AYRO(US:AYRO)2021-05-12 16:00Merger and Ownership - The merger on May 28, 2020, resulted in former AYRO Operating equity holders owning approximately 79% of the outstanding equity of the Company[139]. Product and Sales - AYRO's primary product sales are to Club Car, a division of Ingersoll Rand, Inc., with a focus on environmentally friendly electric vehicles for light-duty uses[146]. - AYRO's electric vehicles are designed for commercial customers, including universities and last-mile delivery services[145]. - Revenues from Club Car constituted approximately 75% of total revenue for the three months ended March 31, 2021[151]. - Revenue for the three months ended March 31, 2021, was $0.79 million, an increase of 437.3% compared to $0.15 million for the same period in 2020, driven by increased vehicle sales from the MPA with Club Car[177]. Financial Performance - AYRO has a history of losses and has never been profitable, with expectations of incurring additional losses in the future[136]. - Adjusted EBITDA for Q1 2021 was $(3.81) million, compared to $(1.43) million in Q1 2020, reflecting increased operating losses[188]. - Cost of goods sold increased by $0.53 million, or 469.6%, for the three months ended March 31, 2021, corresponding with the increase in vehicle sales[178]. - Gross margin percentage decreased to 18.3% for the three months ended March 31, 2021, down from 22.9% for the same period in 2020, primarily due to increased tariffs and shipping costs[178]. Expenses - Research and development (R&D) expense increased to $1.93 million for Q1 2021, up 1146.01% from $0.15 million in Q1 2020, driven by personnel costs and development of a next-generation vehicle[179]. - Sales and marketing expense rose to $0.56 million in Q1 2021, compared to $0.32 million in Q1 2020, due to expanded staff and marketing initiatives for the new three-wheeled vehicle[181]. - General and administrative expenses increased to $3.30 million in Q1 2021, up from $1.25 million in Q1 2020, primarily due to higher personnel costs and stock-based compensation[182]. Capital and Financing - The company entered into a securities purchase agreement on January 25, 2021, issuing 3,333,334 shares at $6.00 per share for gross proceeds of $20.0 million[158]. - A concurrent private placement sold warrants to purchase an additional 3,333,334 shares at an exercise price of $6.93 per share[158]. - On February 11, 2021, the company issued 4,400,001 shares at $9.50 per share for gross proceeds of $41.8 million[160]. - Cash and working capital as of March 31, 2021, were $91.49 million and $92.96 million, respectively, up from $36.54 million and $38.50 million as of December 31, 2020, due to capital raising activities[189]. - Net cash provided by financing activities was $58.55 million in Q1 2021, significantly higher than $0.50 million in Q1 2020[197]. Operational Risks - The company relies on a single third-party supplier in China for sub-assemblies, which poses risks to its operations[137]. - AYRO's business is subject to risks from general economic conditions, including trade wars and public health epidemics[136]. - The company has faced challenges related to market acceptance of its vehicles and competition from alternative technologies[137]. - The COVID-19 pandemic has adversely impacted the company's ability to procure raw materials and has delayed shipments, affecting sales and demand for products[164]. Agreements and Partnerships - The company has established minimum purchase requirements under its Manufacturing License Agreement with Cenntro, including 300 units by the first anniversary and 1,300 units by the third anniversary of the agreement[148]. - The partnership with Cenntro includes an exclusive license to purchase AYRO 411 Fleet vehicles for sale in North America[147]. - The company has a Master Procurement Agreement with Club Car, which grants Club Car exclusive rights to sell AYRO's four-wheeled vehicle in North America, contingent on ordering at least 500 vehicles per year[151]. - The company is engaged in discussions with Club Car to develop additional products for sale in Europe and Asia, although success is not guaranteed[151].