AYRO(AYRO) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited financial statements, management's analysis, market risk disclosures, and internal controls Financial Statements (Unaudited) The company reported zero revenue and a net income of $0.85 million in Q1 2025, but faces substantial doubt about its going concern ability due to insufficient funds Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $16.2 million from $21.7 million, total liabilities increased to $9.8 million, and equity declined to $3.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $12,818 | $16,035 | | Total current assets | $15,734 | $21,262 | | Total assets | $16,155 | $21,739 | | Liabilities & Equity | | | | Total current liabilities | $7,147 | $4,162 | | Total liabilities | $9,784 | $9,469 | | Total stockholders' equity | $3,006 | $4,682 | | Total liabilities & equity | $16,155 | $21,739 | Condensed Consolidated Statements of Operations For Q1 2025, the company generated zero revenue, reduced operating expenses to $2.0 million, and achieved a net income of $0.85 million due to non-cash gains, contrasting with a $3.6 million net loss in Q1 2024 Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $0 | $58 | | Gross loss | $0 | $(1,125) | | Total operating expenses | $1,974 | $4,091 | | Loss from operations | $(1,974) | $(5,216) | | Total other income, net | $2,819 | $1,577 | | Net income (loss) | $845 | $(3,639) | | Net loss attributable to common stockholders | $(1,676) | $(7,186) | | Net loss per share (basic and diluted) | $(0.20) | $(1.46) | Condensed Consolidated Statements of Cash Flows For Q1 2025, net cash used in operating activities was $1.5 million, investing activities provided $1.7 million, and financing activities used $3.5 million, resulting in a total cash decrease of $3.3 million Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,476) | $(4,682) | | Net cash provided by (used in) investing activities | $1,749 | $(23,299) | | Net cash used in financing activities | $(3,546) | $0 | | Net change in cash, cash equivalents and restricted cash | $(3,273) | $(27,981) | - In February 2025, the Company announced the launch of its new robotics division, focused on AI-driven, automated manufacturing of EVs and accompanying accessories[19] - Management has concluded that there is substantial doubt about the Company's ability to continue as a going concern for a period of twelve months from the issuance of these financial statements, as existing cash is not sufficient to fund operations[21] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategic shift, zero Q1 2025 revenue, reduced expenses, ongoing going concern issues, and Nasdaq compliance challenges Results of Operations In Q1 2025, revenue dropped to zero, operating expenses decreased by $2.1 million (52%), and a $2.8 million non-cash gain led to a net income of $0.85 million, a significant turnaround from a $3.6 million net loss in Q1 2024 Comparison of Operations for the Three Months Ended March 31 (in thousands) | Item | 2025 | 2024 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $0 | $58 | $(58) | -100% | | Gross Loss | $0 | $(1,125) | $1,125 | 100% | | Research and development | $308 | $760 | $(452) | -60% | | Sales and marketing | $0 | $268 | $(268) | -100% | | General and administrative | $1,666 | $3,062 | $(1,396) | -46% | | Loss from operations | $(1,974) | $(5,216) | $3,242 | 62% | | Net income (loss) | $845 | $(3,639) | $4,484 | 123% | - The decrease in operating expenses was primarily due to cost reduction initiatives, including a significant decrease in headcount, suspension of marketing efforts, and fewer professional service engagements[72][73][75] Liquidity and Capital Resources The company's liquidity weakened with cash falling to $12.8 million and working capital to $8.6 million, reinforcing the 'going concern' issue as current funds are insufficient for the next 12 months Liquidity Position (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $12.8 | $16.0 | | Marketable securities | $2.5 | $4.1 | | Working capital | $8.6 | $17.1 | - The company is required to redeem its Series H-7 Preferred Stock in 12 equal monthly installments, which commenced in May 2024, payable in cash or, subject to limitations, common stock[85][86] - In March 2025, the company amended the terms of the Series H-7 Preferred Stock, modifying a restrictive covenant to require maintaining cash equal to at least 120% of the outstanding stated value of the stock[92][93] - As of March 31, 2025, the company had no direct, full-time employees following an internal restructuring and is now working with consultants to re-engineer its 'Vanish' vehicle to lower material and manufacturing costs[59] - The company received a Nasdaq deficiency notice for its stock price falling below the $1.00 minimum bid requirement and has until July 14, 2025, to regain compliance[51][52] - Management states that existing cash and marketable securities as of March 31, 2025, will not be sufficient to fund operations for at least the next twelve months, raising substantial doubt about its ability to continue as a going concern[83] Quantitative and Qualitative Disclosure About Market Risk This section is not applicable for the reporting period - The company has indicated that this disclosure is not applicable[106] Controls and Procedures Management concluded that disclosure controls were ineffective as of March 31, 2025, due to material weaknesses including lack of formalized policies, insufficient segregation of duties, and inadequate IT controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were ineffective as of March 31, 2025[108] - A material weakness was identified due to: (i) lack of formalized controls and policies, (ii) failure to maintain effective control activities over the control environment, and (iii) insufficient segregation of duties and oversight in finance and accounting functions due to limited personnel[110] - To remediate the material weakness, management has engaged external consultants to provide support and assist in evaluating complex accounting applications[111] PART II - OTHER INFORMATION This section details legal proceedings, key risk factors, equity transactions, and other relevant corporate information Legal Proceedings The company is subject to various legal claims in the ordinary course of business, but management does not believe the outcome of any of these matters will have a material adverse effect on its financial position or operations - The Company is subject to various legal proceedings and claims arising in the ordinary course of business, which management believes are incidental and will not have a material adverse effect[35][114] Risk Factors The primary risk factor highlighted is the company's ability to continue as a 'going concern,' as it lacks sufficient financial resources for the next twelve months and depends on raising additional capital - Management has substantial doubt about the Company's ability to continue as a going concern because it lacks sufficient resources to fund operations for the next twelve months[118] - The company will need to raise additional capital to finance its losses; if unsuccessful in commercializing products and raising capital, it may need to curtail or cease operations[119] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None[120] Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None[121] Mine Safety Disclosures This section is not applicable to the company - Not applicable[122] Other Information The company announced its 2025 Annual Meeting of Stockholders will be held virtually on May 19, 2025, with new deadlines for stockholder proposals due to a significant change in meeting date - The Company's 2025 Annual Meeting of Stockholders was scheduled to be held virtually on May 19, 2025[123] - The deadline for stockholder proposals for the Annual Meeting was set for April 18, 2025, due to the meeting date changing by more than 30 days from the previous year's anniversary[124][125] Exhibits This section lists the exhibits filed with the Form 10-Q, including amendments to preferred stock designations, waiver agreements, and officer certifications Signatures This section contains the official signatures of the principal executive and financial officers, certifying the report's contents - The report was signed on May 14, 2025, by Joshua Silverman, Executive Chairman (Principal Executive Officer), and Joseph Ramelli, Chief Financial Officer (Principal Financial and Accounting Officer)[130]