other resources than we do and may be able 
to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of 
their products. Increased competition could result in lower vehicle unit sales, price reductions, revenue shortfalls, loss 
of customers and loss of market share, which could harm our business, prospects, ﬁ nancial condition and operating 
results.  Additionally,  industry  overcapacity  has  resulted  in  many  manufacturers  off ering  marketing  incentives  on 
vehicles in an attempt to maintain and grow market share; these incentives historically have included a combination of 
subsidized ﬁ nancing or leasing programs, price rebates, and other incentives. As a result, we are not necessarily able 
to set our prices to off set higher costs. Continuation of or increased excess capacity could have a substantial adverse 
eff ect on our ﬁ nancial condition and results of operations.

11

Our  success  is  dependent  upon  consumers’  willingness  to  adopt  three-wheeled,  tandem-seated  two-passenger 
vehicles.

If we cannot develop suffi  cient market demand for three-wheeled vehicles, we will not be successful. Factors that may 
inﬂ uence the acceptance of three-wheeled vehicles include:

• 

• 

• 

• 

• 

• 

perceptions about three-wheeled vehicles’ comfort, quality, safety, design, performance and cost;

the availability of alternative fuel vehicles, including plug-in hybrid electric and all-electric vehicles;

improvements in the fuel economy and cost of service of the internal combustion engine;

the environmental consciousness of consumers;

volatility in the cost of oil and gasoline; and

government  regulations  and  economic  incentives  promoting  fuel  effi  ciency  and  alternate  forms  of 
transportation.

We may experience lower-than-anticipated market acceptance of our vehicles.

Although we have conducted some market research regarding our electric vehicles and accumulated approximately 
2,234  pre-order  reservation  deposits  as  of  December  31,  2017,  many  factors  both  within  and  outside  our  control, 
aff ect the success of new vehicles in the marketplace. At this time, it is diffi  cult to measure consumers’ willingness to 
adopt electric vehicles as a mode of transportation, particularly three-wheeled electric vehicles. Off ering fuel-effi  cient 
vehicles that consumers want and value can mitigate the risks of increasing price competition and declining demand, 
but vehicles that are perceived to be less desirable (whether in terms of price, quality, styling, safety, overall value, 
or other attributes) can exacerbate these risks. For example, if a new vehicle were to experience quality issues at the 
time of launch, the vehicle’s perceived quality could be aff ected even after the issues had been corrected, resulting 
in lower than anticipated sales volumes, market share, and proﬁ tability. Moreover, if a new vehicle is not accepted 
by consumers based on size, styling, or other attributes, we would experience lower than anticipated sales volumes, 
market share, and proﬁ tability.

Our distribution model may result in lower sales volumes.

Our present distribution model is diff erent from the distribution models used by other vehicle manufacturers, except 
for Tesla Motors. Like Tesla, we plan to sell vehicles directly to our customers over the internet or via Company-owned 
retail stores, rather than through traditional dealer franchises. This direct sales model may result in lower sales due to 
customer reluctance to rely on web-based vehicle purchasing. We are unable to evaluate the eff ectiveness of our present 
distribution model and it may result in lower or higher sales volumes, market share, and proﬁ tability.

Additionally, we may not be able to sell our vehicles through this sales model in each state in the United States as 
some states have laws that may be interpreted to impose limitations on the direct-to-consumer sales of our vehicles. 
The application of these state laws to our operations is diffi  cult to predict. Laws in some states will limit our ability to 
obtain dealer licenses from state motor vehicle regulators and may continue to do so in the future.

In addition, decisions by regulators permitting us to sell vehicles may be subject to challenges by dealer associations and 
others as to whether such decisions comply with applicable state motor vehicle industry laws. In similar circumstances, 
Tesla has prevailed in many of these lawsuits and such results reinforce our continuing belief that state laws were not 
designed to prevent our distribution model. In some states, there have also been regulatory and legislative eff orts by 
vehicle dealer associations to propose bills and regulations that, if enacted, would prevent us from obtaining dealer 
licenses in their states given our current sales model. A few states have passed legislation that clariﬁ es our ability to 
operate, but at the same time limits the number of dealer licenses we can obtain or stores that we can operate. Tesla 
has also ﬁ led a lawsuit in federal court in Michigan challenging the constitutionality of the state’s prohibition on direct 
sales as applied to its business which has a similar distribution model to our business.

Internationally, there may be laws of which we are unaware of in jurisdictions we wish to enter that may restrict our 
sales or other business practices. Even for those jurisdictions we have analyzed, the laws in this area can be complex, 
diffi  cult to interpret and may change over time.

12

The  discovery  of  defects  in  vehicles  resulting  in  delays  in  new  model  launches,  recall  campaigns,  reputational 
damage, or increased warranty costs may negatively aff ect our business.

Meeting or exceeding many government-mandated safety standards is costly and often technologically challenging. 
Government safety standards also require manufacturers to remedy defects related to vehicle safety through safety 
recall campaigns, and a manufacturer is obligated to recall vehicles if it determines that the vehicles do not comply 
with  a  safety  standard.  Should  we  or  government  safety  regulators  determine  that  a  safety  or  other  defect  or  a 
noncompliance exists with respect to certain of our vehicles prior to the start of production, the launch of such vehicle 
could be delayed until such defect is remedied. The costs associated with any protracted delay in new product launches 
necessary to remedy such defects, or the cost of recall campaigns or warranty costs to remedy such defects in vehicles 
that have been sold, could be substantial. Further, adverse publicity surrounding actual or alleged safety-related or 
other defects could damage our reputation and adversely aff ect sales of our vehicles.

We are dependent on our suppliers, the majority of which are single source suppliers, and the inability of these 
suppliers to deliver necessary components of our products in a timely manner at prices, quality levels, and volumes 
acceptable to us, or our inability to effi  ciently manage these components, could have a material adverse eff ect on 
our ﬁ nancial condition and operating results.

Our products contain numerous purchased parts which we source globally from multiple direct suppliers, the majority 
of whom are currently single source suppliers. Any signiﬁ cant unanticipated demand or delays with our suppliers could 
require us to procure additional components in a short amount of time, and in the past we have also replaced certain 
suppliers because of their failure to provide components that met our quality control standards. While we believe that 
we will be able to secure additional or alternate sources of supply for most of our components in a relatively short 
time frame, there is no assurance that we will be able to do so or develop our own replacements for certain highly 
customized components of our products. If we encounter unexpected diffi  culties or delays with key suppliers, and if we 
are unable to ﬁ ll these needs from other suppliers, we could experience production delays and potential loss of access 
to important technology and parts for producing, servicing and supporting our products.

There is no assurance that suppliers will ultimately be able to meet our cost, quality and volume needs. Furthermore, 
as the scale of our vehicle production increases, we will need to accurately forecast, purchase, warehouse and transport 
to our manufacturing facilities components at much higher volumes than we have experience with. If we are unable 
to accurately match the timing and quantities of component purchases to our actual production plans or capabilities, 
or  successfully  implement  automation,  inventory  management  and  other  systems  to  accommodate  the  increased 
complexity in our supply chain, we may have to incur unexpected storage, transportation and write-off  costs, which 
could have a material adverse eff ect on our ﬁ nancial condition and operating results.

We  may  be  unable  to  accurately  forecast  our  vehicle  delivery  needs,  which  could  harm  our  business,  ﬁ nancial 
condition and results of operations.

Arcimoto plans to deliver vehicles to Oregon, Washington, and California via its internal transportation resources, 
primarily trucks and trailers. However, we anticipate that we will reach a point when utilizing a third party common 
carrier  for  vehicle  deliveries  will  become  a  necessity.  Because  of  the  signiﬁ cant  investment  in  equipment  and 
management  to  implement  a  third  party  common  carrier  vehicle  delivery  plan,  it  will  be  important  to  accurately 
forecast  vehicle  delivery  volumes  in  advance.  It  will  be  diffi  cult  to  predict,  especially  months  in  advance,  when 
our vehicle delivery volumes and geographic expansion will require using a third party common carrier for vehicle 
deliveries and if we miscalculate this timing, it could have a material adverse eff ect on our business, ﬁ nancial condition 
and results of operations.

Failure  to  maintain  the  strength  and  value  of  our  brand  could  have  a  material  adverse  eff ect  on  our  business, 
ﬁ nancial condition and results of operations.

Our success depends, in part, on the value and strength of our brand. Maintaining, enhancing, promoting and positioning 
our brand, particularly in new markets where we have limited brand recognition, will depend largely on the success 
of our marketing and merchandising eff orts and our ability to provide high-quality services, warranty plans, products 
and resources and a consistent, high-quality customer experience. Our brand could be adversely aff ected if we fail to 
achieve these objectives, if we fail to comply with laws and regulations, if we are subject to publicized litigation or 
if our public image or reputation were to be tarnished by negative publicity. Some of these risks may be beyond our 

13

ability to control, such as the eff ects of negative publicity regarding our suppliers or third party providers of services or 
negative publicity related to members of management. Any of these events could hurt our image, resulting in reduced 
demand  for  our  products  and  a  decrease  in  net  sales.  Further,  maintaining,  enhancing,  promoting  and  positioning 
our brands’ images may require us to make substantial investments in marketing and employee training, which could 
adversely aff ect our cash ﬂ ow and which may ultimately be unsuccessful. These factors could have a material adverse 
eff ect on our business, ﬁ nancial condition and results of operations.

We will be almost entirely dependent upon revenue generated from one product in the near-term, and our future 
success will be dependent upon our ability to design and achieve market acceptance of new vehicle models.

We currently have planned only one vehicle model, which will be available with an open sided base model with options 
for doors, air conditioning, extended battery range and other options. In the near term, our revenues will be almost 
completely dependent on revenue generated from sales of the FUV vehicle, with some additional revenue coming 
from customization options and maintenance servicing. There can be no assurance that we will be able to design future 
models of vehicles, or develop future services, that will meet the expectations of our customers, or that our future 
models will become commercially viable.

In addition, historically, automobile customers have come to expect new and improved vehicle models to be introduced 
frequently. In order to meet these expectations, we may in the future be required to introduce on a regular basis new 
vehicle  models  as  well  as  enhanced  versions  of  existing  vehicle  models. As  technologies  change  in  the  future  for 
automobiles, we will be expected to upgrade or adapt our vehicles and introduce new models in order to continue 
to  provide  vehicles  with  the  latest  technology.  We  have  limited  experience  simultaneously  designing,  testing, 
manufacturing  and  selling  vehicles. To  date,  we  have  focused  our  business  on  the  development  of  a  low-cost  and 
high  effi  ciency  vehicle  and  have  targeted  a  relatively  narrow  consumer  group. We  will  need  to  address  additional 
markets and expand our customer demographic to further grow our business. Our failure to address additional market 
opportunities could materially harm our business, ﬁ nancial condition, operating results and prospects.

We have experienced in the past, and may experience in the future, signiﬁ cant delays or other complications in the 
design, manufacture, launch and production ramp of our vehicle, which could harm our brand, business, prospects, 
ﬁ nancial condition and operating results.

We  may  experience  launch,  manufacturing  and  production  ramp  delays  or  other  complications  in  connection  with 
our vehicles. For example, we may underestimate the amount of time necessary for alpha and beta testing and design 
changes or design changes necessary for automated production like robotic welding which would delay the production 
of our vehicles. While we continue to make progress resolving such early issues, it is diffi  cult to predict exactly how 
long it will take for all issues to be cleared or when further issues may arise. Any signiﬁ cant additional delay or other 
complication in the production of our vehicles or the development, manufacture, launch and production ramp of our 
future products, including complications associated with expanding our production capacity, supply chain or regulatory 
approvals, could materially damage our brand, business, prospects, ﬁ nancial condition and operating results.

Developments and improvements in alternative technologies such as hybrid engine or full electric vehicles or in the 
internal combustion engine, or continued low retail gasoline prices may materially and adversely aff ect the demand 
for our three-wheeled vehicles.

Signiﬁ cant developments in alternative technologies, such as advanced diesel, ethanol, fuel cells or compressed natural 
gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely aff ect our 
business and prospects in ways that we do not currently anticipate. If alternative energy engines or low gasoline prices 
make existing four-wheeled vehicles with greater passenger and cargo capacities less expensive to operate, we may not 
be able to compete with manufacturers of such vehicles.

Legal, Regulatory and Litigation Risks

Increased safety, emissions, fuel economy, or other regulations may result in higher costs, cash expenditures, and/
or sales restrictions.

The motorized vehicle industry is governed by a substantial amount of government regulation, which often diff ers by 
state and region. Government regulation has arisen, and proposals for additional regulation are advanced, primarily 

14

out of concern for the environment, vehicle safety, and energy independence. In addition, many governments regulate 
local product content and/or impose import requirements as a means of creating jobs, protecting domestic producers, 
and inﬂ uencing the balance of payments. The cost to comply with existing government regulations is substantial, and 
future, additional regulations could have a substantial adverse impact on our ﬁ nancial condition.

Unusual or signiﬁ cant litigation, governmental investigations or adverse publicity arising out of alleged defects in 
our vehicles, or otherwise may derail our business.

We  plan  to  ensure  that  we  comply  with  governmental  safety  regulations,  mobile  and  stationary  source  emissions 
regulations,  and  other  standards.  Compliance  with  governmental  standards,  however,  does  not  necessarily  prevent 
individual or class actions, which can entail signiﬁ cant cost and risk. In certain circumstances, courts may permit tort 
claims even where our vehicles comply with federal law and/or other applicable law. Furthermore, simply responding 
to actual or threatened litigation or government investigations of our compliance with regulatory standards, whether 
related to our vehicles or business or commercial relationships, may require signiﬁ cant expenditures of time and other 
resources. Litigation also is inherently uncertain, and we could experience signiﬁ cant adverse results if litigation is ever 
brought against us. In addition, adverse publicity surrounding an allegation of a defect, regulatory violation or other 
matter  (with  or  without  corresponding  litigation  or  governmental  investigation)  may  cause  signiﬁ cant  reputational 
harm that could have a signiﬁ cant adverse eff ect on our sales.

We may become subject to product liability claims, which could harm our ﬁ nancial condition and liquidity if we are 
not able to successfully defend or insure against such claims.

We may become subject to product liability claims, which could harm our business, prospects, operating results and 
ﬁ nancial condition. The automobile industry experiences signiﬁ cant product liability claims and we face an inherent 
risk of exposure to claims in the event our vehicles do not perform as expected or malfunction resulting in personal 
injury or death. A successful product liability claim against us could require us to pay a substantial monetary award. 
Moreover, a product liability claim could generate substantial negative publicity about our vehicles and business and 
inhibit  or  prevent  commercialization  of  other  future  vehicle  candidates,  which  could  have  material  adverse  eff ect 
on  our  brand,  business,  prospects  and  operating  results. Any  lawsuit  seeking  signiﬁ cant  monetary  damages  either 
in excess of our liability coverage, or outside of our coverage, may have a material adverse eff ect on our reputation, 
business and ﬁ nancial condition. We may not be able to secure product liability insurance coverage on commercially 
acceptable terms or at reasonable costs when needed, particularly if we do face liability for our products and are forced 
to make a claim under our policy.

Limited intellectual property protection may cause us to lose our competitive advantage and adversely aff ect our 
business.

We have been granted three utility patents, have been issued a Notice of Allowance on a fourth, and have ﬁ led four 
additional non-provisional utility patent applications that are currently pending. These patent applications and/or any 
patent applications we may ﬁ le in the future may not be successful. To date, we have relied on copyright, trademark and 
trade secret laws, as well as conﬁ dentiality procedures and licensing arrangements, to establish and protect intellectual 
property rights to our technologies and vehicles. We typically enter into conﬁ dentiality or license agreements with 
employees, consultants, consumers and vendors in an eff ort to control access to and distribution of technology, software, 
documentation and other information. Policing unauthorized use of this technology is diffi  cult and the steps taken may 
not prevent misappropriation of the technology. In addition, eff ective protection may be unavailable or limited in some 
jurisdictions outside the United States, Canada and the United Kingdom. Litigation may be necessary in the future to 
enforce or protect our rights or to determine the validity and scope of the rights of others. Such litigation could cause 
us to incur substantial costs and divert resources away from daily business, which in turn could materially adversely 
aff ect the business.

Our failure to obtain or maintain the right to use certain intellectual property may negatively aff ect our business.

Our future success and competitive position depends in part upon our ability to obtain or maintain certain proprietary 
intellectual  property  used  in  our  principal  products. This  may  be  achieved,  in  part,  by  prosecuting  claims  against 
others who we believe are infringing our rights and by defending claims of intellectual property infringement brought 
by others. In the future we may commence lawsuits against others if we believe they have infringed our rights, or we 
may become subject to lawsuits alleging that we have infringed the intellectual property rights of others. For example, 

15

to the extent that we have previously incorporated third-party technology and/or know-how into certain products for 
which we do not have suffi  cient license rights, we could incur substantial litigation costs, be forced to pay substantial 
damages or royalties, or even be forced to cease sales in the event any owner of such technology or know-how were to 
challenge our subsequent sale of such products (and any progeny thereof). In addition, to the extent that we discover 
or have discovered third-party patents that may be applicable to products or processes in development, we may need to 
take steps to avoid claims of possible infringement, including obtaining non-infringement or invalidity opinions and, 
when necessary, re-designing or re-engineering products. However, we cannot assure you that these precautions will 
allow us to successfully avoid infringement claims. Our involvement in intellectual property litigation could result in 
signiﬁ cant expense to us, adversely aff ect the development of sales of the challenged product or intellectual property 
and divert the eff orts of our technical and management personnel, whether or not such litigation is resolved in our 
favor. In the event of an adverse outcome in any such litigation, we may, among other things, be required to:

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• 

pay substantial damages;

cease the development, manufacture, use, sale or importation of products that infringe upon other patented 
intellectual property;

expend signiﬁ cant resources to develop or acquire non-infringing intellectual property;

discontinue processes incorporating infringing technology; or

obtain licenses to the infringing intellectual property.

We cannot assure you that we would be successful in any such development or acquisition or that any such licenses 
would be available upon reasonable terms, if at all. Any such development, acquisition or license could require the 
expenditure of substantial time and other resources and could have a material adverse eff ect on our business, results 
of operations and ﬁ nancial condition.

We may be aff ected by uncertainty over government purchase incentives.

Our vehicle cost thesis strongly beneﬁ ts from purchase incentives at the state and national government levels. The 
existence or lack of tax incentives will aff ect the adoption velocity of our products in the marketplace. An inability to 
take advantage of tax incentives may negatively aff ect our revenues.

Motor vehicles, like those produced by Arcimoto, are highly regulated and are subject to regulatory changes.

We  are  aware  that  the  National  Highway Transportation  Safety Administration  is  reviewing  whether  to  adopt  new 
safety regulations pertaining to three-wheeled motor vehicles. Currently, United States motorcycle regulations apply 
to such vehicles. New regulations could impact the design of our vehicles and our ability to produce vehicles, possibly 
negatively aff ecting our ﬁ nancial results. Additionally, state level regulations are inconsistent with regard to whether 
a  helmet  is  required  to  operate  an Arcimoto  vehicle.  Sales  may  be  negatively  impacted  should  any  state  alter  its 
requirements with regard to customer use of helmets.

Risks Related to our Common Stock

Our stock price may be volatile or may decline regardless of our operating performance, and you may not be able 
to resell your shares at or above the price at which you purchase it.

The stock market generally, and our stock in particular, has experienced price and volume ﬂ uctuations. As a result of 
this volatility, you might not be able to sell your common stock at or above the price at which you purchase it. The 
public market for our stock is new. From our Regulation A Off ering on September 21, 2017 through December 31, 
2017, the per share trading price of our common stock has been as high as $6.35 and as low as $2.54. It might continue 
to ﬂ uctuate signiﬁ cantly in response to various factors, some of which are beyond our control. These factors include:

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• 

• 

changes to the electric car industry, including demand and regulations;

our ability to compete successfully against current and future competitors;

competitive pricing pressures;

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• 

• 

• 

• 

• 

• 

• 

• 

our ability to obtain working capital ﬁ nancing;

additions or departures of key personnel;

sales of our common stock;

our ability to execute our growth strategy;

operating results that fall below expectations;

loss of any strategic relationship;

regulatory developments; and

economic and other external factors.

In addition, the stock market in general has experienced signiﬁ cant price and volume ﬂ uctuations that have often been 
unrelated or disproportionate to the operating performance of particular companies. These ﬂ uctuations might be even 
more  pronounced  in  the  new  trading  market  for  our  stock. Additionally,  securities  class  action  litigation  has  often 
been instituted against companies following periods of volatility in the overall market and in the market price of a 
company’s securities. This litigation, if instituted against us, could result in substantial costs, divert our management’s 
attention and resources, and harm our business, operating results, and ﬁ nancial condition. On March 11, 2018, the 
Company was served with a Summons Notice of case number: CGC-18-564904 John R Switzer vs W.R. Hambrecht 
& Co. LLC ET All including Arcimoto, Inc., its offi  cers and directors. On March 28, 2018, the Company was served 
with another lawsuit entitled Jay Mendelson v. Arcimoto, Inc. et al., case number CGC-18-565324. Please see “Part I. 
Item 3, Legal Proceedings” of this Annual Report on Form 10-K for more information.

We  may  not  be  able  to  satisfy  listing  requirements  of  the  NASDAQ  Capital  Market  to  maintain  a  listing  of  our 
common stock.

Our  common  stock  is  listed  on  the  NASDAQ  Capital  Market  and  we  must  meet  certain  ﬁ nancial,  liquidity  and 
governance criteria to maintain such listing. If we fail to meet any of NASDAQ Capital Market’s listing standards, 
our common stock may be delisted. In addition, our board of directors may determine that the cost of maintaining our 
listing on a national securities exchange outweighs the beneﬁ ts of such listing. A delisting of our common stock from 
the NASDAQ Capital Market may materially impair our stockholders’ ability to buy and sell our common stock and 
could have an adverse eff ect on the market price of, and the effi  ciency of the trading market for, our common stock. In 
addition, the delisting of our common stock could signiﬁ cantly impair our ability to raise capital.

We rely on permitted exemptions from certain NASDAQ corporate governance standards, which may aff ord less 
protection to the holders of our common stock.

NASDAQ listing rules generally require a majority of a board of directors and all members of the audit committee 
of a listed company to be “independent directors” as deﬁ ned thereunder. However, these rules are subject to a certain 
“phase-in” period for newly listed companies. We rely on the phase-in period for our board of directors that allows 
the board to not have a majority of independent directors until one year following our NASDAQ listing. We also rely 
on the phase-in period for the audit committee that allows the committee to include a minority of members who are 
not independent directors, until one year following our NASDAQ listing. Our reliance on this phase-in period may 
adversely aff ect the level of independent oversight over the management of our Company and therefore aff ord less 
protection to the holders of our common stock.

As  a  smaller  reporting  company,  we  are  exempt  from  certain  disclosure  requirements,  which  could  make  our 
common stock less attractive to potential investors.

Rule 12b-2 of the Exchange Act deﬁ nes a “smaller reporting company” as an issuer that is not an investment company, 
an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that:

• 

had  a  public  ﬂ oat  of  less  than  $75  million  as  of  the  last  business  day  of  its  most  recently  completed 
second ﬁ scal quarter, computed by multiplying the aggregate worldwide number of shares of its voting 
and non-voting common equity held by non-affi  liates by the price at which the common equity was last 
sold, or the average of the bid and asked prices of common equity, in the principal market for the common 
equity;

17

• 

• 

in the case of an initial registration statement under the Securities Act, or the Exchange Act, for shares 
of its common equity, had a public ﬂ oat of less than $75 million as of a date within 30 days of the date 
of the ﬁ ling of the registration statement, computed by multiplying the aggregate worldwide number of 
such shares held by non-affi  liates before the registration plus, in the case of a Securities Act registration 
statement, the number of such shares included in the registration statement by the estimated public off ering 
price of the shares; or

in the case of an issuer whose public ﬂ oat was zero, had annual revenues of less than $50 million during 
the most recently completed ﬁ scal year for which audited ﬁ nancial statements are available.

As a smaller reporting company, we are not required and may not include a Compensation Discussion and Analysis 
section in our proxy statements; we provide only two years of ﬁ nancial statements; we do not need to provide the table of 
selected ﬁ nancial data; and are not required to comply with Section 404(b) of the Sarbanes-Oxley Act, which requires 
our  registered  public  accounting  ﬁ rm  to  attest  to  the  eff ectiveness  of  our  internal  control  over  ﬁ nancial  reporting. 
These and certain other “scaled” disclosure provisions under SEC rules for smaller reporting companies could make 
our common stock less attractive to potential investors, which could make it more diffi  cult for our stockholders to sell 
their shares.

Because of our status as a smaller reporting company and an emerging growth company, you will not be able to 
depend on any attestation from our independent registered public accounting ﬁ rm as to our internal control over 
ﬁ nancial reporting for the foreseeable future.

Our independent registered public accounting ﬁ rm will not be required to attest to the eff ectiveness of our internal control 
over ﬁ nancial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act until the later of the year following our 
ﬁ rst annual report required to be ﬁ led with the Commission, the date we are no longer an emerging growth company 
as deﬁ ned in the JOBS Act or the date we no longer qualify as a smaller reporting company. Accordingly, you will 
not be able to depend on any attestation concerning our internal control over ﬁ nancial reporting from our independent 
registered public accounting ﬁ rm for the foreseeable future.

We have not yet ﬁ nalized our internal controls policies and procedures over ﬁ nancial reporting.

We are in the process of developing and implementing more robust internal controls over ﬁ nancial reporting which 
is time consuming, costly, and complicated. If we identify material weaknesses in our internal control over ﬁ nancial 
reporting, if our management is unable to assert, when required, that our internal control over ﬁ nancial reporting is 
eff ective, or if our independent registered public accounting ﬁ rm is unable to attest, when required, to the eff ectiveness 
of our internal control over ﬁ nancial reporting, investors may lose conﬁ dence in the accuracy and completeness of our 
ﬁ nancial reports and the market price of our common stock could be negatively aff ected, and we could become subject 
to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, 
which could require additional ﬁ nancial and management resources.

We incur increased costs as a result of operating as a listed public company and our management is required to 
devote substantial time to new compliance initiatives and corporate governance practices.

As  a  listed  public  company,  and  particularly  if  at  some  point  in  the  future  we  are  no  longer  an  emerging  growth 
company and a smaller reporting company, we incur signiﬁ cant legal, accounting and other expenses that we have 
not incurred in the past. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, 
the listing requirements of the NASDAQ Capital Market and other applicable securities rules and regulations impose 
various requirements on public companies. Our management and other personnel need to devote a substantial amount 
of  time  to  compliance  with  these  requirements.  Moreover,  these  rules  and  regulations  will  increase  our  legal  and 
ﬁ nancial compliance costs and will make some activities more time-consuming and costly. For example, we expect 
that these rules and regulations may make it more diffi  cult and more expensive for us to obtain directors’ and offi  cers’ 
liability insurance, which could make it more diffi  cult for us to attract and retain qualiﬁ ed members of our board of 
directors. We cannot predict or estimate the amount of additional costs we will incur as a listed public company or the 
timing of such costs.

Our shares are thinly traded on the NASDAQ Capital Market and an active market may never develop.

There is a very limited trading market for our common stock and we cannot ensure that an active market will ever 
develop or be sustained. In addition, the price of our common stock may not reﬂ ect our actual or perceived value. 

18

There can be no assurance that there will be an active market for our shares of common stock in the future. The market 
liquidity will be dependent on the perception of our operating business, among other things. We may, in the future, take 
certain steps, including utilizing investor awareness campaigns, press releases, and conferences to increase awareness 
of our business and any steps that we might take to bring us to the awareness of investors may require we compensate 
consultants with cash and/or stock. There can be no assurance that there will be any awareness generated or the results 
of any eff orts will result in any impact on our trading volume. Consequently, investors may not be able to liquidate 
their investment or liquidate it at a price that reﬂ ects the value of the business and trading may be at an inﬂ ated price 
relative to the performance of our Company due to, among other things, availability of sellers of our shares. Because 
there may be a low price for our shares of common stock, many brokerage ﬁ rms or clearing ﬁ rms may not be willing 
to eff ect transactions in the securities or accept our shares for deposit in an account. Even if an investor ﬁ nds a broker 
willing to eff ect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer 
fees, taxes, if any, and any other selling costs may exceed the selling price.

If our shares become subject to the penny stock rules, it would become more diffi  cult to trade our shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny 
stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national 
securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price 
and volume information with respect to transactions in such securities is provided by the exchange or system. If we 
do not retain our listing on the NASDAQ Capital Market and if the price of our common stock is less than $5.00, our 
common stock will be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in 
a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing 
speciﬁ ed information. In addition, the penny stock rules require that before eff ecting any transaction in a penny stock 
not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock 
is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk 
disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy 
of a written suitability statement. These disclosure requirements may have the eff ect of reducing the trading activity 
in the secondary market for our common stock, and therefore stockholders may have diffi  culty selling their shares.

FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority, or FINRA, has 
adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable 
grounds for believing that the investment is suitable for that customer. Prior to recommending speculative, low-priced 
securities to their non-institutional customers, broker-dealers must make reasonable eff orts to obtain information about 
the  customer’s  ﬁ nancial  status,  tax  status,  investment  objectives  and  other  information. The  FINRA  requirements 
may make it more diffi  cult for broker-dealers to recommend that their customers buy our common stock, which may 
have the eff ect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be 
willing to make a market in our common stock, reducing a stockholder’s ability to resell shares of our common stock.

The preparation of our ﬁ nancial statements involves the use of estimates, judgments and assumptions, and our 
ﬁ nancial statements may be materially aff ected if such estimates, judgments or assumptions prove to be inaccurate.

Financial statements prepared in accordance with accounting principles generally accepted in the United States of 
America,  or  “GAAP”,  typically  require  the  use  of  estimates,  judgments  and  assumptions  that  aff ect  the  reported 
amounts. Often, diff erent estimates, judgments and assumptions could reasonably be used that would have a material 
eff ect on such ﬁ nancial statements, and changes in these estimates, judgments and assumptions may occur from period 
to period over time. Signiﬁ cant areas of accounting requiring the application of management’s judgment include, but 
are not limited to, determining the fair value of assets and the timing and amount of cash ﬂ ows from assets. These 
estimates, judgments and assumptions are inherently uncertain and, if our estimates were to prove to be wrong, we 
would face the risk that charges to income or other ﬁ nancial statement changes or adjustments would be required. Any 
such charges or changes could harm our business, including our ﬁ nancial condition and results of operations and the 
price of our securities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” 
for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to an 
understanding of our ﬁ nancial statements and our business.

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We  have  not  paid  cash  dividends  in  the  past  and  do  not  expect  to  pay  dividends  in  the  future. Any  return  on 
investment may be limited to the value of our common stock.

We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. 
The  payment  of  dividends  on  our  common  stock  will  depend  on  earnings,  ﬁ nancial  condition  and  other  business 
and  economic  factors  aff ecting  us  at  such  time  as  our  board  of  directors  may  consider  relevant.  If  we  do  not  pay 
dividends, our common stock may be less valuable because a return on your investment will only occur if our stock 
price appreciates.

You will experience future dilution as a result of future equity off erings.

We may in the future off er additional shares of our common stock or other securities convertible into or exchangeable 
for our common stock. Although no assurances can be given that we will consummate a ﬁ nancing, in the event we do, 
or in the event we sell shares of common stock or other securities convertible into shares of our common stock in the 
future, additional and substantial dilution will occur. In addition, investors purchasing shares or other securities in the 
future could have rights superior to investors in prior off erings. Subsequent off erings at a lower price, often referred to 
as a “down round”, could result in additional dilution.

Future  issuances  of  debt  securities,  which  would  rank  senior  to  our  common  stock  upon  our  bankruptcy  or 
liquidation, and future issuances of preferred stock, which would rank senior to our common stock for the purposes 
of dividends and liquidating distributions, may adversely aff ect the level of return you may be able to achieve from 
an investment in our common stock.

In  the  future,  we  may  attempt  to  increase  our  capital  resources  by  off ering  debt  securities.  Upon  bankruptcy  or 
liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive 
distributions of our available assets prior to any distributions being made to holders of our common stock. Moreover, if 
we issue preferred stock, the holders of such preferred stock could be entitled to preferences over holders of common 
stock in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to 
issue debt or preferred securities in any future off ering, or borrow money from lenders, will depend in part on market 
conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such 
future off erings or borrowings. Holders of our common stock must bear the risk that any future off erings we conduct 
or borrowings we make may adversely aff ect the level of return they may be able to achieve from an investment in our 
common stock.

Sales by our signiﬁ cant stockholders could have an adverse eff ect on the market price of our stock.

At least one of our stockholders, Mr. Frohnmayer, owns a signiﬁ cant amount of our common stock. If he were to 
sell all or a portion of his holdings of our common stock, the market price of our common stock could be negatively 
impacted. The eff ect of such sales, or of signiﬁ cant portions of our stock being off ered or made available for sale, could 
result in strong downward pressure on our stock price. Investors should be aware that they could experience signiﬁ cant 
short-term volatility in our stock if such stockholders decide to sell all or a portion of their holdings of our common 
stock at once or within a short period of time.

Provisions in our restated certiﬁ cate of incorporation and amended and restated bylaws and Oregon law might 
discourage, delay, or prevent a change in control of our company or changes in our management and, therefore, 
depress the trading price of our common stock.

Provisions of our certiﬁ cate of incorporation and bylaws and Oregon law might discourage, delay, or prevent a merger, 
acquisition, or other change in control that stockholders consider favorable, including transactions in which you might 
otherwise receive a premium for your shares of our common stock. These provisions might also prevent or frustrate 
attempts by our stockholders to replace or remove our management. These provisions include:

• 

• 

• 

limitations on the ability of stockholders to call special meetings;

the inability of stockholders to cumulate votes at any election of directors; and

the ability of our board of directors to make, alter or repeal our bylaws.

20

Our  board  of  directors  has  the  ability  to  designate  the  terms  of  and  issue  new  series  of  preferred  stock  without 
stockholder  approval.  In  addition,  Section  60.835  and  Section  60.840  of  the  Oregon  Revised  Statutes  prohibits  a 
publicly held Oregon corporation from engaging in a business combination with an interested stockholder, generally 
a person which together with its affi  liates owns, or within the last three years has owned, 15% or more of our voting 
stock, at any time within the preceding three-year period, unless the business combination is approved in a prescribed 
manner.

The existence of the foregoing provisions and anti-takeover measures could limit the price that investors are willing to 
pay in the future for shares of our common stock. They could also deter potential acquirers of our Company, thereby 
reducing the likelihood that you could receive a premium for your common stock in an acquisition.

If securities industry analysts do not publish additional research reports on us, or publish unfavorable reports on 
us, then the market price and market trading volume of our common stock could be negatively aff ected.

Any trading market for our common stock will be inﬂ uenced in part by any research reports that securities industry 
analysts  publish  about  us. To  date,  we  have  been  covered  by  one  research  analyst. We  may  not  obtain  any  future 
research coverage by additional securities industry analysts. In the event we are covered by additional analysts, and one 
or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage on 
us, the market price and market trading volume of our common stock could be negatively aff ected.

Item 1B. Unresolved Staff  Comments

Not applicable to smaller reporting companies.

Item 2. Properties

As of December 31, 2017, we occupied approximately 1,700 square feet of offi  ce area, 32,000 square feet of warehouse 
space and 125,000 square feet of asphalt paving and undeveloped greenﬁ eld. The space is under lease expiring in 
2021. We believe that our current facilities are suffi  cient for our needs. We may add other facilities or expand existing 
facilities as we expand our employee base and geographic markets in the future, and we believe that suitable additional 
space will be available as needed to accommodate any such expansion of our operations.

Item 3. Legal Proceedings

On March 11, 2018, we were served with a lawsuit entitled John R Switzer vs W.R. Hambrecht & Co. LLC et al., case 
number: CGC-18-564904, ﬁ led in San Francisco County Superior Court in the State of California. In this action, we 
have been named as defendants along with our directors and certain executive offi  cers at the time of the completion 
of our Regulation A off ering on September 21, 2017. The action purports to be a class action on behalf of all those 
who purchased our common stock in our Regulation A off ering alleging violations of Section 12(a)(2) and Section 15 
of the Securities Act of 1933, as amended. The plaintiff  is seeking damages in an unspeciﬁ ed amount to be proven at 
trial. In addition, On March 28, 2018, we were served with another lawsuit entitled Jay Mendelson v. Arcimoto, Inc. 
et al., case number CGC-18-565324, ﬁ led in San Francisco County Superior Court in the State of California. In this 
action we have also been named as a defendant along with our directors and certain executive offi  cers at the time of 
the completion of our Regulation A off ering on September 21, 2017. The factual allegations and alleged violations 
are substantially similar to the Switzer action and the plaintiff  is also seeking damages in an unspeciﬁ ed amount to be 
proven at trial. We believe these lawsuits are without merit and we intend to vigorously defend these actions in court.

Item 4. Mine Safety Disclosures

Not applicable.

21

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 

PART II

Securities.

None.

Item 6. Selected Financial Data.

Not applicable to smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our ﬁ nancial condition and results of operations for the ﬁ scal year ended 
December 31, 2017, should be read together with our ﬁ nancial statements and related notes included elsewhere in this 
report. The following discussion contains “forward-looking statements” that reﬂ ect our future plans, estimates, beliefs 
and expected performance. Our actual results may diff er materially from those currently anticipated and expressed 
in  such  forward-looking  statements  as  a  result  of  a  number  of  factors. We  caution  that  assumptions,  expectations, 
projections, intentions or beliefs about future events may, and often do, vary from actual results and the diff erences can 
be material. Please see “Cautionary Note Regarding Forward-Looking Statements.”

Overview

We  design,  develop,  manufacture,  and  sell  ultra-effi  cient  fully  electric  vehicles.  We  achieved  limited  production 
and delivered our ﬁ rst Signature Series vehicles at the end of 2017, with continued Signature Series vehicle limited 
production and delivery planned for the ﬁ rst half of 2018. We anticipate that Beta, Pilot and Retail Series small scale 
production will follow later in the year.

On  July  21,  2017,  we  eff ected  a  two-for-one  common  stock  split  and  increased  our  authorized  common  shares  to 
20,000,000. On July 25, 2017, a majority of the Series A-1 Preferred stockholders voted to convert all 1,434,891 shares 
of Series A-1 Preferred Stock to 2,869,782 common shares. The July 21, 2017 two-for-one common stock split resulted 
in a conversion rate of two shares of common stock for each one share of Series A-1 Preferred Stock. In accordance 
with SEC reporting guidelines, the retrospective application of the stock split has been applied to historical ﬁ nancial 
information, and the Series A-1 Preferred to common stock conversion was reﬂ ected in the accompanying ﬁ nancial 
statements as if it occurred as of December 31, 2016.

During the year ended December 31, 2017, we issued 245,100 shares of Series A-1 Preferred Stock for aggregate gross 
proceeds of approximately $1,226,000 from our Regulation D off ering and also received proceeds from the issuance 
of an aggregate of $270,000 of convertible debt.

During September and October 2017, we issued 2,945,657 shares of common stock in a Regulation A off ering at a 
public off ering price of $6.50 per share for net proceeds of approximately $18,087,640 after deducting Underwriter 
commissions of approximately $1,051,131 and Escrow closing fees of $8,000. Also, on October 4, 2017, we issued 
4,000 common shares at a cost of $5.25 per share to a vendor in exchange for $21,000 of video production services.

On September 3, 2017, Arcimoto, Inc. entered into a Triple Net Lease for 30,000 square feet of commercial industrial 
offi  ce  and  manufacturing  space  in  Eugene,  Oregon.  The  lease  began  on  October  1,  2017  and  will  terminate  on 
March 31, 2021. Rent was $25,000 for the ﬁ rst month, then $12,500 per month for months two through forty-one, and 
one dollar for month forty-two.

Management Opportunities, Challenges and Risks

Demand, Production and Capital

Demand for the Retail Series Arcimoto FUV continued to increase throughout 2017. As of December 31, 2017, we had 
2,234 FUV pre-orders with small refundable deposits, representing an increase of 1,158, or approximately 108%, from 
the 1,076 pre-orders as of December 31, 2016. As of March 22, 2018, we had 2,421 pre-orders.

Although  we  initially  contemplated  producing  approximately  2,000  vehicles  in  the  eighteen  months  following  the 
closing of our Regulation A off ering, management decided to slow the rollout of FUVs post-off ering by reducing the 

22

total number of vehicles that we anticipate producing in 2018. Our decision was based, in part, on the following factors 
that became apparent to us later in the fourth quarter 2017:

1. 

The  substantial  public  support  we  received  in  our  Regulation  A  off ering  in  September  and  October 
2017  allowed  us  to  begin  signiﬁ cant  portions  of  the  Phase  2  production  preparations  which  we 
originally contemplated would not commence until twelve months after the closing of our off ering. The 
Phase 2 manufacturing process requires additional up-front time to build out the manufacturing facility 
and redesign the FUV’s upper frame for robotic mass production. Because we anticipate proﬁ tability will 
only be achieved with the margins and volumes possible utilizing the Phase 2 automated manufacturing 
processes, limiting the number of vehicles built prior to these Phase 2 processes coming online keeps us 
true to our commitment to capital effi  ciency.

2.  We experienced a delay in receiving key, single-source component parts from our suppliers of motors, 
motor controllers, and batteries that were expected in the fourth quarter 2017. Some of these materials 
were not received until the end of ﬁ rst quarter 2018.

3. 

The manufacture of the ﬁ rst two Signature Series vehicles took longer than anticipated, due primarily to the 
ﬁ tting of body panel parts. We are currently using the knowledge we glean from the initial manufacturing 
processes used in the production of our ﬁ rst Signature Series vehicles to optimize and ﬁ nalize the design 
and manufacturing processes for the Beta and Pilot Series FUVs. As a venture that embraces continuous 
improvement we will always strive to improving our designs and manufacturing processes.

We anticipate that the procedure to achieve full Phase 2 Retail Series production involves orchestrating many moving 
parts: scale production supply chain, vehicle design ﬁ nalization, and key component robotic manufacture. We believe 
that the adjustments we have made to our plan to scale production more closely aligns each of these objectives, and 
will  enhance  our  chances  to  achieve  proﬁ tability  sooner  than  if  we  had  stayed  with  the  sequencing  we  originally 
contemplated.

Trends in Cash Flow, Capital Expenditures and Operating Expenses

We anticipate initiating Retail Series production beginning in the second half of 2018. Given this plan, our capital 
expenditure needs include capital costs for the tooling, production equipment and construction of the FUV Arcimoto 
production line.

Operating expenses grew by approximately 75% in 2017 as compared to 2016. This increase was driven by increased 
hiring for manufacturing engineering and production operations which began at the end of 2017, and marketing and 
other non-capitalizable expenses associated with our Regulation A off ering. Although we continue to remain on track 
with  our  progress  toward  vehicle  manufacturing,  given  the  size  and  complexity  of  this  undertaking,  it  is  possible 
that  future  events  could  result  in  the  cost  of  building  and  operating  the  production  facility  exceeding  our  current 
expectations and taking longer to bring online than we currently anticipate.

New Accounting Pronouncements

See Note 3 “Summary of Signiﬁ cant Accounting Policies” to our Financial Statements included under Part I, Item 1 of 
this Annual Report on Form 10-K which includes a discussion of recent accounting pronouncements that may impact us.

Disclosure About Off -Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

Our  ﬁ nancial  statements  are  prepared  in  accordance  with  GAAP.  The  preparation  of  these  ﬁ nancial  statements 
requires us to make estimates and assumptions that aff ect the reported amounts of assets, liabilities, revenues, costs 
and expenses and related disclosures. We base our estimates on historical experience, as appropriate, and on various 
other assumptions that we believe are reasonable under the circumstances. Changes in the accounting estimates are 
reasonably likely to occur from period to period. Accordingly, actual results could diff er signiﬁ cantly from the estimates 
made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are 

23

material diff erences between these estimates and actual results, our future ﬁ nancial statement presentation, ﬁ nancial 
condition, results of operations and cash ﬂ ows will be aff ected.

For  a  description  of  our  critical  accounting  policies  and  estimates,  please  refer  to  the  “Summary  of  Signiﬁ cant 
Accounting Policies” in Note 3 of this Annual Report on Form 10-K.

Results of Operations

Year ended December 31, 2017 versus year ended December 31, 2016

Revenues

We had total revenue of approximately $127,000 in 2017 as compared to no revenue in 2016. Sources of revenue 
were $84,000 from the sale of our vehicles of which $42,000 was with a related party, approximately $2,000 from 
merchandise sales, and we also recognized grant revenue during the year ended December 31, 2017 amounting to 
approximately  $41,000.  Revenues  from  grants  are  recognized  in  the  period  during  which  the  conditions  under  the 
grant have been met and the Company has made payment for the related expense. There was no such grant revenue 
during the same period in the prior year. We believe the loss of such grant revenues will not have a material eff ect on 
the Company’s operations.

Operating Expenses

Research and Development Expenses

Research and development (“R&D”) expenses consist primarily of personnel costs for our engineering and research 
teams,  and  prototyping  materials  expense.  R&D  expenses  for  the  years  ended  December  31,  2017  and  2016  were 
approximately  $1,451,000  and  $975,000,  respectively.  The  primary  reason  for  the  increase  in  R&D  expenses  of 
$476,000, or 49%, resulted from an increase in engineering salaries and beneﬁ ts of approximately $340,000 and an 
increase in R&D materials expense of approximately $109,000.

Sales and Marketing Expenses

Sales  and  marketing  expenses  consist  primarily  of  costs  associated  with  marketing  our  Regulation A  off ering  and 
booking pre-orders and selling our high-performance fully electric vehicles. Sales and marketing expenses for the 
years  ended  December  31,  2017  and  2016  were  approximately  $828,000  and  $472,000,  respectively. The  primary 
reasons for the increase in sales and marketing expenses during the year ended December 31, 2017 of $356,000, or 
75%, as compared to the prior period was an $185,000 increase in public relations, marketing, and travel expenses in 
preparation for our Regulation A off ering, an $103,000 increase is salary and beneﬁ ts expenses, and a $71,000 increase 
in lobbying expense.

General and Administrative Expenses

General and administrative (“G&A”) expenses consist primarily of personnel and facilities costs related to executive, 
ﬁ nance, human resources, information technology and legal organizations, as well as litigation settlements and fees 
for  professional  and  contract  services.  G&A  expenses  for  the  year  ended  December  31,  2017  were  approximately 
$1,064,000 as compared to $460,000 for the same period last year, representing an increase of approximately $604,000, 
or  131%. The  primary  reason  for  the  increase  in  the  current  period  was  due  to  an  $80,000  increase  in  non-cash 
compensation expense for the granting of employee stock options, an $135,000 increase in expenses associated with 
being a listed company (investor relations, insurance, and professional fees), a $210,000 increase in salary and beneﬁ ts 
expenses,  a  $56,000  increase  in  rent  and  utilities  associated  with  the  new  facility,  a  $50,000  increase  in  facilities 
maintenance expense, a $46,000 increase in computer expense associated with new hiring and moving into the new 
facility, a $19,000 increase in travel, and a $12,000 increase in depreciation expense.

Interest Expense

Interest expense for the year ended December 31, 2017 was approximately $34,000 as compared to $13,000 during 
the year ended December 31, 2016. The increase in interest expense was due to higher balances of outstanding debt 
during 2017.

24

Liquidity and Capital Resources

As of December 31, 2017, we had approximately $7,824,000 in cash and cash equivalents and another $6,247,000 
in certiﬁ cates of deposits with maturities between three and nine months representing an increase in cash and cash 
equivalents and certiﬁ cate of deposits of approximately $13,657,000 from December 31, 2016. Sources of cash are 
predominantly from the sale of equity. We anticipate that our current sources of liquidity, including cash and cash 
equivalents, together with our current projections of cash ﬂ ow from operating activities, may provide us with adequate 
liquidity in the event we are able to achieve the product cost reductions in our current plans. We may raise funds in 
the future, including potential equity or debt off erings, subject to market conditions and recognizing that we cannot be 
certain that additional funds would be available to us on favorable terms or at all. The amount and timing of funds that 
we may raise is undetermined and would vary based on a number of factors, including our liquidity needs as well as 
access to current and future sources of liquidity.

Our estimates for tooling and manufacturing capital expenditures for our current FUV production facility will require 
approximately $5,000,000, of which approximately $2,445,000 was expended during the fourth quarter of 2017. We 
anticipate utilizing the remaining $2,600,000 during the ﬁ rst half of 2018.

For the year ended December 31, 2017, we issued 245,100 shares of Series A-1 Preferred Stock for aggregate gross 
proceeds of approximately $1,226,000 in a Regulation D off ering, of which 10,000 shares were sold to a related party. 
In addition, During September and October 2017, we issued 2,945,657 shares of common stock in a Regulation A 
off ering at a public off ering price of $6.50 per share for net proceeds of approximately $18,087,640 after deducting 
underwriter commissions of approximately $1,051,131 and escrow closing fees of $8,000. Also, on October 4, 2017, 
we issued 4,000 common shares at a cost of $5.25 per share to a vendor in exchange for $21,000 of video production 
services.

Cash Flows from Operating Activities

Our cash ﬂ ows from operating activities are signiﬁ cantly aff ected by our cash outﬂ ows to support the growth of our 
business in areas such as research and development, sales and marketing and general and administrative expenses. Our 
operating cash ﬂ ows are also aff ected by our working capital needs to support personnel related expenditures, accounts 
payable and other current assets and liabilities.

During the year ended December 31, 2017, cash used in operating activities was approximately $3,344,000, which 
was primarily the result of our net loss incurred of approximately $3,315,000, an increase in other current assets of 
$373,000 and an increase in inventories of $168,000 related to materials for our electric vehicles. These increases in 
cash outﬂ ows were partially off set by an increase in stock-based compensation of $204,000, an increase in accrued 
liabilities  of  $176,000  mainly  for  payroll  related  liabilities,  an  increase  in  accounts  payable  of  $98,000,  and  a  net 
increase in customer deposits of $14,000.

Cash Flows from Investing Activities

Cash ﬂ ows from investing activities primarily relates to the purchases of certiﬁ cates of deposits and capital expenditures 
to  support  our  growth  in  operations,  including  investments  in  manufacturing  equipment  and  tooling.  During  the 
year  ended  December  31,  2017,  the  Company  purchased  approximately  $6,247,000  of  certiﬁ cates  of  deposits  and 
invested approximately $1,960,000 in manufacturing equipment and tooling. The Company had no such purchases of 
certiﬁ cates of deposits or capital expenditures in 2016.

Cash Flows from Financing Activities

During the year ended December 31, 2017, net cash provided by ﬁ nancing activities was approximately $18,961,000 
compared to $1,033,000 during the year ended December 31, 2016. Proceeds from the issuance of common stock 
during the year ended December 31, 2017 were approximately $20,372,000 which consisted of $19,146,000 in gross 
proceeds from our Regulation A off ering of 2,945,657 shares of common stock and $1,226,000 in gross proceeds from 
our Regulation D off ering in that period of 245,100 shares of Series A-1 Preferred Stock. In addition, we received 
proceeds from the issuance of convertible debt and a note payable of $275,000. These proceeds were slightly off set by 
approximately $1,286,000 in off ering costs and $400,000 in repayments of notes payable. Cash ﬂ ows from ﬁ nancing 
activities during the year ended December 31, 2016 consisted primarily of the issuance of $275,000 in convertible 
notes payable, $250,000 in debt from the City of Eugene Business Development fund and approximately $468,000 

25

in gross proceeds from our Regulation D off ering of 93,800 shares of preferred stock off set by $10,000 in legal costs 
associated with the preparation of our Regulation A off ering.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable to smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

The information required by this Item is set forth in the Financial Statements and Notes thereto beginning at page F-1 
of this Report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

None.

Item 9A. Controls and Procedures.

This annual report does not include a report of management’s assessment regarding internal control over ﬁ nancial 
reporting  due  to  a  transition  period  established  by  rules  of  the  SEC  for  newly  public  companies.  In  addition,  this 
annual report does not include an attestation report of our registered public accounting ﬁ rm regarding internal control 
of  ﬁ nancial  reporting  pursuant  to  rules  of  the  SEC  regarding  smaller  reporting  companies  and  emerging  growth 
companies.

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including Mark Frohnmayer, our President and 
Chief Executive Offi  cer, and Douglas M. Campoli, our Chief Financial Offi  cer, we conducted an evaluation of the 
eff ectiveness of the design and operation of our disclosure controls and procedures, as deﬁ ned in Rules 13a-15(e) and 
15d-15(e) under the Exchange Act, as of the end of the period covered by this report.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls 
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the 
desired control objectives. In addition, the design of disclosure controls and procedures must reﬂ ect the fact that there 
are resource constraints and that management is required to apply its judgment in evaluating the beneﬁ ts of possible 
controls and procedures relative to their costs.

Based on the management’s evaluation, our President and Chief Executive Offi  cer and our Chief Financial Offi  cer 
concluded that as of December 31, 2017 our disclosure controls and procedures were designed to, and were eff ective 
to, provide assurance at a reasonable level that the information we are required to disclose in reports that we ﬁ le or 
submit under the Exchange Act is recorded, processed, summarized and reported within the time periods speciﬁ ed 
in SEC rules and forms, and that such information is accumulated and communicated to our management, including 
our President and Chief Executive Offi  cer and our Chief Financial Offi  cer, as appropriate, to allow timely decisions 
regarding required disclosures as of December 31, 2017.

(b) Changes in Internal Control Over Financial Reporting

Under the supervision and with the participation of our management, including our President and Chief Executive 
Offi  cer  and  our  Chief  Financial  Offi  cer,  we  conducted  an  evaluation  of  any  changes  in  our  internal  controls  over 
ﬁ nancial reporting (as such terms are deﬁ ned in Rules 13a-15(f) and 15d-15(f)) under the exchange Act that occurred 
during the quarter ended December 31, 2017. Based on that evaluation, our President and Chief Executive Offi  cer and 
Chief Financial Offi  cer concluded that there has not been any material change in our internal control over ﬁ nancial 
reporting occurred during the period ended December 31, 2017, that materially aff ected, or is reasonably likely to 
materially aff ect, our internal control over ﬁ nancial reporting.

Item 9B. Other Information

None.

26

Item 10. Directors, Executive Offi  cers and Corporate Governance.

PART III

Information required by this Item concerning our directors is incorporated by reference from the sections captioned 
“Election of Directors” and “Corporate Governance Matters” contained in our proxy statement related to the 2018 
Annual  Meeting  of  Stockholders  currently  scheduled  to  be  held  on  June  9,  2018  which  we  intend  to  ﬁ le  with  the 
Securities and Exchange Commission within 120 days of the end of our ﬁ scal year pursuant to General Instruction 
G(3) of Form 10-K.

The  members  of  our Audit  Committee  are Terry  Becker, Thomas Thurston  and  Jeff   Curl.  Our  board  of  directors 
has  determined  that  of  the  members  of  the Audit  Committee,  Messrs. Thurston  and  Curl  are  independent  within 
the  meaning  of  the  NASDAQ  Stock  Market  listing  rules  and  meet  the  additional  test  for  independence  for  audit 
committee members imposed by Securities and Exchange Commission regulation and the NASDAQ Stock Market 
listing rules. We are relying on the phase-in rules of the SEC and NASDAQ with respect to the independence of our 
audit committee. These rules require us to have an audit committee that has at least one independent member by the 
NASDAQ Stock Market listing date, a majority of independent members within 90 days after the listing date, and all 
independent members within one year thereafter. Our board has also determined that Mr. Curl is an “audit committee 
ﬁ nancial expert” as deﬁ ned in Item 407(d)(5)(ii) of Regulation S-K.

We have adopted a code of ethics relating to the conduct of our business by all of our employees, offi  cers, and directors. 
The code of ethics is posted on our website, www.arcimoto.com.

The information required by this Item concerning our executive offi  cers is included in Part I of this Annual Report on 
Form 10-K.

The  information  required  by  this  Item  concerning  compliance  with  Section  16(a)  of  the  United  States  Securities 
Exchange Act of 1934, as amended, is incorporated by reference from the section of the proxy statement captioned 
“Section 16(a) Beneﬁ cial Ownership Reporting Compliance”.

Item 11. Executive Compensation.

The information required by this Item is incorporated by reference to the information under the sections captioned 
“Executive Compensation” and “Director Compensation” in the proxy statement.

Item 12. Security Ownership of Certain Beneﬁ cial Owners and Management and Related Stockholder Matters.

The  following  table  sets  forth  the  indicated  information  as  of  December  31,  2017  with  respect  to  our  equity 
compensation plans:

Plan Category
Equity compensation plans approved by security 

holders
Arcimoto, Inc. Second Amended and Restated 2012 
Employee Stock Beneﬁt Plan . . . . . . . . . . . . . . . . .

Arcimoto, Inc. Amended and Restated 2015 Stock 

Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of 
securities to 
be issued upon 
exercise of 
outstanding 
options, warrants 
and rights

Weighted-average 
exercise price 
of outstanding 
options, warrants 
and rights

Number of 
securities 
remaining 
available for 
future issuance 
under equity 
compensation 
plans

973,004 $ 

984,200 $ 
1,957,204 $ 

0.593

2.709
1.657

11,996

15,800
27,796

27

As  of  December  31,  2017,  our  equity  compensation  plans  consisted  of  the Arcimoto,  Inc.  Second Amended  and 
Restated 2012 Employee Stock Beneﬁ t Plan and the Arcimoto, Inc. Amended and Restated 2015 Stock Incentive Plan, 
which were approved by our stockholders. We do not have any equity compensation plans or arrangements that have 
not been approved by our stockholders.

The other information required by this Item is incorporated by reference to the information under the section captioned 
“Security Ownership of Certain Beneﬁ cial Owners and Management” contained in the proxy statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item is incorporated by reference to the information under the section captioned 
“Certain Relationships and Related-Party Transactions” and “Corporate Governance Matters” in the proxy statement.

Item 14. Principal Accounting Fees and Services.

The information required by this Item is incorporated by reference to the information under the section captioned 
“Audit Committee Report” in the proxy statement.

28

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a) 1. Financial Statements.

See index to ﬁ nancial statements on page F-1 of this Annual Report.

2. Financial Statement Schedules.

All other schedules called for under regulation S-X are not submitted because they are not applicable or not required, 
or because the required information is included in the ﬁ nancial statements or notes thereto.

Incorporated by Reference 
(Unless Otherwise Indicated)
Exhibit
2.1

File No.
024-10710

Filing Date
August 8, 2017

024-10710

2.2

August 8, 2017

—

10.1 October 4, 2017

024-10710

024-10710

—

—

—

—

—
—
—

—

—

—

2.2

2.2

—

—

—

—

—
—
—

—

—

—

August 8, 2017

August 8, 2017

Filed herewith

Filed herewith

Filed herewith

Filed herewith

Filed herewith
Filed herewith
Filed herewith

Filed herewith

Filed herewith

Filed herewith

(b) Exhibits.

Exhibit
Number
3.1

3.2

10.1

10.2

10.3

23.1

31.1

31.2

32.1

Exhibit Description
Second  Amended  and  Restated  Certiﬁcate  of 
Incorporation of Arcimoto, Inc.
Second  Amended  and  Restated  Bylaws  of 
Arcimoto, Inc.
Industrial  Lease  dated  September  3,  2017  by  and 
between Arcimoto, Inc. and 2034 LLC.
Arcimoto,  Inc.  Second  Amended  and  Restated 
2012 Employee Stock Beneﬁt Plan#
Arcimoto, Inc. Amended and Restated 2015 Stock 
Incentive Plan#
Consent of dbbmckennon, Independent Registered 
Certiﬁed Public Accounting Firm.
Certiﬁcation  of  Chief  Executive  Officer  pursuant 
to Section 302 of the Sarbanes-Oxley Act of 2002.
Certiﬁcation of Chief Financial Officer pursuant to 
Section 302 of the Sarbanes-Oxley Act of 2002.
Certiﬁcation of Chief Executive Officer and Chief 
Financial  Officer  pursuant  to  Section  906  of  the 
Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase 

Document.

Form
1-A

1-A

8-K

1-A

1-A

—

—

—

—

—
—
—

101.DEF XBRL  Taxonomy  Extension  Deﬁnition  Linkbase 

—

Document.

101.LAB XBRL  Taxonomy  Extension  Label  Linkbase 

—

Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase 

—

Document.

# 

Management contract or compensatory plan.

Item 16. Form 10-K Summary.

None.

29

Financial Statements
December 31, 2017 and 2016

ARCIMOTO, INC.
TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  . . . . . . . . . . . . . . . . 
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2017 

AND 2016:

Page
F-2

Balance Sheets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Statements of Operations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Statement of Stockholders’ Equity (Deﬁcit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

F-3
F-4
F-5
F-6
F-7 – F-21

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Arcimoto, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Arcimoto, Inc. (the “Company”) as of December 31, 2017 and 
2016, the related statements of operations, stockholders’ equity (deﬁ cit), and cash ﬂ ows, for the years then ended, and 
the related notes (collectively referred to as the “ﬁ nancial statements”). In our opinion, the ﬁ nancial statements present 
fairly,  in  all  material  respects,  the  ﬁ nancial  position  of  the  Company  as  of  December  31,  2017  and  2016,  and  the 
results of its operations and its cash ﬂ ows for the years then ended, in conformity with accounting principles generally 
accepted in the United States of America.

Basis for Opinion

These ﬁ nancial statements are the responsibility of the Company’s management. Our responsibility is to express an 
opinion on the Company’s ﬁ nancial statements based on our audits. We are a public accounting ﬁ rm registered with 
the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with 
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of 
the Securities and Exchange Commission and the PCAOB.

We  conducted  our  audits  in  accordance  with  the  standards  of  the  PCAOB. Those  standards  require  that  we  plan 
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  ﬁ nancial  statements  are  free  of  material 
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, 
an audit of its internal control over ﬁ nancial reporting. As part of our audits we are required to obtain an understanding 
of internal control over ﬁ nancial reporting but not for the purpose of expressing an opinion on the eff ectiveness of the 
Company’s internal control over ﬁ nancial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the ﬁ nancial statements, 
whether  due  to  error  or  fraud,  and  performing  procedures  that  respond  to  those  risks.  Such  procedures  included 
examining, on a test basis, evidence regarding the amounts and disclosures in the ﬁ nancial statements. Our audits 
also included evaluating the accounting principles used and signiﬁ cant estimates made by management, as well as 
evaluating the overall presentation of the ﬁ nancial statements. We believe that our audits provide a reasonable basis 
for our opinion.

Going Concern

The  accompanying  ﬁ nancial  statements  have  been  prepared  assuming  that  the  Company  will  continue  as  a  going 
concern. As discussed in Note 2 to the ﬁ nancial statements, the Company has suff ered recurring losses from operations 
and  has  earned  limited  revenues  from  its  intended  operations,  which  raises  substantial  doubt  about  its  ability  to 
continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The ﬁ nancial 
statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ dbbmckennon

We have served as the Company’s auditor since 2016.

Newport Beach, California
March 30, 2018

F-2

ARCIMOTO, INC.
BALANCE SHEETS
DECEMBER 31, 2017 and 2016

2017

2016

ASSETS

Current assets:

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Certiﬁcates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Accounts receivable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

7,824,109 $ 
6,246,850
500
194,525
401,160
14,667,144

Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Deferred offering cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2,434,026
—

414,405
—
583
26,825
28,207
470,020

8,805
40,000

Total assets  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 

17,101,170 $ 

518,825

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Liabilities:

Current liabilities

Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Notes payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total current liabilities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Long-term convertible notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Long-term convertible notes payable to related party . . . . . . . . . . . . . . . . . . 
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

663,773 $ 
255,758
399,967
—
1,319,498
—
—
1,319,498

81,045
102,776
386,035
250,000
819,856
275,000
50,000
1,144,856

Commitments and contingencies (Note 10)

Stockholders’ equity (deﬁcit):

Series A-1 preferred stock, no par value, 1,500,000 authorized, 0 issued and 
outstanding as of December 31, 2017 and 2016.  . . . . . . . . . . . . . . . . . . . . . 

Common stock, no par value, 20,000,000 authorized, 15,872,001 and 

12,337,466 issued and outstanding as of December 31, 2017 and 2016, 
respectively. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Accumulated deﬁcit  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total stockholders’ equity (deﬁcit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

—

—

27,177,790
519,340
(11,915,458)
15,781,672

7,637,494
336,606
(8,600,131)
(626,031)

Total liabilities and stockholders’ equity (deﬁcit) . . . . . . . . . . . . . . . . . . . . . . . . .  $ 

17,101,170 $ 

518,825

See accompanying notes to ﬁ nancial statements.

F-3

ARCIMOTO, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2017 and 2016

2017

2016

Revenue

Grant revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Product sales – related party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Product sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Gross proﬁt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

40,580 $ 
42,000
44,436
127,016
78,439
48,577

—
—
—
—
—
—

Operating expenses

Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Sales and marketing  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

1,451,394
827,941
1,063,635
3,342,970

974,806
472,108
459,990
1,906,904

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

(3,294,393)

(1,906,904)

Other income and expense

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 

(34,143)
13,209
(3,315,327) $ 

(12,816)
241
(1,919,479)

Weighted-average common shares outstanding

– basic and diluted  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

13,554,282

9,964,403

Net loss per common share

– basic and diluted  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 

(0.24) $ 

(0.19)

See accompanying notes to ﬁ nancial statements.

F-4

ARCIMOTO, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2017 and 2016

Series A-1 Preferred Stock
Number of 
Shares

Amount

Common Stock

Number of 
Shares

Amount

Additional
Paid-In 
Capital

Accumulated 
Deﬁcit

Total 
Stockholders’
Equity 
(Deﬁcit)

Balance at December 31, 2015 . . . . . . . . . . 

1,095,991

$ 3,364,988

9,957,884

$  3,804,561

$  288,231

$  (6,680,652) $ 

777,128

Issuance of Series A-1 preferred stock . . . . 
Conversion of Series A-1 preferred stock . . 
Stock-based 

compensation . . . . . . . . . . . . . . . . . . . . . 
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Balance at December 31, 2016 . . . . . . . . . . 

Issuance of Series A-1 preferred stock . . . . 
Conversion of Series A-1 preferred stock . . 
Issuance of common stock for services  . . . 
Issuance of common stock for cash  . . . . . . 
Conversion of notes to common stock  . . . . 
Offering costs  . . . . . . . . . . . . . . . . . . . . . . . 
Warrants exercised – cashless . . . . . . . . . . . 
Stock-based compensation . . . . . . . . . . . . . 
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Balance at December 31, 2017 . . . . . . . . . . 

93,800
(1,189,791)

467,945
(3,832,933)

—
2,379,582

—
3,832,933

—
—

—
—

467,945
—

—
—
—

—
—
—
—
— 12,337,466

—
—
7,637,494

48,375
—
336,606

—
(1,919,479)
(8,600,131)

48,375
(1,919,479)
(626,031)

245,100
(245,100)
—
—
—
—
—
—
—
— $ 

—
1,225,500
490,200
(1,225,500)
—
4,000
— 2,945,657
80,832
—
—
—
13,846
—
—
—
—
—
— 15,872,001

—
1,225,500
21,000
19,146,771
472,867
(1,325,842)
—
—
—
$ 27,177,790

—
—
—
—
—
—
—
182,734
—
$  519,340

1,225,500
—
—
—
—
21,000
— 19,146,771
472,867
—
(1,325,842)
—
—
—
182,734
—
(3,315,327)
(3,315,327)
$ (11,915,458) $ 15,781,672

See accompanying notes to ﬁ nancial statements.

F-5

ARCIMOTO, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2017 and 2016

2017

2016

OPERATING ACTIVITIES

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Adjustments to reconcile net loss to net cash used in operating activities:

(3,315,327) $ 

(1,919,479)

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

20,107
203,734

7,951
48,375

Changes in operating assets and liabilities:

Accounts receivable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

83
(167,699)
(372,954)
97,838
175,849
13,932
(3,344,437)

7,589
(26,825)
(1,595)
41,816
41,556
181,407
(1,619,205)

INVESTING ACTIVITIES

Purchase of certiﬁcates of deposit  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

(6,246,850)
(1,960,438)
(8,207,288)

—
—
—

FINANCING ACTIVITIES

Proceeds from sale of stock  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Payment of offering cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Proceeds from convertible notes payable to related parties  . . . . . . . . . . . . . . . 
Repayment of convertible notes payable to related parties . . . . . . . . . . . . . . . . 
Proceeds from convertible notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Repayment of convertible notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Proceeds from note payable to related party . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Repayment of note payable to related party . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Proceeds from notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Repayment of notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net cash provided by ﬁnancing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

20,372,271
(1,285,842)
170,000
(70,000)
100,000
(75,000)
5,000
(5,000)
—
(250,000)
18,961,429

467,945
(10,000)
50,000
—
275,000
—
—
—
250,000
—
1,032,945

Net cash increase (decrease) for year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

7,409,704

(586,260)

Cash at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Cash at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 

414,405
7,824,109 $ 

1,000,665
414,405

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the year for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Cash paid during the year for income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 

14,841 $ 
150 $ 

8,333
—

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND 

FINANCING ACTIVITIES:
Conversion of series A-1 preferred stock to common stock . . . . . . . . . . . . . . .  $ 
Notes payable and accrued interest converted to common stock . . . . . . . . . . .  $ 
Notes payable to related parties and accrued interest converted to common 

stock  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Fixed asset purchases in accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Warrants issued to Underwriter  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 

1,225,500 $ 
316,701 $ 

3,832,933
—

156,166 $ 
484,890 $ 
29,820 $ 

—
—
—

See accompanying notes to ﬁ nancial statements.

F-6

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 1: NATURE OF OPERATIONS

Arcimoto,  Inc.  (the  “Company”)  was  originally  formed  on  November  21,  2007  as WTP  Incorporated,  an  Oregon 
Corporation, and later changed its name to Arcimoto, Inc. The Company was founded in order to build products that 
catalyze the shift to a sustainable transportation system. The ﬁ rst step in this shift has been developing an aff ordable, 
daily utility, pure electric vehicle. Over the past ten years, the Company has developed a revolutionary new vehicle 
platform designed around the needs of everyday drivers. Its main product is the Fun Utility Vehicle® (“FUV”), the 
ﬁ rst real fossil-free alternative for the vast majority of daily trips. Compared to the average car, the FUV has dropped 
3/4 of the weight and 2/3 of the footprint in order to bring the joy of aff ordable, ultra-effi  cient, pure electric driving to 
the masses.

Risks and Uncertainties

The Company has commenced revenue generating activities, with its ﬁ rst two deliveries to customers in December 
2017, one of which was to a related party. However, the Company’s business and operations are sensitive to general 
business and economic conditions in the U.S. and worldwide along with governmental policy decisions. A host of 
factors beyond the Company’s control could cause ﬂ uctuations in these conditions. Adverse developments may also 
include:  economic  recessions,  trends  in  car  manufacturing,  consumer  taste,  availability  of  inventory,  and  changes 
in  government  policy  related  to  cars  and  motorcycles,  among  others,  could  have  a  material  adverse  eff ect  on  the 
Company’s ﬁ nancial condition and the results of its operations.

The Company currently has limited sales and marketing and/or distribution capabilities and is still in process of setting 
up facilities to manufacture vehicles on a larger scale. The Company has limited experience in developing, training 
or  managing  a  sales  force  and  will  incur  substantial  additional  expenses  when  we  begin  marketing  of  our  current 
and future products and services. Developing a marketing and sales force is also time consuming and could delay 
launch of our future products and services. In addition, the Company will compete with companies that currently have 
extensive and well-funded marketing and sales operations. Our marketing and sales eff orts may be unable to compete 
successfully against these companies. We also do not have a history of higher-scale production and may encounter 
delays, ﬂ aws, or ineffi  ciencies in the process which may prevent or delay us from achieving higher-scale production 
within the timeline we anticipate. We believe that small scale Retail Series production will commence in the second 
half of 2018; however, delays in receiving machinery, availability of inventory, and machinery customization could 
delay such estimates.

The  Company’s  industry  is  characterized  by  rapid  changes  in  technology  and  customer  demands. As  a  result,  the 
Company’s  products  and  services  may  quickly  become  obsolete  and  unmarketable. The  Company’s  future  success 
will depend on its ability to adapt to technological advances, anticipate customer demands, develop new products and 
services and enhance our current products and services on a timely and cost-eff ective basis. Further, the Company’s 
products and services must remain competitive with those of other companies with substantially greater resources. 
The Company may experience technical or other diffi  culties that could delay or prevent the development, introduction 
or marketing of new products and services or enhanced versions of existing products and services. Also, the Company 
may not be able to adapt new or enhanced products and services to emerging industry standards, and the Company’s 
new products and services may not be favorably received. In addition, we may not have the capital resources to further 
the development of existing and/or new ones.

NOTE 2: GOING CONCERN

The accompanying ﬁ nancial statements have been prepared on a basis that the Company is a going concern, which 
contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has 
experienced recurring operating losses and negative operating cash ﬂ ows since inception.

The  Company  generated  revenues  from  product  sales  for  the  ﬁ rst  time  in  December  2017. The  Company  has  not 
achieved positive earnings and operating cash ﬂ ows to enable the Company to ﬁ nance its operations internally. Funding 
for  the  business  to  date  has  come  primarily  through  the  issuance  of  equity  securities.  We  may  require  additional 
funding in the future to continue to operate in the normal course of business. Accordingly, there is substantial doubt 
about the Company’s ability to continue as a going concern.

F-7

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 2: GOING CONCERN (cont.)

Although the Company’s objective is to increase its revenues from the sales of its products within the next few years 
suffi  cient to generate positive operating and cash ﬂ ow levels, there can be no assurance that the Company will be 
successful  in  this  regard. The  Company  may  also  need  to  raise  additional  capital  in  order  to  fund  its  operations, 
which it intends to obtain through debt and/or equity off erings. The Company intends to use the proceeds from the 
Regulation A off ering (see Note 6) to fund the Company through the end of 2018. Funds on hand and any follow-on 
capital,  if  needed,  will  be  used  to  invest  in  its  business  to  expand  sales  and  marketing  eff orts,  enhance  its  current 
product by continuing research and development to bring the FUV to retail production, to continue to build out its 
production facility, and fund operations until positive cash ﬂ ow is achieved. The need for additional capital may be 
adversely impacted by uncertain market conditions or approval by regulatory bodies.

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accounting and reporting policies of the Company conform with accounting principles generally accepted in the 
United States of America (“GAAP”).

Use of Estimates

The  preparation  of  ﬁ nancial  statements  in  conformity  with  GAAP  requires  management  to  make  estimates  and 
assumptions that aff ect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities 
at the date of the ﬁ nancial statements and the reported amounts of revenues and expenses during the reporting period. 
Actual results could diff er from those estimates.

Fair Value Measurements

The Company’s ﬁ nancial instruments consist primarily of cash and cash equivalents with original maturities of three 
months or less and certiﬁ cates of deposit with original maturities greater than three months. The carrying amounts 
of such ﬁ nancial instruments approximate their respective estimated fair value due to the short-term maturities and 
approximate market interest rates of these instruments. The estimated fair value is not necessarily indicative of the 
amounts the Company would realize in a current market exchange or from future earnings or cash ﬂ ows. The Company 
follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codiﬁ cation (“ASC”) 820-10, Fair 
Value  Measurements  and  Disclosures,  which  deﬁ nes  fair  value,  establishes  a  framework  for  measuring  fair  value, 
and expands disclosures about fair value measurements. The standard provides a consistent deﬁ nition of fair value 
which focuses on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly 
transaction between market participants at the measurement date.

The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity 
speciﬁ c information and establishes a three-level hierarchy for fair value measurements based on the nature of inputs 
used in the valuation of an asset or liability as of the measurement date.

The three-level hierarchy for fair value measurements is deﬁ ned as follows:

• 

• 

Level  1  —  inputs  to  the  valuation  methodology  are  quoted  prices  (unadjusted)  for  identical  assets  or 
liabilities in active markets

Level  2  —  inputs  to  the  valuation  methodology  include  quoted  prices  for  similar  assets  and  liabilities 
in active markets, and inputs that are observable for the asset or liability other than quoted prices, either 
directly or indirectly including inputs in markets that are not considered to be active

• 

Level 3 — inputs to the valuation methodology are unobservable and signiﬁ cant to the fair value measurement

Categorization within the valuation hierarchy is based upon the lowest level of input that is signiﬁ cant to the fair value 
measurement. The carrying amounts reported in the accompanying ﬁ nancial statements for current assets and current 

F-8

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

liabilities approximate the fair value because of the immediate or short-term maturities of the ﬁ nancial instruments. As 
of December 31, 2017 and 2016, the Company did not have any level 2 or level 3 instruments.

Cash and Cash Equivalents

The Company considers deposits that can be redeemed on demand and investments that have original maturities of 
less than three months, when purchased, to be cash equivalents. As of December 31, 2017, approximately $4.1 million 
of the Company’s cash and cash equivalents were deposited in one ﬁ nancial institution, which exceed the federally 
insured  limits. Approximately  $10  million  of  the  Company’s  funds  were  invested  in  certiﬁ cates  of  deposit  with  a 
maximum deposit at any one bank which did not exceed the federally insured limits. As of December 31, 2016, the 
Company’s cash and cash equivalents were deposited in one ﬁ nancial institution, which at times, exceed the federally 
insured limits.

Accounts Receivable

Accounts receivable are reported net of allowance for expected losses. It represents the amount management expects to 
collect from outstanding balances. Diff erences between the amount due and the amount management expects to collect 
are charged to operations in the year in which those diff erences are determined, with an off setting entry to a reserve 
allowance. As of December 31, 2017 and 2016, the Company has no reserve allowance.

Inventory

Inventory is stated at the lower of cost (using the ﬁ rst-in, ﬁ rst-out method “FIFO”) or market. Inventories consist of 
purchased electric motors, electrical storage and transmission equipment and component parts. Inventories consist 
almost entirely of raw materials and component parts as of December 31, 2017 and 2016. Work-in-progress as of 
December 31, 2017 and 2016 was not signiﬁ cant, and there were no ﬁ nished goods.

Property and Equipment

Property and equipment are recorded at cost, less accumulated depreciation. Expenditures for major additions and 
improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. 
When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed 
from  the  accounts  and  any  resulting  gain  or  loss  is  included  in  the  results  of  operations  for  the  respective  period. 
Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for ﬁ nancial 
statement purposes.

The estimated useful lives for signiﬁ cant property and equipment categories are as follows:

Computer Equipment & Software
Furniture and Fixtures
Machinery and Equipment
Leasehold Improvements

Off ering Costs

1 – 3 years
2 – 7 years
5 – 10 years
Shorter of useful or lease life

The Company accounts for off ering costs in accordance with FASB ASC 340, Other Assets and Deferred Costs. Prior 
to  the  completion  of  an  off ering,  off ering  costs  will  be  capitalized  as  deferred  off ering  costs  on  the  balance  sheet. 
The deferred off ering costs will be charged to stockholders’ equity (deﬁ cit) upon the completion of an off ering or to 
expense if the off ering is not completed. As of December 31, 2016, $40,000 off ering costs were capitalized. As of 
December 31, 2017, all deferred off ering costs were charged to stockholders’ equity (deﬁ cit) upon the initial close of 
the Regulation A off ering (see Note 6). As of December 31, 2017, off ering costs charged to stockholders’ equity were 
$1,325,842 which includes the off ering costs for the Regulation A off ering.

F-9

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Impairment of Long-Lived Assets

The Company follows FASB Accounting Standards Codiﬁ cation (“ASC”) 360, Accounting for Impairment or Disposal 
of Long-Lived Assets. ASC 360 requires that if events or changes in circumstances indicate that the cost of long-lived 
assets or asset groups may be impaired, an evaluation of recoverability would be performed by comparing the estimated 
future undiscounted cash ﬂ ows associated with the asset to the asset’s carrying value to determine if a write-down to 
market value would be required. Long-lived assets or asset groups that meet the criteria in ASC 360 as being held for 
sale are reﬂ ected at the lower of their carrying amount or fair market value, less costs to sell.

Customer Deposits

Customer deposits are generally held in a separate deposit account. Revenue is not recognized on customer deposits 
until the vehicle is shipped to the customer.

Warranties

The Company will begin recording warranty reserves with the commencement of Retail Series production of the FUV 
in the second half of 2018. We intend to provide a warranty on all vehicle and production powertrain components and 
battery pack sales, and we will accrue warranty reserves at the time a vehicle or production powertrain component 
is delivered to the customer. Warranty reserves include management’s best estimate of the projected cost to repair or 
to replace any items under warranty, based on actual warranty experience as it becomes available and other known 
factors that may impact our evaluation of historical data. We will review our reserves at least quarterly to ensure that 
our accruals are adequate in meeting expected future warranty obligations, and we will adjust our estimates as needed. 
Warranty expense will be recorded as a component of cost of revenues in the statement of operations. The portion of 
the warranty provision which is expected to be incurred within 12 months from the balance sheet date will be classiﬁ ed 
as current, while the remaining amount will be classiﬁ ed as long-term liabilities.

Revenue Recognition

The Company recognizes revenue when the earnings process is complete on vehicle sales. This generally occurs when 
products are shipped to the customer in accordance with the sales agreement or purchase order, ownership and risk 
of loss pass to the customer, collectability is reasonably assured, and pricing is ﬁ xed or determinable. The Company’s 
shipping  terms  are  generally  F.O.B.  shipping  point,  where  title  is  transferred  and  revenue  is  recognized  when  the 
products are shipped to customers.

Grant Revenue

Revenue from grant revenue is recognized in the period during which the conditions under the grant have been met 
and the Company has made payment for the related expense. Grant revenue was $40,580 and $0 for the years ended 
December 31, 2017 and 2016, respectively. Management believes the loss of such revenues will not have a material 
eff ect on the Company’s operations.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC 718, Compensation — Stock 
Compensation.  Under  the  fair  value  recognition  provisions  of  FASB ASC  718,  stock-based  compensation  cost  is 
measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite 
service period, which is generally the option or warrant vesting period. The Company uses the Black-Scholes option 
pricing model to determine the fair value of stock options and common warrants.

The  Company  measures  compensation  expense  for  its  non-employee  stock-based  compensation  under  FASB ASC 
505-50, Equity-Based Payments to Non-Employees. The fair value of the award issued or committed to be issued is 
used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is 

F-10

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

measured at the value of the Company’s common stock and/or the calculated value based on inputs to the Black-Scholes 
model on the date that the commitment for performance by the counterparty has been reached or the counterparty’s 
performance is complete. The fair value of the equity award is charged directly to stock-based compensation expense 
and credited to additional paid-in capital.

Advertising Costs

Advertising costs are recorded as an expense in the period in which we incur the costs or the ﬁ rst time the advertising 
takes place. Advertising costs expensed were $317,324 and $131,709 for the years ended December 31, 2017 and 
2016, respectively.

Research and Development

Expenses relating to research and development are expensed as incurred. For the years ended December 31, 2017 and 
2016, vehicle and battery research and development consisted of $1,451,394 and $974,806, respectively.

Income Taxes

The Company accounts for income taxes under an asset and liability approach for ﬁ nancial accounting and reporting 
for income taxes. Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of 
diff erences between the ﬁ nancial statements and the tax basis of assets and liabilities.

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not 
to be realized. In the event the Company was to determine that it would be able to realize its deferred tax assets in the 
future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the 
period such determination was made. Likewise, should the Company determine that it would not be able to realize all 
or part of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations 
in the period such determination was made. The Company has incurred losses for tax purposes since inception and has 
signiﬁ cant tax losses and tax credit carry forwards. These amounts are subject to valuation allowances as it is uncertain 
that they will be realized in the next few years.

Net Earnings or Loss per Share

The  Company’s  computation  of  earnings  (loss)  per  share  (“EPS”)  includes  basic  and  diluted  EPS.  Basic  EPS  is 
measured as the income (loss) available to common shareholders divided by the weighted average number of common 
shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive eff ect on a per share 
basis  of  potential  common  shares  (e.g.,  common  stock  warrants  and  common  stock  options)  as  if  they  had  been 
converted  at  the  beginning  of  the  periods  presented,  or  issuance  date,  if  later.  Potential  common  shares  that  have 
an anti-dilutive eff ect (i.e., those that increase income per share or decrease loss per share) are excluded from the 
calculation of diluted EPS.

Loss  per  common  share  is  computed  by  dividing  net  loss  by  the  weighted  average  number  of  shares  of  common 
stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods 
presented because all common stock warrants and common stock options outstanding were anti-dilutive.

At December 31, 2017 and 2016, the Company excluded the outstanding securities summarized below, which entitle 
the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their 
eff ect would have been anti-dilutive.

F-11

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Warrants to purchase common stock  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Stock options to purchase common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Underwriters warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Warrants issued to vendors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Recent Accounting Pronouncements

2017

973,004
984,200
122,238
47,000
2,126,442

2016

980,004
267,700
—
—
1,247,704

In July 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-11, I “Accounting for Certain Financial 
Instruments with Down Round Features” and II “Replacement of the Indeﬁ nite Deferral for Mandatorily Redeemable 
Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests 
with  a  Scope  Exception”.  The  amendments  in  Part  I  of  this  Update  change  the  classiﬁ cation  analysis  of  certain 
equity-linked  ﬁ nancial  instruments  (or  embedded  features)  with  down  round  features. As  a  result,  a  freestanding 
equity-linked ﬁ nancial instrument (or embedded conversion option) no longer would be accounted for as a derivative 
liability at fair value as a result of the existence of a down round feature. The amendments in Part II of this Update 
recharacterize the indeﬁ nite deferral of certain provisions of Topic 480 that now are presented as pending content in 
the Codiﬁ cation, to a scope exception. Those amendments do not have an accounting eff ect. The ASU is eff ective for 
public business entities for ﬁ scal years, and interim periods within those ﬁ scal years, beginning after December 15, 
2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on the 
ﬁ nancial statements and disclosures.

In  May  2017,  the  FASB  issued  ASU-2017-09,  Compensation-Stock  Compensation  (Topic  718)  —  Modiﬁ cation 
Accounting”, to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying 
the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based 
payment  award. The  amendments  in  this ASU  are  eff ective  for  all  entities  for  annual  periods,  and  interim  periods 
within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The Company does not 
expect this update to materially aff ect the Company’s ﬁ nancial statements.

In  February  2016,  the  FASB  issued  ASU  No.  2016-02,  “Leases  (Topic  842)”,  which  signiﬁ cantly  changes  the 
accounting for operating leases by lessees. The accounting applied by lessors is largely unchanged from that applied 
under previous guidance. The new guidance requires lessees to recognize lease assets and lease liabilities in the balance 
sheet, initially measured at the present value of the lease payments, for leases which were classiﬁ ed as operating leases 
under previous guidance. Lease cost included in the statement of income will be calculated so that the cost of the lease 
is allocated over the lease term, generally on a straight-line basis. Lessees may make an accounting policy election to 
exclude leases with a term of 12 months or less from the requirement to record related assets and liabilities. The new 
standard is eff ective for public companies for ﬁ scal years beginning after December 15, 2018. The Company plans to 
adopted the new standard eff ective for periods after December 31, 2018. The Company does not expect the adoption 
of this standard to have a material impact on its results of operations or cash ﬂ ows; however, the Company has not 
determined the impact the adoption of this new standard will have on its ﬁ nancial position

In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606)”, which 
does  not  change  the  core  principles  of ASU  No.  2014-09  discussed  below,  but  rather  clariﬁ es  the  implementation 
guidance in order to eliminate the potential for diversity in practice arising from inconsistent application of the principal 
versus agent guidance. Under the new guidance, when an entity determines it is a principal in a transaction, the entity 
recognizes revenue in the gross amount of consideration; however, in transactions where an entity determines it is 
an agent, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled. 
The standard is eff ective for public companies for annual periods beginning after December 15, 2017. The Company 
adopted the new standard eff ective January 1, 2018. The Company does not expect the adoption of this new standard 
to have a material impact on the Company’s ﬁ nancial position, results of operations or cash ﬂ ows.

F-12

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

In  May  2014,  the  FASB  issued Accounting  Standards  Update ASU  No.  2014-09,  “Revenue  from  Contracts  with 
Customers”,  which  supersedes  existing  revenue  guidance  under  U.S.  GAAP. The  standard’s  core  principle  is  that 
a  company  will  recognize  revenue  when  it  transfers  promised  goods  or  services  to  customers  in  an  amount  that 
reﬂ ects the consideration to which the company expects to be entitled in exchange for those goods or services. The 
implementation of this new standard will require companies to use more judgment and to make more estimates than 
under current guidance and to expand their disclosures to include information regarding contract assets and liabilities 
as  well  as  a  more  disaggregated  view  of  revenue. The  standard,  as  amended,  is  eff ective  for  public  companies  for 
annual periods beginning after December 15, 2017. The Company does not expect the adoption of the standard to have 
a material impact on its ﬁ nancial position, results of operations or cash ﬂ ows.

Management does not believe that any other recently issued, but not yet eff ective, authoritative guidance, if currently 
adopted, would have a material impact on the Company’s ﬁ nancial statement presentation or disclosures.

NOTE 4: PROPERTY AND EQUIPMENT

As of December 31, 2017 and 2016, our property and equipment, net, consisted of the following:

December 31, 
2017

December 31, 
2016

Computer equipment and software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Furniture and ﬁxtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Machinery and equipment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Leasehold improvements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Fixed assets in process  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Less: accumulated depreciation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 

60,696 $ 
50,996
1,658,976
297,025
462,531
2,530,224
(96,198)
2,434,026 $ 

36,522
4,157
32,393
11,824
—
84,896
(76,091)
8,805

Fixed assets in process is comprised primarily of tooling and equipment related to the manufacturing of our vehicles. 
The total purchase commitments for Fixed assets in process as of December 31, 2017 and 2016 was $573,095 and $0, 
respectively. Completed assets are transferred to their respective asset class and depreciation begins when the asset is 
ready for its intended use.

Depreciation expense during the years ended December 31, 2017 and 2016 was $20,107 and $7,951, respectively.

NOTE 5: NOTES PAYABLE

Notes payable and accrued interest as of December 31, 2017 and 2016 are as follows:

Principal

Accrued Interest

Business Development Loan . . . . . . . . . . . . . . . . . . . . . $ 
Convertible Notes Payable  . . . . . . . . . . . . . . . . . . . . . .
Convertible Notes Payable to Related Parties . . . . . . . .

$ 

December 31, 
2017

December 31, 
2017

December 31, 
2016

December 31, 
2016
250,000 $ 
275,000
50,000
575,000 $ 

— $ 
—
—
— $ 

— $ 
—
—
— $ 

—
3,322
384
3,706

On  December  4,  2015,  the  Company  entered  into  a  $250,000  loan  agreement  with  the  City  of  Eugene  Business 
Development Fund; however, the funds for the loan were not received until April 1, 2016. This loan was secured by 
substantially all assets of the Company and had an interest rate of 5% per annum. Interest only payments were due 
monthly from the date of disbursement. The entire unpaid principal balance of the loan, plus accrued interest, was due 
and payable upon the earlier of the occurrence of a Regulation A off ering or October 1, 2017. The note was repaid on 
September 21, 2017 in full, after the ﬁ rst closing of the Regulation A off ering.

F-13

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 5: NOTES PAYABLE (cont.)

During the years ended December 31, 2017 and 2016, the Company issued a series of convertible notes with original 
principal balances of $200,000 and $325,000, respectively, all with the same terms as disclosed below. Of these notes 
$100,000 and $50,000, respectively, were to related parties. The notes and all accrued interest were due on March 31, 
2018. The  notes  were  secured  by  substantially  all  assets  of  the  Company  and  had  a  stated  interest  rate  of  6%  per 
annum. The notes were convertible on demand at the greater of $5.00 per share or 90% of the active selling price of 
the Series A-1 Preferred Stock at the time of conversion. Notes totaling $450,000, of which $150,000 was for related 
parties, with accrued interest thereon of approximately $23,000 were converted to 80,832 shares of common stock on 
August 31, 2017, at a price of $5.85 per share, which represented 90% of the $6.50 per share price in the Regulation A 
off ering. Notes totaling $75,000 were repaid in cash along with accrued interest thereon of $354.

During September 2017, the Company issued two convertible notes to related parties in the total principal amount of 
$70,000. The notes and all accrued interest were due on March 31, 2018. These notes were secured by substantially all 
assets of the Company and had a stated interest rate of 6% per annum. The notes were convertible on demand at the greater 
of $6.50 per share of common stock or 90% of the active selling price of the common stock at the time of conversion. The 
notes principal balance of $70,000 and accrued interest of $232 was repaid in cash on September 29, 2017.

On September 11, 2017, the Company borrowed $5,000 from a related party, no security was issued for the loan. The 
loan was meant to be a short-term advance and due on demand. The loan was repaid on October 26, 2017 and there is 
no interest associated with this advance.

None of the above convertible notes contained a beneﬁ cial conversion feature due to the conversion price of the notes 
being at or above the fair value of the Series A-1 preferred stock or common stock, as applicable, on the issuance date.

NOTE 6: STOCKHOLDERS’ EQUITY (DEFICIT)

Stock-Split

On July 21, 2017, the Board and a majority of common stockholders voted to enact a two-for-one common stock split 
and increase the authorized common shares to 20,000,000. On July 25, 2017, a majority of the Series A-1 Preferred 
stockholders voted to convert all 1,434,891 Series A-1 Preferred shares to 2,869,782 common shares. The July 21, 
2017, two-for-one common stock split resulted in a conversion rate of two shares of common stock for each share of 
Series A-1 Preferred stock. In accordance with SEC reporting guidelines, the retrospective application of the stock 
split has been applied to historical ﬁ nancial information, and the Series A-1 Preferred to common stock conversion 
was reﬂ ected in the accompanying ﬁ nancial statements as if it occurred as of December 31, 2016.

Preferred Stock

The Company is authorized to issue 5,000,000 shares of preferred stock, no par value, of which 1,500,000 shares were 
designated as Series A-1 Preferred Stock. As of December 31, 2017 and 2016, there were no shares of Series A-1 
Preferred Stock issued and outstanding.

The  Series A-1  Preferred  Stock  is  convertible  at  any  time  after  issuance  at  the  option  of  the  holder  into  shares  of 
common stock at the original issue price of the Series A-1 Preferred Stock. The Series A-1 Preferred Stock is also 
subject  to  mandatory  conversion  provisions  upon  an  initial  public  off ering  raising  $15  million  or  more  and  is  not 
redeemable. To  prevent  dilution,  the  conversion  price  of  the  Series A-1  Preferred  Stock  is  to  be  adjusted  for  any 
issuance of securities, excluding exempt securities, which change the number of shares of common stock outstanding. 
The Series A-1 Preferred Stockholders are entitled to equal voting rights to common stockholders on an as-converted 
basis  and  receive  preference  to  the  common  stockholders  upon  liquidation.  During  the  ﬁ rst  two  quarters  of  2017, 
245,100 shares of Series A-1 Preferred Stock were sold for cash proceeds of $1,225,500 under a Regulation D off ering. 
Of these shares, 10,000 were issued to a related party. The Series A-1 Preferred Stock was converted to common stock 
as noted above.

F-14

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 6: STOCKHOLDERS’ EQUITY (DEFICIT) (cont.)

Common Stock

The Company is authorized to issue 20,000,000 shares of common stock, no par value, as of December 31, 2017 and 
2016.

During September and October 2017, the Company issued 2,945,657 shares of common stock in a Regulation A off ering 
at a public off ering price of $6.50 per share. We received net proceeds of $18,087,640 after deducting underwriter 
commissions of $1,051,131 and escrow closing fees of $8,000.

On October 4, 2017, we issued 4,000 shares of common shares at a cost of $5.25 per share were issued to a vendor 
in exchange for video production services. The price per share was based on the closing quote for the Company’s 
common stock on the Nasdaq Capital Market the day before the Board of Directors approved the payment. The total 
cost of $21,000 is included in sales and marketing expenses on the Company’s Statement of Operations.

The Company has reserved a total of 2,000,000 shares of its common stock pursuant to the Equity Incentive Plans (see 
Note 7). The Company has 1,957,204 and 1,247,704 stock options and warrants outstanding under these plans as of 
December 31, 2017 and 2016, respectively.

During 2017, the Company has reserved an additional 169,238 shares of its common stock for warrants pursuant to 
the Underwriter Agreement for the Regulation A off ering and other vendor agreements (Note 7). As of December 31, 
2017, 139,238 of these warrants have vested.

NOTE 7: STOCK-BASED PAYMENTS

The Company grants stock options and warrants pursuant to the 2015 Stock Incentive Plan (“2015 Plan”) and the 2012 
Stock Incentive Plan (“2012 Plan”).

The Company measures employee stock-based awards at grant-date fair value and recognizes employee compensation 
expense on a straight-line basis over the vesting period of the award. Grants to non-employees are expensed at the 
earlier of (i) the date at which a commitment for performance by the counterparty to earn the equity instrument is 
reached and (ii) the date at which the counterparty’s performance is complete

Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions, including 
the fair value of the Company’s common stock, and for stock options, the expected life of the option, and expected 
stock price volatility. The Company uses the Black-Scholes option pricing model to value its stock option awards. 
The  assumptions  used  in  calculating  the  fair  value  of  stock-based  awards  represent  management’s  best  estimates 
and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and 
management uses diff erent assumptions, stock-based compensation expense could be materially diff erent for future 
awards.

The  Company  uses  the  following  inputs  when  valuating  stock-based  awards. The  expected  life  of  employee  stock 
options  was  estimated  using  the  “simpliﬁ ed  method,”  as  the  Company  has  no  historical  information  to  develop 
reasonable  expectations  about  future  exercise  patterns  and  employment  duration  for  its  stock  option  grants.  The 
simpliﬁ ed method is based on the average of the vesting tranches and the contractual life of each grant. The expected 
life of awards that vest immediately use the contractual maturity since they are vested when issued. For stock price 
volatility,  the  Company  uses  public  company  compatibles  and  historical  private  placement  data  as  a  basis  for  its 
expected volatility to calculate the fair value of option grants. The risk-free interest rate is based on U.S. Treasury notes 
with a term approximating the expected life of the option at the grant-date.

F-15

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 7: STOCK-BASED PAYMENTS (cont.)

Stock-based compensation, including stock-options, warrants and stock issued for compensation is included in the 
statement of operations as follows:

Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Sales and marketing  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

24,000 $ 
27,000
152,734

—
—
48,375

December 31, 
2017

December 31, 
2016

2015 Stock Incentive Plan

The 2015 Stock Incentive Plan (the “2015 Plan”) of the Company was approved by the written consent of the holders 
of a majority of the Company’s outstanding common stock. The Plan provides the Company the ability to grant to any 
employee, director, consultant or advisor who provides services to the Company the opportunity to acquire shares of 
Common Stock of the Company through the grant of options that are incentive stock options or nonqualiﬁ ed stock 
options (NQSOs) and/or the grant of restricted stock, provided that only employees are entitled to receive incentive 
stock  options  in  accordance  with  IRS  guidelines. The  Company  reserved  1,000,000  shares  of  common  stock  for 
delivery under the 2015 Plan. Awards that are forfeited generally become available for grant under the plan.

See below for the weighted average variables used in assessing the fair value at the grant dates:

2017

Annual dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total grant date fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 

—
6.0-10.0
1.71-2.46%
21.3%-22.1%
503,260

Employee stock-based compensation expense included in operating expenses for the years ended December 31, 2017 
and 2016, was $136,002 and $48,375, respectively.

For  the  NQSOs  issued  in  2017,  performance  was  completed  on  the  date  of  issue. The  fair  value  of  non-employee 
awards was $22,445 for the year ended December 31, 2017.

Total compensation cost related to non-vested awards not yet recognized as of December 31, 2017 was $429,403 and 
will be recognized on a straight-line basis through the end of the vesting periods, December, 2020. Future stock option 
compensation expense related to these options to be recognized during the years ending December 31, 2018, 2019, and 
2020 is expected to be approximately $207,000 and $153,000 and $69,000, respectively. The amount of future stock 
option compensation expense could be aff ected by any future option grants or by any forfeitures.

F-16

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 7: STOCK-BASED PAYMENTS (cont.)

A summary of stock option activity for the years ended December 31, 2017 and 2016 is presented below for the 2015 
Plan:

Number of 
Shares

Weighted 
Average 
Exercise 
Price

Weighted 
Average 
Remaining 
Contractual 
Life (in 
Years)

Options outstanding at December 31, 2015 . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options outstanding at December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Options outstanding at December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . .

275,200 $ 
—
—
(7,500)
267,700 $ 
756,500
—
(40,000)
984,200 $ 

Options exercisable at December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . .

232,284 $ 

2.06
—
—
2.06
2.06
2.70
—
2.50
2.71

2.06

As of December 31, 2017, 15,800 options are still issuable under the 2015 Plan.

9.76
—
—
—
8.76
9.42
—
—
8.97

7.76

2012 Employee Stock Beneﬁ t Plan

The Amended  and  Restated  2012  Employee  Stock  Beneﬁ t  Plan  (the  “2012  Plan”)  of  the  Company  was  approved 
by the written consent of the holders of a majority of the Company’s outstanding common stock. The Plan provides 
the Company the ability to grant to any offi  cer, director, or employee of the Company, or any Consultant, advisor or 
independent contractor who provides services to the Company, the opportunity to acquire shares of Common Stock of 
the Company through the grant of warrants and/or the grant of common stock. The Company reserved 1,000,000 shares 
of common stock for delivery under the Plan. Warrants issued and outstanding as of December 31, 2017 and 2016 were 
973,004 and 980,004. Warrants expire ten to ﬁ fteen years from the grant date and were vested when issued.

On May 1, 2017, 8,000 warrants were issued to a service provider with a strike price of $2.50 per share and a ﬁ ve-year 
life. The Black-Scholes variables used in assessing the fair value at the grant date were an expected life of 5 years, risk 
free interest rate of 1.84% and expected volatility of 21.34%.

On September 20, 2017, 15,000 employee warrants were exercised in a cashless transaction resulting in the issuance 
of 13,846 common shares.

F-17

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 7: STOCK-BASED PAYMENTS (cont.)

A summary of activity under the 2012 Plan for the years ended December 31, 2017 and 2016 is presented below:

Number of 
Shares

Weighted 
Average 
Exercise 
Price

Weighted 
Average 
Remaining 
Contractual 
Life (in 
Years)

Warrants outstanding at December 31, 2015  . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrants outstanding at December 31, 2016  . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warrants outstanding at December 31, 2017  . . . . . . . . . . . . . . . . . . . . . .

980,004 $ 
—
—
—
980,004 $ 
8,000
(15,000)
—
973,004 $ 

0.58
—
—
—
0.58
2.50
0.50
—
0.59

As of December 31, 2017, 11,996 warrants are still issuable under the 2012 Plan.

8.36
—
—
—
7.36
4.33
—
—
6.37

Warrants

The following warrants were issued outside of the 2012 Plan.

Warrants issued to vendors to purchase common stock
Underwriters warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Warrants issued to vendors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Exercise 
Price

7.475
3.200

Vested as of 
December 31, 
2017
122,238
17,000
139,238

Issued

122,238
47,000
169,238

In connection with our Regulation A off ering, the Company issued 122,238 warrants to the underwriter with a strike 
price of $7.475 per share and a ﬁ ve-year life from the off ering qualiﬁ cation date. The variables used in the Black-Scholes 
calculation were similar to those disclosed under the 2015 Plan and 2012 Plan disclosed above, with the exception that 
the contractual date was used for expected life. The value of the warrants is both an increase and decrease to common 
stock as a cost of equity, for a net zero eff ect within the statement of stockholders’ equity.

In December 2017, 47,000 warrants were issued to two service providers with strike prices of $3.20 per share and a 
ten-year life. Of these, 11,000 warrants vest as follows: 5,000 immediately and 1,500 per month over four months. As 
of December 31, 2017, 5,000 of these were vested with a value of $5,805. The remaining 36,000 warrants are subject 
to deliverables being met. As of December 31, 2017, deliverables related to 12,000 of these warrants were met and are 
deemed vested with a value of $13,932 based on inputs to the Black-Scholes model, similar to those disclosed under 
the 2015 Plan and 2012 Plan above. Future warrants that become vested will be valued each reporting period or as the 
deliverables are met, as applicable.

NOTE 8: INCOME TAXES

The  2017 Tax Act,  which  was  signed  into  law  on  December  22,  2017,  has  resulted  in  signiﬁ cant  changes  to  the 
U.S. corporate income tax system. These changes include a federal statutory rate reduction from 35% to 21%, the 
elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest 
expense  and  executive  compensation. The  2017 Tax Act  also  transitions  international  taxation  from  a  worldwide 
system to a modiﬁ ed territorial system and includes base erosion prevention measures on non-U.S. earnings, which 
has the eff ect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low taxed 
income (GILTI). These changes are eff ective beginning in 2018.

F-18

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 8: INCOME TAXES (cont.)

Deferred income taxes reﬂ ect the net tax eff ects of temporary diff erences between the carrying amounts of assets and 
liabilities for ﬁ nancial reporting purposes and the amounts used for income tax purposes. Signiﬁ cant components of 
the Company’s deferred tax assets as of December 31, 2017 and 2016 are summarized below:

2017

2016

Deferred tax assets:

Share-based compensation expense  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 
Net operating loss carry forward  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

88,211 $ 

2,434,289

42,854
2,112,856

Deferred tax liabilities:

Property and equipment  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Federal research and development credit  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Oregon research and development credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Valuation Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 

(24,878)
259,615
129,675
2,886,912
(2,886,912)

— $ 

(15,387)
178,158
83,012
2,401,493
(2,401,493)
—

In  assessing  the  potential  realization  of  these  deferred  tax  assets,  management  considers  whether  it  is  more  likely 
than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax 
assets is dependent upon the Company attaining future taxable income during the periods in which those temporary 
diff erences  become  deductible. As  of  December  31,  2017  and  2016,  management  was  unable  to  determine  if  it  is 
more likely than not that the Company’s deferred tax assets will be realized, and has therefore recorded an appropriate 
valuation allowance against deferred tax assets at such dates. The valuation allowance for deferred tax assets increased 
approximately $485,000 and $836,000 during the years ended December 31, 2017 and 2016, respectively.

No federal tax provision has been provided for the years ended December 31, 2017 and 2016 due to the losses incurred 
during such periods. The Company’s eff ective tax rate is diff erent from the federal statutory rate of 34% due primarily 
to operating losses that receive no tax beneﬁ t as a result of a valuation allowance recorded for such losses.

Statutory U.S. Federal tax rate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Effect of U.S. tax law change(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
State and local income taxes – net of Federal beneﬁt . . . . . . . . . . . . . . . . . . . . . . 
Nondeductible expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Valuation Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Effective rate tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2017

2016

34.0%
(30.0)%
6.6%
4.0%
(14.6)%
0.0%

34.0%
—
6.6%
3.0%
(43.6)%
0.0%

(1)  Due to the Tax Act, our U.S. deferred tax assets and liabilities as of December 31, 2017 were re-measured from 34% to 21%. 
The change in tax rate resulted in a decrease to our gross U.S. deferred tax assets which is off set by a corresponding decrease 
to our valuation allowance. This resulted in an adjustment to the Company’s deferred tax assets of $676,000 from the prior 
period.

As of December 31, 2017, the Company had net operating loss carry forwards of approximately $8,820,000 which will 
expire at various dates from 2029 through 2037. The Federal R&D tax credits will expire at various dates from 2032 
through 2037, and the Oregon R&D tax credits will expire at various dates from 2018 through 2022.

The  Company  has  evaluated  its  income  tax  positions  and  has  determined  that  it  does  not  have  any  uncertain  tax 
positions. The Company policy is to record interest and penalties on uncertain tax positions as income tax expense. 
The Company may in the future become subject to federal, state and local income taxation though it has not been since 
its inception. The Company is not presently subject to any income tax audit in any taxing jurisdiction.

The Company has identiﬁ ed the United States Federal and Oregon State tax returns as its “major” tax jurisdiction. 
The United States Federal and Oregon State return years 2014 through 2017 are still subject to tax examination by the 
United States Internal Revenue Service; however, we do not currently have any ongoing tax examinations.

F-19

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 9: CUSTOMER DEPOSITS

The Company has received customer deposits ranging from $100 to $10,100 per order for Retail Series production 
vehicles and $42,000 per order for Signature Series vehicles for purposes of securing their vehicle production slot. As 
of December 31, 2017 and 2016, the Company’s balance of deposits received was $399,967 and $386,035, respectively. 
As of December 31, 2017 and 2016, $231,967 and $386,035, respectively, of these deposits were refundable upon 
demand. Deposits are included in current liabilities in the accompanying balance sheets. When a customer’s order is 
ready to enter the production process, the customer is notiﬁ ed that if they would like to proceed with the purchase of 
a vehicle, their deposit will no longer be refundable and any additional deposit required must be paid prior to the start 
of the manufacturing process. Customer deposits from related parties total $1,700 and $43,700 as of December 31, 
2017 and 2016, respectively.

NOTE 10: COMMITMENTS AND CONTINGENCIES

On September 3, 2017, the Company entered into a lease on 30,000 square feet of commercial industrial offi  ce and 
manufacturing space in Eugene, Oregon. The lease began on October 1, 2017 and will terminate on March 31, 2021. 
Rent was $25,000 for the ﬁ rst month, then is $12,500 per month for months two through forty-one, and one dollar for 
month forty-two. See the following table for future minimum rent payments by year.

Years ending December 31:

2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 
2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 
2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 
2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 

150,000
150,000
150,000
25,001

The Company also leased offi  ce space from Center Camp, LLC (“Landlord”) whereby the sole member is the Company’s 
Chief Executive Offi  cer and director. The triple net lease was for 5,094 usable square feet in Eugene, Oregon. The lease 
began on May 1, 2013 and was set to terminate on April 30, 2018. The lease may be terminated by written notiﬁ cation 
(90) days in advance of intent to vacate the Premises, provided that the Company pays a termination charge equal 
to 6 months’ rent. The Landlord and the Company mutually agreed to terminate the lease as of December 31, 2017, 
without penalty in order to facilitate the landlord’s sale of the property. During the year ended December 31, 2017, 
$61,200 in rent was paid to Center Camp, LLC.

Rent expense is recognized on a straight-line basis. Total rent expense for the years ended December 31, 2017 and 
2016 was $107,645 and $61,740, of these amounts $62,405 and $54,600 was to related parties, respectively.

Underwriter Agreement

Details in Note 7 above.

Litigation

The Company is involved in claims and litigation from time to time in the normal course of business. At December 31, 
2017, the management of the Company believes there are no pending matters that are expected to have a material 
adverse eff ect on the business of the Company, their ﬁ nancial condition, results of operations or cash ﬂ ows. See also 
Note 11 Subsequent Events.

NOTE 11: SUBSEQUENT EVENTS

Common Stock

On January 29, 2018, 15,000 employee warrants with an exercise price of $0.50 per share were exercised in a cashless 
transaction at a market price of $3.77756 per share, which was based on the average of the FUV daily closing prices 
from January 19-25, 2018, total shares issued were 13,014. These shares meet the requirements for not being restricted 
from trading.

F-20

ARCIMOTO, INC.
NOTES TO FINANCIAL STATEMENTS

NOTE 11: SUBSEQUENT EVENTS (cont.)

On January 31, 2018, 14,200 employee options were exercised at a price per share of $2.0605, total proceeds to the 
Company were $29,259. These shares are restricted from trading.

In February 2018, the Company issued 20,000 shares of restricted common stock to a vendor for investor relations 
services.

Equipment Financing

The  Company  is  seeking  ﬁ nancing  for  its  capital  equipment  purchases.  Subsequent  to  December  31,  2017,  it  has 
ﬁ nanced a total of $942,474 with monthly payments ranging from $437 to $6,897 and periods ranging from 48 to 
60 months.

Litigation

On  March  11,  2018,  the  Company  was  served  with  a  lawsuit  entitled  John  R  Switzer  vs W.R.  Hambrecht  &  Co. 
LLC et al., case number: CGC-18-564904, ﬁ led in San Francisco County Superior Court in the State of California. 
In this action, the Company been named as defendants along with our directors and certain executive offi  cers at the 
time of the completion of its Regulation A off ering on September 21, 2017. The action purports to be a class action 
on behalf of all those who purchased the Company’s common stock in its Regulation A off ering alleging violations 
of Section 12(a)(2) and Section 15 of the Securities Act of 1933, as amended. The plaintiff  is seeking damages in 
an unspeciﬁ ed amount to be proven at trial. In addition, On March 28, 2018, the Company was served with another 
lawsuit entitled Jay Mendelson v. Arcimoto, Inc. et al., case number CGC-18-565324, ﬁ led in San Francisco County 
Superior Court in the State of California. In this action the Company has also been named as a defendant along with 
its directors and certain executive offi  cers at the time of the completion of our Regulation A off ering on September 21, 
2017. The factual allegations and alleged violations are substantially similar to the Switzer action and the plaintiff  is 
also seeking damages in an unspeciﬁ ed amount to be proven at trial. The Company believes these lawsuits are without 
merit and the Company intends to vigorously defend these actions in court.

F-21

[THIS PAGE INTENTIONALLY LEFT BLANK.]

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly 
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Date: March 30, 2018

ARCIMOTO, INC.

By:

/s/ Mark Frohnmayer
Mark Frohnmayer
President, Chief Executive Officer and 
Chairman of the Board of Directors

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following 
persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature

/s/ Mark Frohnmayer
Mark Frohnmayer

Capacity

President, Chief Executive Officer and
Chairman of the Board of Directors
(principal executive officer)

Date

March 30, 2018

/s/ Douglas M. Campoli
Douglas M. Campoli

Chief Financial Officer 
(principal ﬁnancial and accounting officer)

March 30, 2018

/s/ Terry Becker
Terry Becker

/s/ Thomas Thurston
Thomas Thurston

/s/ Jeff Curl
Jeff Curl

Chief Operating Officer and Director

March 30, 2018

Director

Director

March 30, 2018

March 30, 2018

30

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

EXHIBIT 31.1

I, Mark Frohnmayer, certify that:

1. 

2. 

3. 

4. 

I have reviewed this Annual Report on Form 10-K of Arcimoto, Inc. (the registrant);

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a 
material fact necessary to make the statements made, in light of the circumstances under which such statements 
were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the ﬁ nancial statements, and other ﬁ nancial information included in this report, fairly 
present in all material respects the ﬁ nancial condition, results of operations and cash ﬂ ows of the registrant as of, 
and for, the periods presented in this report;

The  registrant’s  other  certifying  offi  cer(s)  and  I  are  responsible  for  establishing  and  maintaining  disclosure 
controls and procedures (as deﬁ ned in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to 
be designed under our supervision, to ensure that material information relating to the registrant, including 
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the 
period in which this report is being prepared;

(b) 

(Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

(c)  Evaluated  the  eff ectiveness  of  the  registrant’s  disclosure  controls  and  procedures  and  presented  in  this 
report our conclusions about the eff ectiveness of the disclosure controls and procedures, as of the end of 
the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over ﬁ nancial reporting that occurred 
during  the  registrant’s  most  recent  ﬁ scal  quarter  (the  registrant’s  fourth  ﬁ scal  quarter  in  the  case  of  an 
annual  report)  that  has  materially  aff ected,  or  is  reasonably  likely  to  materially  aff ect,  the  registrant’s 
internal control over ﬁ nancial reporting; and

5. 

The registrant’s other certifying offi  cer(s) and I have disclosed, based on our most recent evaluation of internal 
control over ﬁ nancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of 
directors (or persons performing the equivalent functions):

(a)  All signiﬁ cant deﬁ ciencies and material weaknesses in the design or operation of internal control over 
ﬁ nancial reporting which are reasonably likely to adversely aff ect the registrant’s ability to record, process, 
summarize and report ﬁ nancial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a signiﬁ cant 

role in the registrant’s internal control over ﬁ nancial reporting.

Date: March 30, 2018

By:

/s/ Mark Frohnmayer
Mark Frohnmayer
President and Chief Executive Officer

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

EXHIBIT 31.2

I, Douglas M. Campoli, certify that:

1. 

2. 

3. 

4. 

I have reviewed this Annual Report on Form 10-K of Arcimoto, Inc. (the registrant);

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a 
material fact necessary to make the statements made, in light of the circumstances under which such statements 
were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the ﬁ nancial statements, and other ﬁ nancial information included in this report, fairly 
present in all material respects the ﬁ nancial condition, results of operations and cash ﬂ ows of the registrant as of, 
and for, the periods presented in this report;

The  registrant’s  other  certifying  offi  cer(s)  and  I  are  responsible  for  establishing  and  maintaining  disclosure 
controls and procedures (as deﬁ ned in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to 
be designed under our supervision, to ensure that material information relating to the registrant, including 
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the 
period in which this report is being prepared;

(b) 

(Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

(c)  Evaluated  the  eff ectiveness  of  the  registrant’s  disclosure  controls  and  procedures  and  presented  in  this 
report our conclusions about the eff ectiveness of the disclosure controls and procedures, as of the end of 
the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over ﬁ nancial reporting that occurred 
during  the  registrant’s  most  recent  ﬁ scal  quarter  (the  registrant’s  fourth  ﬁ scal  quarter  in  the  case  of  an 
annual  report)  that  has  materially  aff ected,  or  is  reasonably  likely  to  materially  aff ect,  the  registrant’s 
internal control over ﬁ nancial reporting; and

5. 

The registrant’s other certifying offi  cer(s) and I have disclosed, based on our most recent evaluation of internal 
control over ﬁ nancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of 
directors (or persons performing the equivalent functions):

(a)  All signiﬁ cant deﬁ ciencies and material weaknesses in the design or operation of internal control over 
ﬁ nancial reporting which are reasonably likely to adversely aff ect the registrant’s ability to record, process, 
summarize and report ﬁ nancial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a signiﬁ cant 

role in the registrant’s internal control over ﬁ nancial reporting.

Date: March 30, 2018

By:

/s/ Douglas M. Campoli
Douglas M. Campoli
Chief Financial Officer

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EXHIBIT 32.1

In accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 
Mark Frohnmayer, President and Chief Executive Offi  cer of Arcimoto, Inc. (the “registrant”), and Douglas M. Campoli, 
Chief Financial Offi  cer of the registrant, each hereby certiﬁ es that, to the best of their knowledge:

1. The registrant’s Annual Report on Form 10-K for the period ended December 31, 2017, to which this Certiﬁ cation 
is attached as Exhibit 32.1 (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of 
the Securities Exchange Act of 1934, as amended; and

2. The  information  contained  in  the  Report  fairly  presents,  in  all  material  respects,  the  ﬁ nancial  condition  of  the 
registrant at the end of the period covered by the Report and results of operations of the registrant for the periods 
covered by the Report.

Date: March 30, 2018

By:

/s/ Mark Frohnmayer
Mark Frohnmayer
President and Chief Executive Officer

/s/ Douglas M. Campoli
Douglas M. Campoli
Chief Financial Officer

Board of Directors

Mark D. Frohnmayer, Chairman
President and Chief Executive Offi  cer, Arcimoto, Inc.

Terry L. Becker, Director
Chief Operating Offi  cer, Arcimoto, Inc.

Jeff  Curl, M.B.A., Director
Chief Financial Offi  cer and Chief Operating Offi  cer, Summit Beneﬁ t and Actuarial Services, Inc.
Senior  Partner  and  Architect  of  the  Aff ordable  Care  Act  Service  Model,  Summit  Beneﬁ t  and 
Actuarial Services, Inc. 

Thomas Thurston, M.B.A., J.D., Director
Managing Director, WR Hambrecht Ventures
Founder, Growth Science International, LLC 

Financial Reports

Copies  of  the  Company’s  Annual  Report  on  Form  10K  as  ﬁ led  with  the  Securities  and 
Exchange Commission are available at www.arcimoto.com or on request, free of charge, by 
calling (541) 683-6293 or emailing investor@arcimoto.com.

2034 West 2nd Avenue 
Eugene, Oregon 97402
Phone: (541) 683-6293
www.arcimoto.com