Hello, and welcome to Electrovaya Fourth Quarter and Year-End 2021 Financial Results Analyst Conference Call. At this time, all participants should be in listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Richard Halka, Executive Vice President and CFO for Electrovaya. Please go ahead, sir.
Thank you very much, Kevin. Good morning, everyone, and thank you for joining us on today's conference call to discuss Electrovaya's Q4 and fiscal 2021 financial results. Today's call is being hosted by Dr. Sankar Das Gupta, CEO of Electrovaya, and myself, Richard Halka, Executive Vice President and CFO. On December 20th, 2021, Electrovaya issued a press release concerning its business highlights financial results for the three and 12-month period ended September 30, 2021. If you would like a copy of the release, you can access it on our website. If you wanna view our financial statements, management discussion and analysis, and annual information form or AIF, you can access those documents on the SEDAR website at www.sedar.com. As with previous calls, our comments today are subject to normal provisions related to forward-looking information.
We will provide information relating to our current views regarding trends in our markets, including their size and potential for growth, and our competitive position in our target markets. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and actual results may differ materially from those expressed or implied in such statements. Additional information about factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the company's press release announcing the fiscal 2021 annual and fourth quarter results, and the most recent AIF and management discussion and analysis under risks and uncertainties, as well as in other public disclosure documents filed with Canadian securities regulatory authorities. Also, please note that all numbers discussed on this call are in U.S. dollars unless otherwise noted.
Now I'd like to turn the call over to Dr. Sankar Das Gupta. Sankar?
Thank you, Richard, and good morning, everyone. I'd like to start this morning and highlight some of Electrovaya's initiatives and our progress. We had revenues of about CAD 14.8 million or $11.6 million, which is excellent considering that a new OEM corporate sales team took over the OEM sales space from our earlier OEM distribution team. There was always a learning time gap between the two teams, building new websites, training new sales and marketing teams. Ultimately, we believe the corporate team has more resources with higher reach and will do much better. Furthermore, the chip and component shortage in the auto industry and COVID also impacted our revenues. In the coming year, we are expecting our sales revenue to more than double to about $27 million or CAD 34 million.
The revenue is anticipated to be generated from both direct sales and OEM sales. The OEM strategic supply agreement has an exclusivity provision which is triggered starting January 1st, 2022, where the OEM must make annual purchases of over $15 million to maintain exclusivity, and we believe they will be able to maintain their exclusivity. The users of our batteries are a wide and diverse group, including groceries, e-retailers, manufacturers, logistics, hardware stores, distribution centers, among others, and the market is expanding and emerging. Our second significant item this year was on financing. We had applied for a base shelf of $100 million, which allows flexible financing. We have extended our working capital line and our two principal promissory notes. Richard will explain more of our financial highlights later.
Technically, we believe the most important advantage Electrovaya has over our competition is a truly exceptional battery with industry-leading safety and longevity. Our battery cycle life and safety are critical differentiators for us. We believe they are game-changers and fundamental to our current and future success. Safety is a key important technological differentiator as OEMs in recent years have major vehicle recalls due to battery safety incidents, all costing several billion dollars. Unsafe batteries in electric mobility are expensive to recall. The longevity of our battery is industry-leading, and we have named this line as our Infinity Battery product line. This Infinity Battery product line meets the demand from commercial users who not only need the safest battery, but also the lowest cost on a holistic basis. Our Infinity line fulfills both these requirements.
We believe commercial electric mobility applications, such as electric materials handling vehicles, electric buses, and electric trucks, needs the safety and longevity performance of the Electrovaya battery. I will now turn the call over to Richard to review our fiscal 2022 and fourth quarter results in greater detail. Richard?
Thank you, Sankar. Revenue for Q4 fiscal year 2021 was $4.2 million compared to $6.9 million for Q4 2020. It increased significantly compared to $1.9 million for Q3 2021. It was our strongest quarter of the year. Revenue for fiscal year 2021 was $11.6 million, compared to $14.5 million for fiscal year 2020. The year-over-year decline was primarily due to a reduced order volume resulting from a transition to the OEM supply agreement, as Sankar has mentioned. This agreement brought new sales and corporate teams. Management believes the sales cycle is relatively long for these customers. There was continued disruption in the supply chain as well as component shortages, as Sankar has discussed. We are encouraged by the strong quarterly sequential growth and believe the situation has improved moving into 2021.
We're receiving strong indications from our major customers that our order volumes will increase. Our gross margin for fiscal year 2021 was 34%, which was consistent with fiscal year 2020. Our objective is to maintain gross margin in the range of 30%-35%. Our margin varies with a number of factors, including the product mix, special customer pricing, material costs, shipping costs, foreign exchange movement. In the current fiscal year, there's been an increase in the price of some components, most significantly the cost of steel, which has recently stabilized, which impacts the cost of battery enclosures. However, this was offset by pricing adjustments due to the increase in our energy density. This allowed us to maintain the margins at the same level.
The company's financial position improved in fiscal year 2021 as at September 30th, current assets were $12 million, an increase of $4 million over fiscal year 2020. Current liabilities were $13.5 million, a decrease of $3 million over fiscal year 2020. The equity deficiency was -$1.7 million, a reduction of $7 million over the fiscal year-end 2020. As Sankar has also mentioned, in December 2021, the company filed a base shelf prospectus. The base shelf prospectus is valid for a 25-month period and permits the offering of debt and securities for up to a total of $100 million by filing supplements to the shelf, thereby fast-tracking as opposed to a normal prospectus. We also extended our working capital facility and promissory notes, which were falling due on December 31st, 2021.
The $7 million working capital facility was extended for a year to December 31st, 2022. The $6 million promissory note was extended to July 1st, 2020. The company has provided our anticipated revenue for fiscal year 2022 of $27 million. We are encouraged by the strong indicators we have received from our major customers. As in past years, we expect that Q1 fiscal 2021 will be a sequential drop from the fiscal Q4 2021 as our major customers wish to push deliveries after their busy season of late November and December and into the new year. However, after that, we expect a strong traction in our sales through the year. I would now like to turn the call back to Sankar to wrap up.
Thank you, Richard. I will touch on little bit on our next-generation research work being done at Electrovaya Labs. As mentioned earlier, our Infinity battery line is focused on the commercial vehicles who demand highest safety and lowest holistic cost without compromising energy and power. We are making good progress there and moving to a leadership position for the emerging lithium-ion powered material handling vehicles. We are finding that our customer base is now becoming large and diverse. We believe there will be growing demand for our batteries in electric buses and electric trucks, and this market will emerge once the various financing legislation is in place in both USA and Canada. Again, we believe safety and longevity are the two most important performance parameters in this commercial transportation space. For electric cars, however, the consumer demand is for the lowest sticker price.
Electrovaya is developing two major disruptive technologies in this lithium-ion battery space. The first disruptive technology is the solid-state battery. The solid-state battery has conceptually the highest energy density and possibly the lowest cost battery approach. Electrovaya understands solid-state battery and making good experimental progress in filing many patents in this sector. We had announced some of our initial coin cell results, where we showed cells demonstrating nearly no capacity fade after 80 deep charge and deep discharge cycles. This experimental work is done through our Electrovaya Labs division. The second disruptive technology being developed at Electrovaya Labs is to commercialize our patented novel electrode production process, which has the possibility of causing disruption in the standard lithium-ion cell production. The standard lithium-ion electrode and cell production process is expensive. Process uses massive quantities of toxic solvents, and the electrode microstructure suffers from tight boundary restriction.
That is what is the conventional process. The Electrovaya disruptive patented electrode making process does not use toxic solvents, is inexpensive to operate, and creates superior electrodes with superior microstructures. On our capital markets initiatives in Canada and United States, we have added certain advisors, and both the management and the board of directors are carefully monitoring the capital markets before a decision is made regarding the next steps towards a potential listing on the Nasdaq Stock Market. That concludes our remarks this morning. Richard and I would now be pleased to hold a question-and-answer session. Kevin, please open the line for questions.
Our first question today is coming from Jeffrey Campbell from Alliance Global Partners. Your line is now live.
Good morning and congratulations on the quarter. Addressing your standard cell process innovations that you just discussed, I'm just wondering what's the plan here. Is this something you might license to others or will this remain an in-house advantage?
Presently at Electrovaya Labs, we believe this is a very disruptive technology and we will do both. We will produce it in-house, and we will also look at licensing the technology.
Okay, great. Thank you. Sankar, up till now, the direct sales channel is largely concentrated on the Canadian market. I wondered if any of your large multinational customers in Canada have discussed bringing Electrovaya batteries to any of their operations in the United States.
We are actually, Jeffrey, our direct sales team is also based in the U.S. We have folks in the southern part of the U.S. We have folks around the central Chicago area, and we are making good progress in direct sales. I would think our direct sales in the U.S. might be order of magnitude larger than our direct sales in Canada.
Morning, Jeffrey. It's Richard. Richard here. I just wanna add something. Thanks for joining the call, Jeffrey. When we look at it's kind of skewed because we have a couple of very significant customers in Canada that the volume of orders is low, but the value per order is high. For example, Walmart. While in the U.S., we have quite a high number of orders in. But the values are somewhat lower because these customers are getting acquainted with the product. They tend to put in initial orders that are smaller, let's say anywhere from five to 20 units as they test and trial the product. Then once they're comfortable, they will then order for an entire warehouse or distribution center.
We feel quite encouraged that we'll call them the level of seed orders that we've received in the U.S. is quite significant. I think I'm just echoing what Sankar said, is that we will see a trend of growing direct sales from our direct sales.
It is growing quite well.
Yeah.
We've got two major teams, running direct sales in the U.S.
That's very helpful color. I appreciate that. First, I want to congratulate you on the recent Vicinity Motor eBus and eTruck win. My question is the plan to concentrate on this opportunity exclusively for 2022, or do you plan discussions with any additional bus manufacturers at this time?
We are in discussion with additional bus manufacturers. Everybody is positioning themselves as the market emerges. It's still a very small market. Everybody is looking at the legislation which is happening. I think all the bus manufacturers are positioning themselves. Yes, we are talking to a number of them.
All right. That's good to know. There's been some discussion about both a sales and a leasing model for your batteries. I wondered if we could get some color on your thoughts concerning these two possibilities, and if they largely surround your OEM work, or could these two models be viable in the direct sales as well?
I think at this point, I've just mentioned that with the OEM, they do offer leasing, so it is a solution for their customers and financed by them. That certainly is attractive to quite a number of their customers. For the direct sales side, at this stage, it's still something we're evaluating. You know, there's a pretty major investment required for leasing. I think, you know, we're monitoring this, but at this point, I don't think in the very near term we're going to be looking at any leasing. I think there's third parties out there that we've worked with, if our customer wishes to lease, that they can provide the financing. So at this stage, it's not on our priorities.
Okay. My last question is, you referenced the shelf in the press release, and by the way, we certainly appreciated the 2022 guidance that came along with it. At a high level, can you just give us some ideas of where, if funds are raised, where they might be invested? I'm really just thinking manufacturing expansion or is there any M&A? Your technology is superior, so I don't know if you wanna acquire anyone. Any color you can give would be helpful.
Yeah. You know, Jeffrey, we are, we will be opportunistic. We see demand growing in the U.S. We have a very strong tie-up with an OEM who is global and we just received, I think, our first order in Australia. Funds will be used for growth. The other interesting thing is, as Richard had earlier said, we have been consistently running in the 30%-35% gross margin. When you are hitting something like $27 million revenue, your bottom line is pretty good. We are looking for growth and probably organic growth over M&A activities.
I think that it also, something we've alluded to in the past, is that we are considering expansion into the U.S. with a facility there. We're considering all the options on the table, but that's something that is attractive to us and is certainly something that we're looking at very closely.
Great. I appreciate the color. Again, congratulations on the quarter, and we're looking forward to a good year in 2022.
Thank you very much, Jeffrey.
Yeah, thanks, Jeffrey.
Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to you for further closing comments.
Well, that concludes our call. Thank you all for listening this morning. We look forward to speaking with you again after we report our fiscal first quarter results in the new year. We wish you all the very best for a safe and happy holiday season, and best wishes for a Merry Christmas and a Happy New Year. Thank you.
Thank you, everyone.
Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.