GlobeNewswire Inc | Nov 15, 2021 07:30AM EST

November 15, 2021

AUSTIN, TX, Nov. 15, 2021 (GLOBE NEWSWIRE) -- AYRO, Inc. (Nasdaq: AYRO) (AYRO or the Company), a designer and manufacturer of electric, purpose-built delivery vehicles and solutions for micro distribution, micro mobility, and last-mile delivery, announces financial results for its third fiscal quarter ended September 30, 2021.

Third Quarter 2021Financial Highlights:

-- Revenue of $559,370 (+44% YOY) -- Net Loss Attributable to Common Stockholders of ($12.0) million -- Adjusted EBITDA loss of ($8.2) million -- Total Cash of $77.1million and no debt as of September 30, 2021

Recent Corporate Highlights:

-- Launched the 2022 AYRO Club Car Current, the next generation of the AYRO Club Car 411 that features a unique industrial design, enhanced ergonomics, and new options for safety and comfort, in early June 2021 -- Recognized a charge of $0.4 million in its cost of goods sold related to the retirement of the remaining original Club Car 411 product, which was replaced by the Club Car Current (Current) -- Announced a total of $4.9 million in purchase orders for the Current from Club Car received in the second and third quarters in conjunction with the Currents launch -- Appointed Thomas M. Wittenschlaeger as Chief Executive Officer

Contracted backlog of $4.1 million as of September 30, 2021

Thomas M. Wittenschlaeger, AYROs Chief Executive Officer, stated, The third quarter provided the opportunity to garner new customers for our Current model with Club Car and recognize an increase in year-over-year revenue. Having recently joined AYRO and given our healthy balance sheet, including over $77 million in cash at quarter end, I believe now is the time for us to evaluate our strategy and operations to ensure we are headed down the path within the electric vehicle market that provides the most shareholder value. I look forward to working with the AYRO team and updating shareholders toward the end of the calendar year to discuss our plans moving into 2022 and beyond.

About AYRO, Inc.

Texas-based AYRO, Inc. designs and produces all-electric, purpose-built vehicles that are powered by technology and usable by anyone. Driven by insight gained from partners, customers, and research, AYRO delivers sustainable e-delivery solutions that empower organizations to enable sustainable fleets that extend both their brand value and exceptional user experience throughout the delivery process. Founded in 2017 by entrepreneurs, investors, and executives with a passion for creating sustainable electric vehicle solutions, AYRO is focused on adaptable, eco-friendly solutions that can drive change in campus, micro distribution, micro mobility, and last-mile delivery. For more information, visit:www.ayro.com.

Forward-Looking Statements

This press release may contain forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any expected future results, performance, or achievements. Words such as anticipate, believe, could, estimate, expect, goal, may, plan, project, target, will, would and their opposites and similar expressions are intended to identify forward-looking statements and include statements concerning the strategic review of the Companys product development strategy . Such forward-looking statements are based on the beliefs of management as well as assumptions made by and information currently available to management. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, without limitation: we are currently evaluating our product development strategy, which may result in significant changes and have a material impact on our business, results of operations and financial condition; if disruptions in our transportation network continue to occur or our shipping costs continue to increase, we may be unable to sell or timely deliver our products, and our gross margin could decrease; increases in costs, disruption of supply or shortage of raw materials, in particular lithium-ion cells and other critical components, could harm our business; the ability of AYROs suppliers to deliver parts and assemble vehicles; the ability of the purchaser to terminate or reduce purchase orders; AYRO has a history of losses and has never been profitable, and AYRO expects to incur additional losses in the future and may never be profitable; the impact of public health epidemics, including the COVID-19 pandemic; the market for AYROs products is developing and may not develop as expected and AYRO, accordingly, may never meet its targeted production and sales goals; AYROs business is subject to general economic and market conditions, including trade wars and tariffs; AYROs business, results of operations and financial condition may be adversely impacted by public health epidemics, including the recent COVID-19 outbreak; AYROs limited operating history makes evaluating its business and future prospects difficult and may increase the risk of any investment in its securities; AYRO may experience lower-than-anticipated market acceptance of its vehicles; developments in alternative technologies or improvements in the internal combustion engine may have a materially adverse effect on the demand for AYROs electric vehicles; the markets in which AYRO operates are highly competitive, and AYRO may not be successful in competing in these industries; a significant portion of AYROs revenues are derived from a single customer; AYRO relies on and intends to continue to rely on a single third-party supplier in China for the sub-assemblies in semi-knocked-down state for all of its current vehicles; AYRO may become subject to product liability claims, which could harm AYROs financial condition and liquidity if AYRO is not able to successfully defend or insure against such claims; the range of our electric vehicles on a single charge declines over time, which may negatively influence potential customers decisions whether to purchase AYROs vehicles; AYRO may be required to raise additional capital to fund its operations, and such capital raising may be costly or difficult to obtain and could dilute AYRO stockholders ownership interests, and AYROs long term capital requirements are subject to numerous risks; AYRO may fail to comply with environmental and safety laws and regulations; and AYRO is subject to governmental export and import controls that could impair AYROs ability to compete in international market due to licensing requirements and subject AYRO to liability if AYRO is not in compliance with applicable laws. A discussion of these and other factors is set forth in our most recent Annual Report on Form 10-K and subsequent reports on Form 10-Q. Forward-looking statements speak only as of the date they are made and AYRO disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

For media inquiries: For investor inquiries:Chelsea Lauber Joseph Delahoussaye IIIfor AYRO, Inc. for AYRO Inc.ayro@antennagroup.com investors@ayro.com

AYRO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, December 31, 2021 2020 (unaudited) ASSETS Current assets: Cash $ 77,099,134 $ 36,537,097 Accounts receivable, net 740,224 765,850 Inventory, net 2,670,282 1,173,254 Prepaid expenses and other current assets 2,450,225 1,608,762 Total current assets 82,959,865 40,084,963 Property and equipment, net 903,076 611,312 Intangible assets, net 109,110 143,845 Operating lease ? right-of-use asset 1,069,883 1,098,819 Deposits and other assets 41,289 22,491 Total assets $ 85,083,223 $ 41,961,430 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 1,187,625 $ 767,205 Accrued expenses 4,439,997 665,068 Contract liability - 24,000 Current portion long-term debt, net - 7,548 Current portion lease obligation ? 231,867 123,139 operating leaseTotal current liabilities 5,589,489 1,586,960 Long-term debt, net - 14,060 Lease obligation - operating lease, net of 897,032 1,002,794 current portionTotal liabilities 6,756,521 2,603,814 Commitments and contingencies Stockholders? equity: Preferred Stock, (authorized ? 20,000,000 - - shares)Convertible Preferred Stock Series H,($0.0001 par value; authorized ? 8,500shares; issued and outstanding ? 8 shares - - as of September 30, 2021 and December 31,2020)Convertible Preferred Stock Series H-3,($.0001 par value; authorized ? 8,461shares; issued and outstanding ? 1,234 - - shares as of September 30, 2021 andDecember 31, 2020)Convertible Preferred Stock Series H-6,($.0001 par value; authorized ? 50,000shares; issued and outstanding ? 50 shares - - as of September 30, 2021 and December 31,2020)Common Stock, ($0.0001 par value;authorized ? 100,000,000 shares; issued andoutstanding ? 36,432,789 and and 27,088,584 3,643 2,709 shares, as of September 30, 2021 andDecember 31, 2020)Additional paid-in capital 128,777,533 64,509,724 Accumulated deficit (50,454,474 ) (25,154,817 )Total stockholders? equity 78,326,702 39,357,616 Total liabilities and stockholders? equity $ 85,083,223 $ 41,961,430

AYRO, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)

Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Revenue $ 559,370 $ 388,654 $ 1,870,306 $ 821,398 Cost of goods 955,466 326,671 2,030,447 645,463 soldGross profit (396,096 ) 61,983 (160,141 ) 175,935 (loss) Operating expenses:Research and 4,165,732 664,145 9,135,410 999,449 developmentSales and 646,713 304,880 1,873,955 863,400 marketingGeneral and 6,805,788 1,482,018 14,168,782 3,445,749 administrativeTotaloperating 11,618,233 2,451,043 25,178,147 5,308,598 expenses Loss from (12,014,329 ) (2,389,060 ) (25,338,288 ) (5,132,663 )operations Other income (expense):Other income, 12,254 17,503 40,943 17,523 netInterest - (95,469 ) (2,312 ) (324,670 )expenseLoss onextinguishment - (213,700 ) - (566,925 )of debtOther income 12,254 (291,666 ) 38,631 (874,072 )(expense), net Net loss $ (12,002,075 ) $ (2,680,726 ) $ (25,299,657 ) $ (6,006,735 ) Deemeddividend onmodification - (432,727 ) - (432,727 )of Series H-5warrants Net lossAttributable $ (12,002,075 ) $ (3,113,453 ) $ (25,299,657 ) $ (6,439,462 )to CommonStockholders Net loss pershare, basic $ (0.33 ) $ (0.13 ) $ (0.73 ) $ (0.54 )and diluted Basic anddilutedweighted 36,312,478 23,599,967 34,615,858 11,896,906 average CommonStockoutstanding

AYRO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

Nine Months Ended September 30, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (25,299,657 ) $ (6,006,735 )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization 384,157 343,932 Stock-based compensation 6,997,986 475,175 Amortization of debt discount - 236,398 Loss on extinguishment of debt - 566,925 Amortization of right-of-use asset 149,376 80,447 Provision for bad debt expense 92,176 10,131 Change in operating assets and liabilities:Accounts receivable (66,550 ) (353,015 )Inventory (1,568,687 ) (406,239 )Prepaid expenses and other current assets (841,465 ) (1,697,474 )Deposits (18,797 ) 26,265 Accounts payable 420,420 285,184 Accrued expenses 1,168,858 (168,840 )Contract liability (24,000 ) 122,514 Lease obligations - operating leases (117,474 ) (57,163 )Net cash used in operating activities (18,723,657 ) (6,542,495 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (512,298 ) (581,137 )Purchase of intangible assets (57,227 ) (11,730 )Proceeds from merger with ABC Merger Sub, - 3,060,740 Inc.Net cash used in and provided by (569,525 ) 2,467,873 investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance debt - 1,318,000 Repayments of debt (21,609 ) (1,742,884 )Proceeds from exercise of warrants 100,000 2,983,527 Proceeds from exercise of stock options 1,506,999 - Proceeds from issuance of Common Stock, 58,269,829 28,790,995 net of fees and expensesNet cash provided by financing activities 59,855,219 31,349,638 Net change in cash 40,562,037 27,275,016 Cash, beginning of period 36,537,097 641,822 Cash, end of period $ 77,099,134 $ 27,916,838 Supplemental disclosure of cash and non-cash transactions:Cash paid for interest $ 1,971 $ 78,794 Supplemental non-cash amounts of leaseliabilities arising from obtaining right $ 120,440 $ 1,210,680 of use assetsConversion of debt to Common Stock $ - $ 1,000,000 Conversion of Preferred Stock to Common $ - $ 9,025,245 StockDiscount on debt from issuance of Common $ - $ 462,013 Stock and warrantsAccrued offering costs $ - $ 74,200 Deemed dividend on modification of Series $ - $ 432,727 H-5 warrantsRestricted Stock for service, vested not $ 2,648,371 $ - issued

Non-GAAP Financial Measures

We present Adjusted EBITDA because we consider it to be an important supplemental measure of our operating performance, and we believe it may be used by certain investors as a measure of our operating performance. Adjusted EBITDA is defined as income (loss) from operations before interest income and expense, income taxes, depreciation, amortization of intangible assets, amortization of discount on debt, impairment of long-lived assets, stock-based compensation expense and certain non-recurring expenses.

Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States, or GAAP. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact our non-cash operating expenses, we believe that providing a non-GAAP financial measure that excludes non-cash and non-recurring expenses allows for meaningful comparisons between our core business operating results and those of other companies, as well as providing us with an important tool for financial and operational decision making and for evaluating our own core business operating results over different periods of time.

Adjusted EBITDA may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. We do not consider Adjusted EBITDA to be a substitute for, or superior to, the information provided by GAAP financial results.

Below is a reconciliation of Adjusted EBITDA to net loss for the three months ended September 30, 2021 and 2020:

Three Months Ended September 30, 2021 2020 Net Loss $ (12,002,075 ) $ (2,680,726 )Depreciation and Amortization 130,483 115,468 Stock-based compensation expense 3,660,492 167,769 Amortization of Discount on Debt - 66,659 Interest expense - 28,809 Loss on extinguishment of debt - 213,700 Adjusted EBITDA $ (8,211,100 ) $ (2,088,321 )