AYRO(US:AYRO)2023-03-22 16:00Product 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].