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 June 30, 2024

☐	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 other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

900 E. Old Settlers Boulevard, Suite 100

Round Rock, Texas

78664

(Address of principal executive offices)

(Zip Code)

(512) 994-4917

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		AYRO		The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 13, 2024, the registrant had 6,878,618 shares of common stock outstanding.

AYRO, Inc.

Quarter Ended June 30, 2024

Table of Contents

		PAGE
PART I	FINANCIAL INFORMATION	F-1

ITEM 1.	Financial Statements (Unaudited)	F-1
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	F-1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	F-2
	Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	F-3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	F-4
	Notes to Condensed Consolidated Financial Statements (Unaudited)	F-5
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
ITEM 3.	Quantitative and Qualitative Disclosure About Market Risk	12
ITEM 4.	Controls and Procedures	12

PART II	OTHER INFORMATION	12

ITEM 1.	Legal Proceedings	12
ITEM 1A.	Risk Factors	12
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
ITEM 3.	Defaults Upon Senior Securities	13
ITEM 4.	Mine Safety Disclosures	13
ITEM 5.	Other Information	13
ITEM 6.	Exhibits	14

SIGNATURES		15

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements (Unaudited)

AYRO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2024			2023
	Unaudited			Audited
ASSETS
Current assets:
Cash and cash equivalents	$	14,091,100		$	33,440,867
Restricted cash		—			10,000,000
Marketable securities		22,872,151			—
Accounts receivable, net of allowance for credit losses of $130,515 and $53,696 at June 30, 2024, and December 31, 2023, respectively		129,302			219,000
Inventory		3,314,008			3,431,982
Prepaid expenses and other current assets		1,587,261			1,887,782
Total current assets		41,993,822			48,979,631

Property and equipment, net		2,351,061			3,117,164
Operating lease – right-of-use asset		569,346			671,451
Deposits and other assets		82,564			95,532
Total assets	$	44,996,793		$	52,863,778

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	3,500,916		$	2,456,258
Accrued expenses and other current liabilities		1,509,201			1,656,541
Accrued preferred stock redemption payable (H-7)		1,329,047			—
Current portion lease obligation – operating lease		206,112			196,682
Total current liabilities		6,545,276			4,309,481

Derivative liability		6,773,000			9,400,000
Warrant liability		4,309,500			13,319,800
Lease obligation - operating lease, net of current portion		396,712			502,831
Total liabilities		18,024,488			27,532,112

MEZZANINE EQUITY
Redeemable Series H-7 Convertible Preferred Stock, ($0.0001 par value per share and $1,000 face value per share; authorized - 22,000 shares; issued and outstanding – 19,333 and 22,000 shares, at June 30, 2024, and December 31, 2023, respectively). Liquidation preference of $ $22,044,550, as of June 30, 2024		14,140,756			11,193,939

Stockholders’ equity:
Preferred Stock, (authorized – 20,000,000 shares)		—			—
Series H Convertible Preferred Stock, ($0.0001 par value per share; authorized – 8,500 shares; issued and outstanding – 8 shares as of June 30, 2024, and December 31, 2023, respectively) Liquidation preference of $1 as of June 30, 2024		—			—
Convertible Preferred Stock Series H-3, ($0.0001 par value; authorized – 8,461 shares; issued and outstanding – 1,234 shares as of June 30, 2024, and December 31, 2023, respectively) Liquidation preference of $101 as of June 30, 2024		—			—
Series H-6 Convertible Preferred Stock, ($0.0001 par value per share; authorized – 50,000 shares; issued and outstanding – 50 shares as of June 30, 2024, and December 31, 2023, respectively) Liquidation preference of $487 as of June 30, 2024		—			—
Preferred Stock, value		—			—

Common Stock, ($0.0001 par value; authorized – 200,000,000 shares; issued and outstanding – 6,572,618 and 4,913,907 shares as of June 30, 2024, and December 31, 2023, respectively)		657			492
Additional paid-in capital		124,885,063			129,467,274
Accumulated deficit		(112,054,171	)		(115,330,039	)
Total stockholders’ equity		12,831,549			14,137,727
Total liabilities, mezzanine equity and stockholders’ equity	$	44,996,793		$	52,863,778

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-1

AYRO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	2024			2023			2024			2023
	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue	$	—		$	139,544		$	58,351		$	252,628
Cost of goods sold		1,074,896			332,027			2,258,103			551,820
Gross loss		(1,074,896	)		(192,483	)		(2,199,752	)		(299,192	)

Operating expenses:
Research and development		622,567			2,405,398			1,382,984			4,535,388
Sales and marketing		285,035			420,861			553,390			1,138,953
General and administrative		1,977,358			3,247,731			5,039,684			6,091,047
Total operating expenses		2,884,960			6,073,990			6,976,058			11,765,388

Loss from operations		(3,959,856	)		(6,266,473	)		(9,175,810	)		(12,064,580	)

Other income (expense):
Interest income		140,567			117,278			293,865			261,638
Change in fair value - warrant liability		7,937,500			—			9,010,300			—
Change in fair value - derivative liability		2,618,000			—			2,627,000			—
Unrealized gain on marketable securities		301,921			146,935			266,902			198,215
Realized gain on marketable securities		74,998			8,193			452,121			73,193
Other income (expense), net		(198,510	)		(9,166	)		(198,510	)		52,532
Total other income (expense), net		10,874,476			263,240			12,451,678			585,578
Net income (loss) prior to provision for income taxes	$	6,914,620		$	(6,003,233	)	$	3,275,868		$	(11,479,002	)

Provision for income taxes		—			—			—			—

Net income (loss)	$	6,914,620		$	(6,003,233	)	$	3,275,868		$	(11,479,002	)

Dividends earned on H-7 convertible preferred stock		(546,648	)		—			(998,734	)		—
Accretion of discounts to redemption value of H-7 convertible preferred stock		(1,999,136	)		—			(5,094,609	)		—

Net income (loss) attributable to common stockholders		4,368,836			(6,003,233	)		(2,817,475	)		(11,479,002	)

Net income (loss) per share, basic	$	0.78		$	(1.28	)	$	(0.53	)	$	(2.46	)
Net income (loss) per share, diluted (NOTE 14)	$	0.14		$	(1.28	)	$	(0.53	)	$	(2.46	)

Basic weighted average Common Stock outstanding		5,615,725			4,684,606			5,270,757			4,674,819
Diluted weighted average Common Stock outstanding (NOTE 14)		16,638,755			4,684,606			5,270,757			4,674,819

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-2

AYRO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

(UNAUDITED)

SEC Form 10-Q filed by AYRO Inc.