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 September 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 November 11, 2024, the registrant had 6,812,141 shares of common stock outstanding.

AYRO, INC.

QUARTER ENDED SEPTEMBER 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 September 30, 2024 and December 31, 2023	F-1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2024 and 2023	F-2
	Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023	F-3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 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	13

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

SIGNATURES		15

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

AYRO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2024			2023
	Unaudited			Audited
ASSETS
Current assets:
Cash and cash equivalents	$	2,729,904		$	33,440,867
Restricted cash		10,022,700			10,000,000
Marketable securities		16,127,434			—
Accounts receivable, net of allowance for credit losses of $0 and $53,696 at September 30, 2024, and December 31, 2023, respectively		—			219,000
Inventory		3,209,892			3,431,982
Prepaid expenses and other current assets		1,287,553			1,887,782
Total current assets		33,377,483			48,979,631

Property and equipment, net		1,973,465			3,117,164
Operating lease – right-of-use asset		521,236			671,451
Deposits and other assets		53,368			95,532
Total assets	$	35,925,552		$	52,863,778

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,382,260		$	2,456,258
Accrued expenses and other current liabilities		1,332,991			1,656,541
Accrued preferred stock redemption payable (H-7)		2,166,268			—
Current portion lease obligation – operating lease		211,766			196,682
Total current liabilities		5,093,285			4,309,481

Derivative liability		4,365,000			9,400,000
Warranty liability		4,182,900			13,319,800
Lease obligation - operating lease, net of current portion		340,959			502,831
Total liabilities		13,982,144			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 – 14,500 and 22,000 shares, at September 30, 2024, and December 31, 2023, respectively). Liquidation preference of $16,857,966, as of September 30, 2024		10,485,122			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 September 30, 2024, and December 31, 2023, respectively) Liquidation preference of $1 as of September 30, 2024		—			—
Convertible Preferred Stock Series H-3, ($0.0001 par value; authorized – 8,461 shares; issued and outstanding – 1,234 shares as of September 30, 2024, and December 31, 2023, respectively) Liquidation preference of $108 as of September 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 September 30, 2024, and December 31, 2023, respectively) Liquidation preference of $525 as of September 30, 2024
Preferred Stock, value		—			—
Common Stock, ($0.0001 par value; authorized – 200,000,000 shares; issued and outstanding – 7,004,952 and 4,913,907 shares as of September 30, 2024, and December 31, 2023, respectively)		700			492
Additional paid-in capital		122,961,200			129,467,274
Accumulated deficit		(111,503,614	)		(115,330,039	)
Total stockholders’ equity		11,458,286			14,137,727
Total liabilities, mezzanine equity and stockholders’ equity	$	35,925,552		$	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 September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue	$	5,426		$	88,395		$	63,777		$	341,023
Cost of goods sold		286,028			231,837			2,544,131			783,656
Gross loss		(280,602	)		(143,442	)		(2,480,354	)		(442,633	)

Operating expenses:
Research and development		14,776			1,335,167			1,397,760			5,870,555
Sales and marketing		216,605			390,684			769,995			1,529,637
General and administrative		1,414,026			4,370,684			6,453,710			10,461,733
Total operating expenses		1,645,407			6,096,535			8,621,465			17,861,925

Loss from operations		(1,926,009	)		(6,239,977	)		(11,101,819	)		(18,304,558	)

Other income (expense):
Interest income		89,060			35,557			382,925			370,387
Change in fair value - warrant liability		126,600			(10,095,960	)		9,136,900			(10,095,960	)
Change in fair value - derivative liability		2,408,000			3,216,000			5,035,000			3,216,000
Unrealized gain (loss) on marketable securities		(240,743	)		403,996			26,159			602,211
Realized gain on marketable securities		562,627			90,812			1,014,748			143,344
Other income (expense), net		(468,978	)		—			(667,488	)		—
Total other income (expense), net		2,476,566			(6,349,595	)		14,928,244			(5,764,018	)
Net income (loss) prior to provision for income taxes	$	550,557		$	(12,589,572	)	$	3,826,425		$	(24,068,576	)

Provision for income taxes		—			—			—			—

Net income (loss)	$	550,557		$	(12,589,572	)	$	3,826,425		$	(24,068,576	)

Dividends earned on Series H-7 convertible preferred stock		(741,172	)		(

SEC Form 10-Q filed by AYRO Inc.