UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ 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: 001-34643 AYRO, INC. (Exact name of registrant as specified in its charter) Delaware 98-0204758 (State or ot ...

Financial Data and Key Metrics Changes - Revenue for the year ended December 31, 2022, was $2,990,497, an increase of 11.4% year-over-year [17] - Total operating expenses for 2022 were approximately $20.2 million, down from $31 million in 2021, reflecting a nearly $11 million decrease [17][20] - Adjusted EBITDA for 2022 was a loss of approximately $18.5 million, an improvement from a loss of approximately $25 million in 2021 [18] - Net loss in 2022 was approximately $22.9 million, improved from a net loss of approximately $33.1 million in 2021 [18] Business Line Data and Key Metrics Changes - Revenue in Q4 2022 came from sales of legacy Club Car Current units, with nearly all inventory sold off [8] - Anticipated dip in revenue as the company transitions from the legacy Current to the next-generation Vanish [8] Market Data and Key Metrics Changes - Cash and marketable securities at the end of 2022 were approximately $49 million, implying a cash runway exceeding two years at current spending levels [9] - Total debt was zero at December 31, 2022, consistent with the previous year [18] Company Strategy and Development Direction - The company is focused on the launch of the Ayro Vanish, a low-speed electric vehicle designed for various applications, with an MSRP of about $34,000 [7] - A new supply chain has been established, eliminating reliance on suppliers from China and enhancing in-house manufacturing capabilities [9] - Future vehicle launches will utilize the same critical components as the Vanish, reducing design effort and time to market for new models [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future despite a challenging economic backdrop, emphasizing the importance of customer acceptance and market penetration [10] - The Vanish is expected to enter the homologation phase, with production anticipated to begin by the end of June 2023 [11][12] Other Important Information - The company is developing a strong intellectual property portfolio to act as a barrier to entry for competitors [15] - The company is in discussions with over 50 potential dealers in the U.S. and Canada for the Vanish [13] Q&A Session Summary Question: Will future models be subject to the same homologation process? - Yes, homologation is a platform-specific activity, and the timeframe is expected to remain consistent across all platforms [23] Question: Are there particular industries showing interest in the Vanish? - Interest is strong in sectors like fleet refresh for resorts and golf businesses, with expectations of a longer product lifetime compared to existing options [25] Question: Is the company attempting to position on the GSA schedule? - The company plans to partner with existing GSA schedule holders to add their offerings rather than applying independently [29] Question: What is the strategy regarding NASDAQ minimum bid rule? - The company is in constant contact with NASDAQ and believes that delivering the Ayro Vanish will help improve stock price [34]

Product Development and Strategy - The company has initiated a strategic review of its product development strategy, focusing on electric vehicles and last-mile delivery, resulting in the cancellation of all material R&D activities related to a planned next-generation vehicle[18]. - The company is currently evaluating its product development strategy, which may lead to significant changes impacting its business and financial condition[12]. - The company aims to scale operations and expand sales territories to increase revenue and manufacturing capacity for electric vehicles[40]. - The company completed preproduction on its Model Year 2023 refresh vehicle, the AYRO Vanish, which represents a shift in supply chain from Asian suppliers to North America[67]. Vehicle Specifications and Features - The AYRO Vanish Fleet is expected to have a maximum payload capacity of 1,500 pounds and an expected range of over 50 miles, with operating costs projected to be approximately 50% lower per year compared to similarly sized gas-powered vehicles[24]. - The AYRO Vanish is designed to be street legal with a maximum speed of 25 mph, and it can be charged using conventional outlets or a J1772 charger[23]. - The assembly capacity for the AYRO Vanish is estimated at 170 vehicles per month, with an assembly time of 20 man-hours per vehicle[35]. - The AYRO Vanish Fleet is expected to provide a 49% reduction in operating expenses and a 100% reduction in CO2 emissions when charged with renewable energy[47]. Market Opportunities and Trends - The U.S. electric vehicle market is projected to grow significantly, driven by urbanization, rising gas prices, and demand for non-emissive transportation alternatives[43]. - The target market includes over 1,800 higher education campuses in the U.S. with over 10,000 students each, representing a significant opportunity for the AYRO Vanish Fleet[52]. - Food delivery sales are anticipated to increase over 20% per year, reaching an expected $365 billion worldwide by 2030, highlighting a growing market for LSEVs[53]. - The North American LSEV market constitutes 28% of the global LSEV market, indicating a competitive landscape with substantial growth potential[56]. Supply Chain and Manufacturing - The company has ceased production of the AYRO 411x in September 2022 due to rising shipping costs and quality issues, redirecting resources to the development of the new Vanish model[19]. - Cenntro Automotive Group has been the primary supplier, but the company has ceased all production agreements with Cenntro and currently only intends to order replacement parts[30]. - The company is focusing on reducing supply risk by migrating its vehicle supply chain to North America and standardizing parts and sub-assemblies[57]. - A manufacturing agreement with Linamar Corporation has been established for the supply of sub-assembly and assembly parts for the Vanish, with an initial term of three years[32]. Financial Performance and Risks - The company has a history of losses and has never been profitable, with expectations of incurring additional losses in the future[12]. - The company relies on a single third-party supplier for certain components, and any disruption could adversely affect its operations[12]. - The company has identified a material weakness in its internal control over financial reporting, which could harm its business if not remediated[14]. Regulatory Compliance and Intellectual Property - The company operates under stringent governmental regulations related to emissions, safety, and pollution control, which significantly impact manufacturing and operational costs[64][66]. - The company expects its vehicles to meet and exceed both EPA and California Air Resources Board emissions standards[65]. - The company holds two design patents issued on February 11, 2020, expiring on February 11, 2035, and has multiple non-public patent applications pending with the USPTO[61]. - There are currently two design patents and two utility patents awaiting examination, including applications for Electric Vehicle Structure and Electric Vehicle Control Systems filed in 2022[61]. - The company has two granted trademarks in the U.S. and abroad, including the word "AYRO" and its logo, with additional trademarks pending[63]. Employee Relations - As of December 31, 2022, the company had 44 full-time employees and maintains good relations with them, offering competitive compensation and benefits[73]. - All revenue generated during the fiscal year ended December 31, 2022, was from operations in the United States[74]. Manufacturing Practices - The company follows a lean, cell-based manufacturing model with five sequential cells to ensure quality and compliance with safety standards[71]. - The company is registered as a manufacturer in multiple states, including Texas, California, and Florida, to facilitate its operations[68].

Ayro, Inc. (NASDAQ:AYRO) Q3 2022 Earnings Conference Call November 3, 2022 8:30 AM ET Company Participants Scott Gordon - Investor Relations, CORE IR Tom Wittenschlaeger - Chief Executive Officer Dave Hollingsworth - Chief Financial Officer Conference Call Participants Barry Sine - Spartan Capital Securities Tyler DuPont - Augury Research Harold Weber - Aegis Capital Operator Ladies and gentlemen, thank you for standing by. Good morning, and welcome to the Ayro, Inc. Third Quarter 2022 Financial Results and ...

Financial Performance - The company has a history of losses and has never been profitable, expecting to incur additional losses in the future[101]. - Revenue for the three months ended September 30, 2022, was $0.37 million, a decrease of 33% compared to $0.56 million for the same period in 2021, primarily due to a $2,000 discount per vehicle sold, reducing revenue by $0.13 million[151]. - Revenue for the nine months ended September 30, 2022, was $2.38 million, an increase of 27.3% compared to $1.87 million for the same period in 2021, driven by increased vehicle sales[160]. - Gross margin percentage was (155.9%) for the three months ended September 30, 2022, compared to (70.8%) for the same period in 2021, attributed to credit memos related to the Club Car Discount[152]. - Cost of goods sold increased by 144.3% to $4.96 million for the nine months ended September 30, 2022, compared to $2.03 million in the same period in 2021, due to inventory write-offs and increased sales[161]. Product Development and Strategy - The company ceased production of the AYRO 411x in September 2022 due to rising shipping costs and quality issues, focusing on the development of the new Vanish model[109]. - The company expects to unveil the first Vanish prototype in the fourth quarter of 2022[110]. - The company is currently evaluating its product development strategy, which may result in significant changes impacting business and financial condition[102]. - The company intends to utilize North American and European sources for the new Vanish to reduce dependency on Chinese imports[117]. - The company is reevaluating its relationship with Club Car and may seek new business partners for selling products starting with the Vanish[120]. Supply Chain and Operational Challenges - The cost of shipping products by ocean freight has increased to at least three times historical levels, adversely impacting profitability[132]. - The company expects supply chain shortages of lithium-ion battery cells and other critical components to continue affecting production through the fourth quarter of 2022[133]. - The COVID-19 pandemic has delayed procurement of raw materials and shipments, adversely impacting sales and demand for products in 2021 and the first half of 2022[128]. Financial Position and Cash Flow - As of September 30, 2022, the company had $39.43 million in cash and $15.79 million in marketable securities, down from $69.16 million in cash as of December 31, 2021[167]. - During the nine months ended September 30, 2022, the company had no notable financing activities[174]. - In the nine months ended September 30, 2021, the company received net proceeds of $59.57 million from the issuance of common stock, net of fees and expenses[174]. - The company also received $0.10 million from the exercise of warrants for cash during the same period[174]. - In June 2021, the company issued 555,004 shares of common stock from the exercise of stock options, resulting in cash proceeds of $1.5 million[174]. Expenses and Cost Management - Research and development (R&D) expense decreased by 59.5% to $1.69 million for the three months ended September 30, 2022, down from $4.17 million in the same period in 2021, due to a repositioning of expenses[153]. - Sales and marketing expense was $0.38 million for the three months ended September 30, 2022, a decrease of 40.5% from $0.65 million in the same period in 2021, as costs related to marketing initiatives were reduced[155]. - General and administrative expenses were $3 million for the three months ended September 30, 2022, a decrease of 55.9% from $6.81 million in the same period in 2021, primarily due to a reduction in stock-based compensation[156]. - General and administrative expenses for the nine months ended September 30, 2022, were $8.45 million, a decrease of 40.4% from $14.17 million in the same period in 2021, mainly due to a significant reduction in stock-based compensation[165]. Inventory and Quality Issues - The company has canceled all purchase orders and future builds with Cenntro and is in discussions regarding unsaleable inventory[116]. - The company experienced a 100% failure rate in testing certain components from Cenntro, leading to a write-off of $1,317,289 in inventory[135]. Market Position and Future Outlook - The company’s vehicles are designed for low-speed logistics and community transport, targeting commercial customers[108]. - The company’s future growth depends on customers' willingness to adopt electric vehicles[102]. - The company is exploring potential partnerships and acquisitions to enhance its competitive position in the electric vehicle market following a strategic review[169]. Compliance and Regulatory Issues - The company has not regained compliance with Nasdaq's minimum bid price requirement of $1.00 per share as of the date of the report[112].

Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $980,000, an increase of 88% year-over-year, but a decline of 4% sequentially [10][14] - Net loss increased from $4.58 million in Q1 2022 to $5.97 million in Q2 2022, primarily due to a $1.32 million write-off related to defective components [11][15] - Cash and marketable securities at the end of Q2 2022 were $57.9 million, down from $63.5 million at the end of Q1 2022, with no debt [13][16] Business Line Data and Key Metrics Changes - The increase in revenue year-over-year was attributed to higher unit sales and deliveries of the Club Car Current light-duty EV and a higher average selling price [14] - The total operating expenses in Q2 2022 were approximately $4.1 million, down from $7.8 million in Q2 2021 and $4.4 million in Q1 2022, mainly due to reduced R&D expenses [15] Market Data and Key Metrics Changes - The company is focusing on the low-speed electric vehicle market, targeting applications in urban environments and indoor settings [6][12] - The supply chain for the new Ayro Z platform is 92% defined, with 85% of components sourced from North America, which is expected to lead to significant cost savings [8][9] Company Strategy and Development Direction - The company plans to unveil the Ayro Z prototype and open preorders by year-end 2022, with a focus on maximizing shareholder value through the new product cycle [12][17] - The strategy includes shifting from offshoring to onshoring and in-sourcing certain production aspects, which may lead to changes in existing partnerships [24][25] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the Ayro Z platform despite challenges faced in Q2, emphasizing the importance of the new product cycle for shareholder value [12][17] - The company does not anticipate a complete revenue drop as it transitions from the Current vehicle to the new Ayro Z platform [28] Other Important Information - The company has no immediate need to raise capital due to a strong balance sheet [13] - The Ayro Z platform is expected to have positive gross margins from the start, with margins improving as production scales up [31][32] Q&A Session Summary Question: Is there a prototype of the Ayro Z running in the wild? - Currently, there are no production-level Ayro Zs as the supply chain is 92% complete, with plans to build 17 prototypes for testing [19][20] Question: What is the visibility on partnerships and potential renegotiations? - The company is in negotiations regarding various partnerships, with a strategy to shift from offshoring to onshoring, which may lead to changes in relationships [24][25] Question: What does the revenue outlook look like for the rest of the year? - The company expects to generate revenue from existing inventory of the Current vehicle while transitioning to the new Ayro Z platform [28] Question: Is the balance sheet sufficient to support the transition? - Management agrees that the balance sheet is adequate, with expectations of positive gross margins on the Z units [29][31] Question: Will the company benefit from EV incentives in the new bill? - Management is uncertain about the extent of incentives but believes the platform will be competitively priced without relying heavily on them [35][36]

Financial Performance - The company has a history of losses and has never been profitable, expecting to incur additional losses in the future[98] - Revenue for the three months ended June 30, 2022, was $0.98 million, an increase of 88% compared to $0.52 million for the same period in 2021[151] - Revenue for the six months ended June 30, 2022, was $2.01 million, an increase of 53.2% compared to $1.32 million for the same period in 2021[158] - Cost of goods sold increased by $2.4 million, or 556.8%, for the three months ended June 30, 2022, primarily due to a $1.32 million write-off of NCM inventory[152] - Cost of goods sold increased by $2.93 million, or 272.5%, for the six months ended June 30, 2022, due to inventory write-offs and increased vehicle sales[159] - Gross margin percentage was (188.1)% for the three months ended June 30, 2022, a significant decrease from 17.5% for the same period in 2021[153] - General and administrative expenses were $2.74 million for the three months ended June 30, 2022, a decrease of $1.32 million, or 32.5%, primarily due to a reduction in stock-based compensation[156] - General and administrative expenses for the six months ended June 30, 2022, were $5.45 million, a decrease of $1.91 million, or 26%, primarily due to a decrease in stock-based compensation[164] - As of June 30, 2022, the company had $40.89 million in cash and $17.97 million in marketable securities, down from $69.16 million in cash at the end of 2021[165] Product Development and Strategy - The company plans to unveil the first AYRO Z prototype in the fourth quarter of 2022, focusing on the development and launch of this new model[105] - The company has canceled the development of a planned next-generation three-wheeled high-speed vehicle as part of a strategic review initiated in 2021[103] - The company ceased production of the AYRO 411x in September 2022 due to rising shipping costs and quality issues, focusing instead on the AYRO Z[104] - The company is transitioning from the AYRO 411x platform to the AYRO Z, with plans to retire the 411x assembly line by late September 2022[119] - A supply agreement with Gallery Carts led to the launch of an all-electric configurable mobile hospitality vehicle, addressing the demand for mobile food and beverage options[120] Supply Chain and Operational Challenges - The Master Procurement Agreement with Club Car requires a minimum order of 500 vehicles per year, which Club Car did not meet for 2020 and 2021[113] - The company intends to eliminate dependency on Chinese imports for the AYRO Z and optimize the supply chain to North American and European sources[112] - Supply chain shortages of lithium-ion battery cells and other critical components are expected to continue impacting production through the third quarter of 2022[129] - Shipping costs have increased to at least three times historical levels, significantly impacting profitability and operational margins[128] - The COVID-19 pandemic has adversely impacted the company's operations, delaying raw material procurement and affecting sales and demand through at least the third quarter of 2022[124] Internal Controls and Governance - The company has identified a material weakness in its internal control over financial reporting, which could harm its business if not remediated[100] - The company is evaluating its relationship with Club Car and may seek a new business partner for selling products starting with the AYRO Z[123] - The company is exploring potential partnerships and acquisitions to enhance its competitive position in the electric vehicle market[167] Research and Development - Research and development expense decreased by $2 million, or 65.6%, to $1.05 million for the three months ended June 30, 2022, due to repositioning of expenses[154] Agreements and Contracts - The company has a manufacturing services agreement with Karma, with an initial payment of $1.2 million for assembly and logistics services[116] - The Karma Agreement was amended to allow Karma to assemble a certain number of units of the AYRO 411x vehicle, expiring in September 2022[117]

Ayro, Inc. (NASDAQ:AYRO) Q1 2022 Earnings Conference Call May 2, 2022 8:30 AM ET Company Participants Scott Gordon - Core IR Thomas Wittenschlaeger - Chief Executive Officer David Hollingsworth - Chief Financial Officer (Interim) Conference Call Participants Operator Ladies and gentlemen, thank you for standing by. Good morning and welcome to the Ayro Inc. First Quarter 2022 Financial Results and Corporate Update Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions ...

Financial Performance - The company has a history of losses and has never been profitable, expecting to incur additional losses in the future[84] - Revenue for the three months ended March 31, 2022, was $1.03 million, an increase of 30.2% or $0.24 million compared to $0.79 million for the same period in 2021[130] - Net loss for the three months ended March 31, 2022, was $4.58 million, a decrease of $1.06 million compared to a net loss of $5.63 million for the same period in 2021[129] - Cash used in operating activities was $5.55 million for the three months ended March 31, 2022, an increase of $2.1 million compared to $3.45 million in the same period in 2021[140] - Cash used in investing activities was $20.12 million for the three months ended March 31, 2022, compared to $0.15 million in the same period in 2021, primarily due to investment in marketable securities[140] - As of March 31, 2022, the company had $43.49 million in cash and $19.98 million in marketable securities, down from $69.16 million in cash as of December 31, 2021[135] Revenue Sources - Approximately 99% of the company's revenues for the three months ended March 31, 2022, were derived from Club Car[100] - Revenue is primarily derived from the sale of four-wheeled electric vehicles, with recognition upon shipment to customers[117] Operational Challenges - The company experienced significant disruptions in operations due to the COVID-19 pandemic, affecting raw material procurement and customer demand, with expectations of continued impact through Q3 2022[111] - Shipping costs have increased to at least three times historical levels, adversely affecting profitability and operational margins[114] - Supply chain shortages of lithium-ion battery cells and critical components have slowed vehicle production, with expectations of continued impact through Q3 2022[115] - The company relies on a single third-party supplier for sub-assemblies, which poses risks to production and operational stability[86] Product Development and Strategy - The company is currently updating its model year 2023 vehicle lineup to support markets such as last-mile delivery and government use[91] - A strategic review of the product development strategy was initiated, pausing all material research and development activities related to the next-generation three-wheeled vehicle[92] - The company is evaluating its product development strategy, which may result in significant changes impacting its business and financial condition[84] - Research and development efforts are focused on the new AYRO Z fleet vehicle model, aimed at reducing dependency on Chinese imports and enhancing supply chain resilience[116] Expenses and Cost Management - Cost of goods sold increased by $0.53 million, or 82.6%, for the three months ended March 31, 2022, due to increased vehicle sales and shipping costs[131] - Gross margin percentage was (14.6%) for the three months ended March 31, 2022, down from 18.3% for the same period in 2021, primarily due to increased shipping costs and out of scope costs[131] - Research and development expenses decreased by $1.06 million, or 54.7%, to $0.87 million for the three months ended March 31, 2022, due to repositioning of expenses[132] - Sales and marketing expenses increased by $0.28 million, or 150%, to $0.84 million for the three months ended March 31, 2022, as the company expanded its sales and marketing staff[133] - General and administrative expenses decreased by $0.60 million, or 18.3%, to $2.70 million for the three months ended March 31, 2022, primarily due to a reduction in headcount[134] Agreements and Partnerships - The company has minimum purchase requirements under its Manufacturing License Agreement with Cenntro, which includes selling a minimum of 1,300 units by the third anniversary of the agreement[95] - The Master Procurement Agreement with Club Car requires a minimum order of 500 vehicles per year to maintain exclusivity in North America[99] - The company has entered into a Master Manufacturing Services Agreement with Karma, agreeing to pay $1.2 million for manufacturing services[101] - The Karma Agreement allows for termination by either party with varying notice periods, with Karma having the discretion to terminate without cause upon twelve months' notice[102] - A supply agreement with Gallery Carts was established in 2020, leading to the launch of an all-electric mobile hospitality vehicle, catering to the growing demand for on-the-go food options[103] Market Demand - A study by Technomic indicated that 77% of students desire alternative mobile and to-go food options on campuses, highlighting market demand for innovative delivery solutions[104]

Ayro Inc. (NASDAQ:AYRO) Q4 2021 Earnings Conference Call March 23, 2022 8:30 AM ET Company Participants Tom Wittenschlaeger - Chief Executive Officer Dave Hollingsworth - Chief Financial Officer (interim) Scott Gordon - Core IR Conference Call Participants Barry Sine - Spartan Capital Securities Operator Good morning and welcome to the Ayro Inc. fourth quarter and year-end 2021 financial results and corporate update conference call. At this time, all participants are in a listen-only mode. Should you need a ...