[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) [Registrant Information](index=1&type=section&id=Registrant%20Information) Details AERWINS TECHNOLOGIES INC.'s identification, Nasdaq securities, and non-accelerated/emerging growth status - **Registrant**: AERWINS TECHNOLOGIES INC., a Delaware corporation[1](index=1&type=chunk) Registered Securities | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------------------------------------------------------------------------------------------ | :---------------- | :---------------------------------------- | | Common Stock, $0.000001 par value per share | AWIN | The Nasdaq Stock Market LLC | | Redeemable Warrants, each whole warrant exercisable for one-hundredth of a share of Common Stock at an exercise price of $1,150 per share | AWINW | The Nasdaq Stock Market LLC | - **Filing Status**: Non-accelerated filer and an emerging growth company[4](index=4&type=chunk) [Market Value and Shares Outstanding](index=2&type=section&id=Market%20Value%20and%20Shares%20Outstanding) Non-affiliate common equity market value was **$16.75 million**, with **924,890 shares** outstanding Market Value and Shares Outstanding Metrics | Metric | Value | | :------------------------------------------------------------------ | :------------- | | Aggregate market value of common equity held by non-affiliates | $16,752,613 | | Common stock outstanding as of May 24, 2024 | 924,890 shares | [Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) Forward-looking statements are subject to risks, actual results may differ, and the company disclaims update obligations - **Forward-looking statements** are based on current expectations, estimates, and projections, and are not guarantees of future performance[8](index=8&type=chunk) - Actual results may differ materially due to difficult-to-predict risks, uncertainties, and assumptions[8](index=8&type=chunk) - The company disclaims any obligation to publicly release updates or revisions to **forward-looking statements**, except as required by federal securities laws[8](index=8&type=chunk) [PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents AERWINS Technologies Inc.'s unaudited financial statements and notes, covering balance sheets, income, equity, and cash flows [Balance Sheets](index=4&type=section&id=Balance%20Sheets) Balance sheets show decreased **total liabilities** and improved **stockholders' deficit** from A.L.I. deconsolidation Balance Sheet Summary | Metric | March 31, 2024 (Unaudited) | December 31, 2023 (Audited) | | :----------------------------------------- | :------------------------- | :-------------------------- | | Total Assets | $999,033 | $1,066,659 | | Total Liabilities | $8,966,839 | $19,547,304 | | Stockholders' Deficit | $(7,967,806) | $(18,480,645) | | Cash and cash equivalents | $163,275 | $2,072 | - **Total Liabilities** decreased significantly from **$19,547,304** to **$8,966,839**, largely due to the deconsolidation of A.L.I. Technologies Inc[9](index=9&type=chunk)[10](index=10&type=chunk) - **Accumulated deficit** improved from **$(72,411,375)** to **$(63,484,844)** during the quarter[9](index=9&type=chunk) [Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) Q1 2024 saw **net income** of **$8,926,531**, a turnaround from prior-year **net loss**, driven by A.L.I. deconsolidation gain Income Statement Summary | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Total operating expenses | $620,380 | $3,574,882 | | Loss from operations | $(620,380) | $(3,574,882) | | Total other income | $9,546,911 | $86,251 | | Net income (loss) from continuing operations | $8,926,531 | $(3,488,631) | | Loss from discontinued operations | $- | $(4,312,913) | | Net Income (Loss) | $8,926,531 | $(7,801,544) | | Basic EPS from continuing operations | $12.12 | $(6.58) | | Diluted EPS from continuing operations | $12.12 | $(6.58) | - **Net income** for Q1 2024 was **$8,926,531**, a significant turnaround from a **net loss** of **$7,801,544** in Q1 2023[15](index=15&type=chunk) - The substantial increase in '**Total other income**' to **$9,546,911** (from **$86,251** in Q1 2023) was largely due to a **$10,014,482 gain on deconsolidation**[15](index=15&type=chunk) [Statements of Changes in Shareholders' Deficiency](index=8&type=section&id=Statements%20of%20Changes%20in%20Shareholders'%20Deficiency) **Shareholders' deficiency** improved from **$(18.48 million)** to **$(7.97 million)**, driven by **net income** and other comprehensive income Shareholders' Deficiency Changes | Metric | January 1, 2024 | March 31, 2024 | | :-------------------------------------- | :-------------- | :------------- | | Total Stockholders' Deficit | $(18,480,645) | $(7,967,806) | | Net income | - | $8,926,531 | | Other comprehensive income | - | $1,044,308 | | Issuance of common shares for services | - | $542,000 | - **Shareholders' Deficit** decreased by over **$10 million**, from **$(18,480,645)** to **$(7,967,806)**, driven by **net income** and other comprehensive income[21](index=21&type=chunk) - **Common shares outstanding** increased from **626,890** to **886,012**, reflecting issuances for services and other adjustments[21](index=21&type=chunk) [Statements of Cash Flows](index=10&type=section&id=Statements%20of%20Cash%20Flows) Q1 2024 saw a **net increase** in **cash** of **$161,203**, from **financing activities** offsetting **operating activities** Cash Flow Summary | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used) operating activities | $(380,797) | $(3,230,216) | | Net cash used by investing activity | $- | $(45,559) | | Net cash provided by financing activities | $542,000 | $3,066,717 | | Net increase (decrease) in cash | $161,203 | $(209,058) | | Cash and cash equivalents at end of period | $163,275 | $30,333 | - **Cash and cash equivalents** increased to **$163,275** at March 31, 2024, from **$2,072** at the beginning of the period[23](index=23&type=chunk) - **Operating activities** used **$380,797** in **cash**, a significant reduction from **$3,230,216** used in the prior year, partly due to the deconsolidation of A.L.I[23](index=23&type=chunk) [Notes to Financial Statements](index=11&type=section&id=Notes%20to%20Financial%20Statements) The notes provide detailed explanations of the company's financial statements, covering its organization, significant accounting policies, going concern issues, debt instruments, related party transactions, and the deconsolidation of A.L.I. Technologies Inc. due to bankruptcy proceedings [NOTE 1 – Organization and Description of Business](index=11&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20DESCRIPTION%20OF%20BUSINESS) AERWINS is redesigning its **MAV** and completed a **reverse recapitalization merger**, with A.L.I. Technologies Inc. deconsolidated due to bankruptcy - AERWINS Technologies Inc. is focused on redesigning its single-seat optionally **Manned Air Vehicle (MAV)** to meet FAA Powered Ultra-Light Air Vehicle Category requirements[25](index=25&type=chunk) - The company completed a **reverse recapitalization merger** with Pono Capital Corp. on February 3, 2023, with AERWINS being the **accounting acquirer**[26](index=26&type=chunk)[27](index=27&type=chunk) - A.L.I. Technologies Inc., a wholly-owned indirect subsidiary, was deconsolidated as of January 10, 2024, following its voluntary bankruptcy petition filed on December 27, 2023[31](index=31&type=chunk) [NOTE 2 - Going Concern](index=13&type=section&id=NOTE%202%20-%20GOING%20CONCERN) **Accumulated deficit** of **$63.48 million** and A.L.I. bankruptcy raise substantial doubt about **going concern** - **Accumulated deficit** of **$63,484,844** as of March 31, 2024, and the A.L.I. bankruptcy raise substantial doubt about the company's ability to continue as a **going concern**[33](index=33&type=chunk) - Management plans to raise additional funds via debt or equity and generate revenue from **MAV production**, but success is not assured[34](index=34&type=chunk) - **Total liabilities** were **$8,966,839** as of March 31, 2024, and the A.L.I. bankruptcy triggered an **event of default** on **$4,200,000** in secured **convertible notes** with Lind Global[36](index=36&type=chunk) [NOTE 3 – Summary of Significant Accounting Policies](index=14&type=section&id=NOTE%203%20%E2%80%93%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines significant accounting policies for financial statements, covering U.S. GAAP, estimates, assets, liabilities, revenue, and other key areas - Financial statements are prepared in accordance with U.S. GAAP and are unaudited interim statements[38](index=38&type=chunk)[39](index=39&type=chunk) - Key **estimates** include **valuation** of **warrant** and **derivative liabilities**, useful lives of assets, **impairment**, and **revenue recognition**[40](index=40&type=chunk) - **Warrants** are classified as **liabilities** and remeasured at **fair value** each period, with changes recognized in operations[49](index=49&type=chunk) - The conversion feature of **convertible promissory notes** is bifurcated and accounted for as an embedded derivative at **fair value**[51](index=51&type=chunk) [NOTE 4 – Prepaid Expenses](index=19&type=section&id=NOTE%204%20%E2%80%93%20PREPAID%20EXPENSES) **Prepaid expenses** decreased from **$983,255** to **$835,758**, largely due to **prepaid stock-based compensation** Prepaid Expenses Summary | Metric | March 31, 2024 | December 31, 2023 | | :--------------- | :------------- | :---------------- | | Total Prepaid Expenses | $835,758 | $983,255 | - **Prepaid expenses** decreased by **$147,497** during the quarter[72](index=72&type=chunk) - Of the total **prepaid expenses**, **$753,407** as of March 31, 2024, is related to **prepaid stock-based compensation**[72](index=72&type=chunk) [NOTE 5 – Loans Payable](index=20&type=section&id=NOTE%205%20%E2%80%93%20LOANS%20PAYABLE) **Notes payable** of **$1.48 million** are in default, plus **short-term loans** of **$272,835** at **15%** interest - **Notes payable** balance was **$1,480,000** as of March 31, 2024, and is in default, with **$288,243** recognized as **accrued interest expenses**[75](index=75&type=chunk) - The company also has **short-term loans** totaling **$272,835** from third parties, bearing **15% interest** per annum[75](index=75&type=chunk) [NOTE 6 — Related Party Transactions](index=20&type=section&id=NOTE%206%20%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) **Related party transactions** include a **debt guarantee**, a defaulted **loan** from a former CEO to A.L.I., and **payables** to directors - A.L.I.'s Representative Director, Daisuke Katano, provided a **debt guarantee** for a building lease agreement, valued at **$5,961**[76](index=76&type=chunk) - A **loan** from former CEO Shuhei Komatsu to A.L.I. of **200,000,000 yen** (approx. **$1,384,370**) resulted in the enforcement of a pledge and derecognition of investment and debt due to default[77](index=77&type=chunk)[78](index=78&type=chunk) - As of March 31, 2024, **$313,428** was **outstanding** to director Kiran Sidhu and **$9,935** to former director Daisuke Katano for payments made on behalf of the company[79](index=79&type=chunk) [NOTE 7 – Convertible Promissory Notes, Net](index=21&type=section&id=NOTE%207%20%E2%80%93%20CONVERTIBLE%20PROMISSORY%20NOTES,%20NET) **Convertible promissory notes** with Lind Global total **$4.2 million** principal, amended to **$3.5 million** contingent on a public offering, which failed, allowing Lind Global to demand payment or convert at penalty - The company issued two tranches of **convertible promissory notes** to Lind Global Fund II LP with an aggregate **principal amount** of **$4,200,000**[82](index=82&type=chunk)[83](index=83&type=chunk) - Amendments in January 2024 reduced the **principal** to **$3,500,000** and set conditions for **mandatory prepayment** and conversion linked to a **$13,500,000 public offering** by April 15, 2024[84](index=84&type=chunk) - Failure to complete the **public offering** by April 15, 2024, means Lind Global is not obligated to the amended terms and can **demand 120%** of outstanding **principal** or **convert** at a lower price with cash payment[36](index=36&type=chunk)[86](index=86&type=chunk) Convertible Promissory Notes Summary | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------------- | :------------- | :---------------- | | Principal | $4,200,000 | $4,200,000 | | Debt discount | $(2,089,150) | $(2,680,597) | | Net Carrying Balance | $2,110,850 | $1,519,403 | [NOTE 8 – Derivative Liability](index=23&type=section&id=NOTE%208%20%E2%80%93%20DERIVATIVE%20LIABILITY) **Derivative liability** decreased to **$1.29 million** from **$1.37 million**, stemming from **convertible notes** and remeasured using a **Monte Carlo simulation model** - **Derivative liability** decreased to **$1,293,276** at March 31, 2024, from **$1,367,140** at December 31, 2023[90](index=90&type=chunk) - The **liability** is derived from the **debt conversion option features** and valued using a **Monte Carlo simulation model**[90](index=90&type=chunk) Derivative Liability Movement | Metric | Amount | | :-------------------------------------- | :------------- | | Ending Balance, December 31, 2023 | $1,367,140 | | Adjustments | $(452,549) | | Change in fair value | $378,685 | | Ending Balance, March 31, 2024 | $1,293,276 | [NOTE 9 – Warrant Liability](index=23&type=section&id=NOTE%209%20%E2%80%93%20WARRANT%20LIABILITY) **Warrant liabilities** decreased to **$257,764** from **$400,924**, with **Public Warrants** as **Level 1** and other **warrants** as **Level 2** using Black-Scholes - Total **warrant liability** decreased to **$257,764** at March 31, 2024, from **$400,924** at December 31, 2023[93](index=93&type=chunk) Warrant Liability Summary | Warrant Type | March 31, 2024 | December 31, 2023 | | :---------------- | :------------- | :---------------- | | Public Warrants | $107,812 | $117,300 | | Placement Warrants| $7,155 | $7,648 | | Debt Warrants | $142,797 | $275,976 | | Total | $257,764 | $400,924 | - **Public Warrants** are **Level 1** (quoted market prices), while **Placement** and **Debt Warrants** are **Level 2** (Black-Scholes model with observable inputs)[123](index=123&type=chunk) [NOTE 10 – Deconsolidation of A.L.I.](index=25&type=section&id=NOTE%2010%20%E2%80%93%20DECONSOLIDATION%20OF%20A.L.I.) A.L.I. Technologies Inc. filed for bankruptcy, leading to its deconsolidation and a **gain on deconsolidation** of **$10.01 million** - A.L.I. Technologies Inc. filed for voluntary bankruptcy on December 27, 2023, and was deconsolidated from the company's financial statements as of January 10, 2024[100](index=100&type=chunk)[102](index=102&type=chunk) - The **deconsolidation** resulted in a **gain** of **$10,014,482**[104](index=104&type=chunk) A.L.I. Deconsolidated Balances | A.L.I. Deconsolidated Balances (January 10, 2024) | :------------- | | :------------------------------------------------ | :------------- | | Total Assets | $81,332 | | Total Liabilities | $11,140,122 | | Net Liabilities deconsolidated | $(11,058,790) | [NOTE 11 – Income Taxes](index=27&type=section&id=NOTE%2011%20%E2%80%93%20INCOME%20TAXES) No **income tax provision** was reported for Q1 2024 or 2023, and no significant uncertain tax positions are expected Income Tax Provision | Income Tax Provision | March 31, 2024 | March 31, 2023 | | :------------------- | :------------- | :------------- | | Federal Current | $- | $- | | Federal Deferred | $- | $- | | State Current | $- | $- | | State Deferred | $- | $- | | Foreign Current | $- | $- | | Foreign Deferred | $- | $- | | Total | $- | $- | - No **income tax provision** was recognized for the periods presented[106](index=106&type=chunk) - The company does not expect significant unrecognized uncertain tax benefits within **12 months** and has not incurred interest or penalties[107](index=107&type=chunk) [NOTE 12 – Contingencies](index=27&type=section&id=NOTE%2012%20%E2%80%93%20CONTINGENCIES) The company faces potential liabilities from lawsuits, and the A.L.I. bankruptcy triggered an **event of default** on **$4.2 million** **convertible notes**, allowing Lind Global to demand payment or convert at penalty - The company faces potential liabilities from various lawsuits and claims in the ordinary course of business[109](index=109&type=chunk) - The A.L.I. bankruptcy triggered an **event of default** on **$4,200,000** in **convertible notes** with Lind Global[110](index=110&type=chunk) - Lind Global can **demand 120%** of the outstanding **principal** or **convert notes** into common stock at a lower **conversion price** (**80%** of the average of the three lowest VWAPs during the **20 trading days** prior to conversion, or the **Floor Price** of **$18.176**)[110](index=110&type=chunk) [NOTE 13 – Shareholders' Deficit](index=28&type=section&id=NOTE%2013%20%E2%80%93%20SHAREHOLDERS'%20DEFICIT) **Authorized shares** include **400 million common** and **20 million preferred**, with **common shares outstanding** increasing by **259,097** due to issuances, adjusted for a 1-for-100 consolidation - **Authorized shares**: **400,000,000 common shares** and **20,000,000 preferred shares**[111](index=111&type=chunk) - **Common shares outstanding** increased by **259,097** during Q1 2024, reaching **885,987 shares**[115](index=115&type=chunk) - The company issued **135,500 unregistered shares** for **$542,000** in **cash** to accredited investors in February and March 2024[111](index=111&type=chunk) - All **share figures** are retrospectively adjusted for a **1-for-100 share consolidation** effective April 2, 2024[115](index=115&type=chunk) [NOTE 14 – Earnings (Loss) Per Share](index=29&type=section&id=NOTE%2014%20%E2%80%93%20EARNINGS%20(LOSS)%20PER%20SHARE) **Basic and diluted EPS** from continuing operations improved to **$12.12** in Q1 2024 from **$(6.58)**, with **loss per share** from discontinued operations at **$0.00** Earnings Per Share Summary | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) from continuing operations | $8,926,531 | $(3,488,631) | | Weighted average common shares outstanding | 736,765 | 529,844 | | Basic EPS from continuing operations | $12.12 | $(6.58) | | Diluted EPS from continuing operations | $12.12 | $(6.58) | | Basic EPS from discontinued operations | $0.00 | $(8.14) | - **Basic and diluted EPS** from continuing operations improved to **$12.12** in Q1 2024 from **$(6.58)** in Q1 2023[117](index=117&type=chunk) - **Weighted average common shares outstanding** increased to **736,765** in Q1 2024 from **529,844** in Q1 2023[117](index=117&type=chunk) [NOTE 15 – Stock-Based Compensation](index=29&type=section&id=NOTE%2015%20%E2%80%93%20STOCK-BASED%20COMPENSATION) **Stock options** for **41,424 shares** were issued to directors, with **11,732 options** outstanding at March 31, 2024, and **fair value** estimated at **$0.005** using the **Binomial Option Pricing Model** - **Stock options** for **41,424 shares** were issued to directors on July 27, 2022, with an **exercise price** of **$0.015 per share**[118](index=118&type=chunk) - As of March 31, 2024, **11,732 options** were outstanding, with a weighted average contractual life of **8.33 years**[120](index=120&type=chunk) - The **fair value** of **stock-based compensation** was estimated at **$0.005** using the **Binomial Option Pricing Model**[121](index=121&type=chunk) [NOTE 16 – Fair Value Measurement](index=31&type=section&id=NOTE%2016%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENT) **Fair value measurements** are categorized into **Level 1** (**Public Warrants**) and **Level 2** (Placement, Debt **Warrants**, and **Derivative Liability**), valued using Black-Scholes or Monte Carlo models Fair Value Measurements by Level | Liability Type | Fair Value (March 31, 2024) | Level 1 | Level 2 | | :------------------- | :-------------------------- | :---------- | :---------- | | Public Warrants | $107,812 | $107,812 | $- | | Placement Warrants | $7,155 | $- | $7,155 | | Debt Warrants | $142,797 | $- | $142,797 | | Subtotal: Warrant liabilities | $257,764 | $107,812 | $149,952 | | Derivative Liability | $1,293,276 | $- | $1,293,276 | - **Public Warrants** are classified as **Level 1** due to quoted market prices[123](index=123&type=chunk) - **Placement Warrants**, **Debt Warrants**, and **Derivative Liability** are classified as **Level 2**, valued using Black-Scholes or Monte Carlo simulation models with observable inputs[123](index=123&type=chunk) [NOTE 17 – Discontinued Operations](index=31&type=section&id=NOTE%2017%20%E2%80%93%20DISCONTINUED%20OPERATIONS) **Drone solution service** and A.L.I. operations were discontinued as part of a strategic shift to **MAV development** in Los Angeles, classifying A.L.I.'s businesses as discontinued - **Drone solution service** discontinued as of June 30, 2023[125](index=125&type=chunk) - Remaining operations of A.L.I. Technologies Inc. discontinued on December 27, 2023, and classified as **discontinued operations**[125](index=125&type=chunk) Discontinued Operations Financials | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Revenues | $- | $1,265,883 | | Cost of revenues | $- | $955,071 | | Gross profit | $- | $310,812 | | Total operating expenses | $- | $4,778,170 | | Net loss from discontinued operations | $- | $(4,312,913) | [NOTE 18 – Subsequent Events](index=33&type=section&id=NOTE%2018%20%E2%80%93%20SUBSEQUENT%20EVENTS) Subsequent events include a 1-for-100 **share consolidation**, authorization of **38,878 shares** for consultants, and **$240,000** in aggregate **advances** - A **1-for-100 share consolidation** was completed on April 2, 2024[130](index=130&type=chunk) - **38,878 shares** with a **fair value** of **$180,000** were authorized for issuance to **consultants**[130](index=130&type=chunk) - The company received **$100,000** in **non-interest bearing**, **unsecured advances** and **$140,000** in **unsecured advances** with **3% compounded interest** from third parties[130](index=130&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q1 2024 financial condition and results, highlighting the strategic shift to **MAV development**, A.L.I. deconsolidation, and their impact on performance and liquidity [Overview](index=34&type=section&id=Overview) AERWINS is redesigning its **MAV** to meet FAA requirements, following discontinued non-core operations and A.L.I. bankruptcy, with financials reflecting a **reverse recapitalization merger** - AERWINS is focused on redesigning its **MAV** to comply with FAA Powered Ultra-Light Air Vehicle Category standards[133](index=133&type=chunk) - Non-core operations of A.L.I. Technologies Inc. were discontinued, and A.L.I. filed for voluntary bankruptcy on December 27, 2023[133](index=133&type=chunk) - The company's financial statements reflect a **reverse recapitalization merger** with Pono Capital Corp. on February 3, 2023, with AERWINS as the **accounting acquirer**[134](index=134&type=chunk) [Business Overview](index=35&type=section&id=Business%20Overview) AERWINS, via Aerwin Development, is redesigning its **MAV** for an 'Air Mobility Society,' shifting focus to FAA-compliant **MAV development** after A.L.I.'s deconsolidation due to bankruptcy - The company's mission is to realize an 'Air Mobility Society' by redesigning its **MAV** to meet FAA Powered Ultra-Light Air Vehicle Category requirements[139](index=139&type=chunk) - A.L.I. was acquired in August 2022 but deconsolidated on January 10, 2024, following its bankruptcy[138](index=138&type=chunk) - The company has established AERWIN Development Company LLC in Los Angeles, California, for **MAV development**[139](index=139&type=chunk) [Discontinued Operations](index=35&type=section&id=Discontinued%20Operations) **Drone photography** and A.L.I.'s remaining operations, including **XTURISMO hoverbike** and **drone businesses**, were discontinued and classified as discontinued operations due to strategic shift and bankruptcy - **Drone photography services** and joint R&D services were discontinued as of June 30, 2023[140](index=140&type=chunk) - All remaining operations of A.L.I. were discontinued on December 27, 2023, and classified as **discontinued operations**[140](index=140&type=chunk) - A.L.I.'s **discontinued operations** included the **XTURISMO hoverbike**, COSMOS platform, **computing power-sharing**, and **drone businesses**[141](index=141&type=chunk) [Key Factors that Affect Our Results of Operations](index=36&type=section&id=Key%20Factors%20that%20Affect%20Our%20Results%20of%20Operations) Key factors include completing **MAV development** and manufacturing, establishing a **dealer distribution network**, and controlling costs for efficient **mass production** - Ability to complete **development** and manufacture of the **MAV** according to FAA requirements is crucial[143](index=143&type=chunk) - Success depends on developing a **dealer distribution network** and marketing/selling **MAVs** in sufficient quantities to achieve **profitability**, targeting sales in the US, China, and Europe by **2027**[143](index=143&type=chunk) - Controlling costs and improving operating efficiency to establish a highly profitable structure for **MAV mass production** is a key factor[144](index=144&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Q1 2024 saw **net income** of **$8,926,531**, a significant improvement from prior-year **net loss**, driven by A.L.I. deconsolidation **gain** and reduced **general and administrative expenses** Comparative Results of Operations | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Variance ($) | Variance (%) | | :----------------------------------------- | :---------------------------- | :---------------------------- | :----------- | :----------- | | Total operating expenses | $620,380 | $3,574,882 | $(2,954,502) | (82.6)% | | Loss from operations | $(620,380) | $(3,574,882) | $2,954,502 | 82.6% | | Total other income | $9,546,911 | $86,251 | $9,460,660 | 10,968.8% | | Net income (loss) from continuing operations | $8,926,531 | $(3,488,631) | $12,415,162 | (355.9)% | | Loss from discontinued operations | $- | $(4,312,913) | $4,312,913 | (100.0)% | | Net income (loss) | $8,926,531 | $(7,801,544) | $16,728,075 | (214.4)% | - **Net income** for Q1 2024 was **$8,926,531**, a significant improvement from a **net loss** of **$7,801,544** in Q1 2023[146](index=146&type=chunk) - **General and administrative expenses** decreased by **82.6%** to **$620,380**, primarily due to reduced consulting and professional service fees related to the Pono business combination[152](index=152&type=chunk) - **Total other income** increased by **10,968.8%** to **$9,546,911**, mainly due to the **gain on deconsolidation** of A.L.I[153](index=153&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2024, the company had **$163,275** in **cash** and a **working capital deficit** of **$4,305,916**, raising substantial doubt about its **going concern** due to **liquidity challenges** and **indebtedness** Liquidity and Capital Metrics | Metric | March 31, 2024 | December 31, 2023 | | :---------------------- | :------------- | :---------------- | | Cash | $163,275 | $2,072 | | Working Capital Deficit | $(4,305,916) | N/A | - The company's **accumulated deficit** of **$63,484,844** and A.L.I.'s bankruptcy raise substantial doubt about its ability to continue as a **going concern**[166](index=166&type=chunk) - **Total liabilities** were **$8,966,839** as of March 31, 2024, and the A.L.I. bankruptcy triggered an **event of default** on **$4,200,000** in secured **convertible notes** with Lind Global[168](index=168&type=chunk) - The company raised **$542,000** in **cash** from the sale of **common stock** and received shareholder **advances** to meet **liquidity needs**[163](index=163&type=chunk)[165](index=165&type=chunk) [Critical Accounting Policies and Estimates](index=47&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial statements rely on significant **estimates** for **warrant** and **derivative liabilities**, **accounts receivable**, **asset useful lives**, **impairment**, and **revenue recognition** - Significant **estimates** include **valuation** of **warrant liabilities** and **derivative liabilities**, **accounts receivable**, useful lives of property and equipment, **impairment of long-lived assets**, and **revenue recognition**[198](index=198&type=chunk)[202](index=202&type=chunk) - **Warrant liabilities** are classified as **liabilities** and adjusted to **fair value** at each reporting period using models like Black-Scholes[206](index=206&type=chunk) - **Convertible promissory notes' conversion features** are bifurcated and accounted for as **embedded derivatives** at **fair value**, remeasured each period[209](index=209&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) No applicable quantitative and qualitative disclosures about **market risk** for the company - The company has no applicable quantitative and qualitative disclosures about **market risk**[210](index=210&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) **Disclosure controls and procedures** were ineffective due to administrative delays and A.L.I. bankruptcy, with no material changes in **internal control over financial reporting** - **Disclosure controls and procedures** were not effective as of March 31, 2024, due to administrative delays and issues from the A.L.I. bankruptcy[212](index=212&type=chunk) - A **material weakness** exists due to these administrative delays and issues[212](index=212&type=chunk) - No material changes in **internal control over financial reporting** occurred during the three months ended March 31, 2024[213](index=213&type=chunk) [PART II - OTHER INFORMATION](index=50&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in **legal proceedings**, with A.L.I. Technologies Inc.'s voluntary bankruptcy leading to deconsolidation and no prospect of distribution to general creditors - A.L.I. Technologies Inc. filed a voluntary bankruptcy petition on December 27, 2023, with a **trustee** appointed on January 10, 2024[217](index=217&type=chunk) - The company concluded it no longer **controls** A.L.I. for accounting purposes as of January 10, 2024, leading to deconsolidation[219](index=219&type=chunk) - The **bankruptcy trustee** reported no prospect of distribution to general creditors at this time[218](index=218&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) No material changes to **risk factors** from the Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes in **risk factors** from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[220](index=220&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company completed unregistered sales of **135,500 common shares** to accredited investors for **$542,000** in cash, under Section 4(a)(2) or Regulation D/S, with piggyback registration rights - The company sold **135,500 unregistered shares** of **common stock** to two **accredited investors** for **$542,000** in **cash**[221](index=221&type=chunk) - Sales were made on February 27, 2024 (**100,000 shares**) and March 22, 2024 (**35,500 shares**) at **$4.00 per share**[221](index=221&type=chunk) - The **shares** were issued in reliance on exemptions from registration under Section 4(a)(2) of the Securities Act, or Regulation D or Regulation S[222](index=222&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) A.L.I. bankruptcy triggered an **event of default** on **$4.2 million** **convertible notes** with Lind Global; failed public offering means Lind Global can demand payment or convert at penalty - The A.L.I. bankruptcy constitutes an **event of default** on the **$4,200,000** secured **convertible notes** with Lind Global[223](index=223&type=chunk) - January 2024 amendments reduced the **principal** to **$3,500,000** and required a **$1,750,000 prepayment** by April 15, 2024, contingent on a **$13,500,000 public offering**[224](index=224&type=chunk) - Failure to complete the **public offering** by April 15, 2024, means Lind Global is not bound by the amended terms and can **demand 120%** of the outstanding **principal** or **convert** at a penalty rate[226](index=226&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) **Mine safety disclosures** are not applicable to the company - **Mine safety disclosures** are not applicable[227](index=227&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) Information from **Item 3** of this report is incorporated by reference - Information from **Item 3** of this report is incorporated by reference[227](index=227&type=chunk) [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including **certifications** from **Principal Executive Officer** and **Principal Financial Officer**, and **XBRL documents** - Exhibits include Rule 13a-14(a) **Certifications**, **Certification** Pursuant to 18 U.S.C. Section 1350, and Inline **XBRL documents**[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) [Signatures](index=53&type=section&id=SIGNATURES) Report signed by **Kiran Sidhu**, **Chief Executive Officer**, and **Yinshun (Sue) He**, **Chief Financial Officer**, on May 28, 2024, confirming due authorization - Signed by **Kiran Sidhu**, **Chief Executive Officer**, and **Yinshun (Sue) He**, **Chief Financial Officer**[236](index=236&type=chunk)[237](index=237&type=chunk) - Report dated May 28, 2024[236](index=236&type=chunk)[237](index=237&type=chunk)

Popular meme stocks are falling today, but a few companies are still rising steadily. One company that has surged this week and remains in the green is Aerwins Technologies (NASDAQ:AWIN), an aerospace technology producer based in Japan. This company doesn’t often make headlines, but today, it has surged more than 160% in just a few hours. When a mostly unknown company sees that type of growth, it’s easy to blame meme stock momentum. And given the high short interest in AWIN stock, it’s not hard to see what’ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 ☐ 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 001-40734 AERWINS TECHNOLOGIES INC. (Exact Name of Registrant as Specified in its Charter) | --- | --- | --- | |--------------------------- ...

LOS ANGELES, CA, April 23, 2024 (GLOBE NEWSWIRE) -- AERWINS Technologies Inc. (NASDAQ:AWIN) ("AERWINS" or "the Company") today announced that on April 17, 2024, the Company received an Additional Staff Delisting Determination (the "Additional Staff Determination") from the Listing Qualifications Department of The Nasdaq Stock Market LLC ("Nasdaq"). The Additional Staff Determination noted that the Company is now delinquent in filing its Form 10-K for the period ended December 31, 2023 (the "Form 10-K"), whi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 ☐ 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 001-40734 AERWINS TECHNOLOGIES INC. (Exact Name of Registrant as Specified in its Charter) | --- | --- | --- | |------------------ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 ☐ 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 001-40734 AERWINS TECHNOLOGIES INC. (Exact Name of Registrant as Specified in its Charter) | --- | --- | --- | |----------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 ☐ 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 001-40734 AERWINS TECHNOLOGIES INC. (Exact Name of Registrant as Specified in its Charter) | --- | --- | --- | |---------------------- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 ☐ 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 001-40734 AERWINS Technologies Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 86-2049355 (State or Other Jurisdi ...