Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 03, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-34643 | |
Entity Registrant Name | AYRO, INC. | |
Entity Central Index Key | 0001086745 | |
Entity Tax Identification Number | 98-0204758 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 900 E. Old Settlers Boulevard | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | Round Rock | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78664 | |
City Area Code | (512) | |
Local Phone Number | 994-4917 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | AYRO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 37,020,518 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 39,428,850 | $ 69,160,466 |
Marketable securities | 15,790,595 | |
Accounts receivable, net | 456,372 | 969,429 |
Inventory | 1,479,501 | 3,744,037 |
Prepaid expenses and other current assets | 2,327,563 | 2,276,178 |
Total current assets | 59,482,881 | 76,150,110 |
Property and equipment, net | 1,663,385 | 835,160 |
Intangible assets, net | 99,023 | 88,322 |
Operating lease – right-of-use asset | 857,576 | 1,012,884 |
Deposits and other assets | 22,491 | 41,288 |
Total assets | 62,125,356 | 78,127,764 |
Current liabilities: | ||
Accounts payable | 1,163,398 | 647,050 |
Accrued expenses | 1,622,149 | 2,990,513 |
Current portion lease obligation – operating lease | 159,910 | 206,426 |
Total current liabilities | 2,945,457 | 3,843,989 |
Lease obligation - operating lease, net of current portion | 737,124 | 859,543 |
Total liabilities | 3,682,581 | 4,703,532 |
Stockholders’ equity: | ||
Preferred stock, value | ||
Common Stock, ($0.0001 par value; authorized – 100,000,000 shares; issued and outstanding – 37,131,380 and 36,866,975 as of September 30, 2022 and December 31, 2021, respectively) | 3,713 | 3,687 |
Additional paid-in capital | 132,907,975 | 131,654,776 |
Accumulated deficit | (74,468,913) | (58,234,231) |
Total stockholders’ equity | 58,442,775 | 73,424,232 |
Total liabilities and stockholders’ equity | 62,125,356 | 78,127,764 |
Convertible Preferred Stock Series H [Member] | ||
Stockholders’ equity: | ||
Preferred stock, value | ||
Convertible Preferred Stock Series H-3 [Member] | ||
Stockholders’ equity: | ||
Preferred stock, value | ||
Convertible Preferred Stock Series H-6 [Member] | ||
Stockholders’ equity: | ||
Preferred stock, value |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 37,131,380 | 36,866,975 |
Common stock, shares outstanding | 37,131,380 | 36,866,975 |
Convertible Preferred Stock Series H [Member] | ||
Preferred stock, shares authorized | 8,500 | 8,500 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 8 | 8 |
Preferred stock, shares outstanding | 8 | 8 |
Convertible Preferred Stock Series H-3 [Member] | ||
Preferred stock, shares authorized | 8,461 | 8,461 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 1,234 | 1,234 |
Preferred stock, shares outstanding | 1,234 | 1,234 |
Convertible Preferred Stock Series H-6 [Member] | ||
Preferred stock, shares authorized | 50,000 | 50,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 50 | 50 |
Preferred stock, shares outstanding | 50 | 50 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenue | $ 373,186 | $ 559,370 | $ 2,381,592 | $ 1,870,306 |
Cost of goods sold | 955,003 | 955,466 | 4,959,660 | 2,030,447 |
Gross loss | (581,817) | (396,096) | (2,578,068) | (160,141) |
Operating expenses: | ||||
Research and development | 1,837,510 | 4,165,732 | 3,749,714 | 9,135,410 |
Sales and marketing | 384,748 | 646,713 | 1,566,790 | 1,873,955 |
General and administrative | 3,000,156 | 6,805,788 | 8,446,785 | 14,168,782 |
Total operating expenses | 5,222,414 | 11,618,233 | 13,763,289 | 25,178,147 |
Loss from operations | (5,804,231) | (12,014,329) | (16,341,357) | (25,338,288) |
Other income (expense): | ||||
Other income, net | 51,792 | 12,254 | 71,389 | 40,943 |
Interest expense | (2,312) | |||
Realized gain on marketable securities | 103,000 | 110,490 | ||
Unrealized loss on marketable securities | (32,135) | (75,204) | ||
Other income (expense), net | 122,657 | 12,254 | 106,675 | 38,631 |
Net loss | $ (5,681,574) | $ (12,002,075) | $ (16,234,682) | $ (25,299,657) |
Net loss per share, basic and diluted | $ (0.15) | $ (0.33) | $ (0.44) | $ (0.73) |
Basic and diluted weighted average Common Stock outstanding | 37,094,631 | 36,312,478 | 36,995,497 | 34,615,858 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Series H Preferred Stock [Member] Preferred Stock [Member] | Series H-3 Preferred Stock [Member] Preferred Stock [Member] | Series H-6 Preferred Stock [Member] Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2020 | $ 2,709 | $ 64,509,724 | $ (25,154,817) | $ 39,357,616 | |||
Beginning balance, shares at Dec. 31, 2020 | 8 | 1,234 | 50 | 27,088,584 | |||
Stock Based Compensation | 1,699,423 | 1,699,423 | |||||
Net loss | (5,633,833) | (5,633,833) | |||||
Sale of common stock, net of fees | $ 804 | 58,269,025 | 58,269,829 | ||||
Sale of common stock, net of fees, shares | 8,035,835 | ||||||
Exercise Warrants | $ 1 | 99,999 | 100,000 | ||||
Exercise Warrants, shares | 13,642 | ||||||
Exercise of Options | $ 7 | 183,418 | 183,425 | ||||
Exercise of Options, shares | 74,987 | ||||||
Ending balance at Mar. 31, 2021 | $ 3,521 | 124,761,589 | (30,788,650) | 93,976,460 | |||
Ending balance, shares at Mar. 31, 2021 | 8 | 1,234 | 50 | 35,213,048 | |||
Beginning balance, value at Dec. 31, 2020 | $ 2,709 | 64,509,724 | (25,154,817) | 39,357,616 | |||
Beginning balance, shares at Dec. 31, 2020 | 8 | 1,234 | 50 | 27,088,584 | |||
Net loss | (25,299,657) | ||||||
Ending balance at Sep. 30, 2021 | $ 3,643 | 128,777,533 | (50,454,474) | 78,326,702 | |||
Ending balance, shares at Sep. 30, 2021 | 8 | 1,234 | 50 | 36,432,789 | |||
Beginning balance, value at Mar. 31, 2021 | $ 3,521 | 124,761,589 | (30,788,650) | 93,976,460 | |||
Beginning balance, shares at Mar. 31, 2021 | 8 | 1,234 | 50 | 35,213,048 | |||
Stock Based Compensation | 1,638,071 | 1,638,071 | |||||
Restricted stock vesting | $ 68 | (68) | |||||
Restricted stock vesting, shares | 681,725 | ||||||
Net loss | (7,663,749) | (7,663,749) | |||||
Exercise of Options | $ 39 | 1,041,452 | 1,041,491 | ||||
Exercise of Options, shares | 394,589 | ||||||
Issuance of common stock for services | $ 2 | 42,298 | 42,300 | ||||
Issuance of common stock for services, shares | 15,000 | ||||||
Ending balance at Jun. 30, 2021 | $ 3,630 | 127,483,342 | (38,452,399) | 89,034,573 | |||
Ending balance, shares at Jun. 30, 2021 | 8 | 1,234 | 50 | 36,304,362 | |||
Stock Based Compensation | 1,012,121 | 1,012,121 | |||||
Restricted stock vesting | $ 4 | (4) | |||||
Restricted stock vesting, shares | 42,999 | ||||||
Net loss | (12,002,075) | (12,002,075) | |||||
Exercise of Options | $ 9 | 282,074 | 282,083 | ||||
Exercise of Options, shares | 85,428 | ||||||
Ending balance at Sep. 30, 2021 | $ 3,643 | 128,777,533 | (50,454,474) | 78,326,702 | |||
Ending balance, shares at Sep. 30, 2021 | 8 | 1,234 | 50 | 36,432,789 | |||
Beginning balance, value at Dec. 31, 2021 | $ 3,687 | 131,654,776 | (58,234,231) | 73,424,232 | |||
Beginning balance, shares at Dec. 31, 2021 | 8 | 1,234 | 50 | 36,866,956 | |||
Stock Based Compensation | 288,110 | 288,110 | |||||
Restricted stock vesting | $ 4 | 329,377 | 329,381 | ||||
Restricted stock vesting, shares | 43,000 | ||||||
Net loss | (4,578,660) | (4,578,660) | |||||
Ending balance at Mar. 31, 2022 | $ 3,691 | 132,272,263 | (62,812,891) | 69,463,063 | |||
Ending balance, shares at Mar. 31, 2022 | 8 | 1,234 | 50 | 36,909,956 | |||
Beginning balance, value at Dec. 31, 2021 | $ 3,687 | 131,654,776 | (58,234,231) | 73,424,232 | |||
Beginning balance, shares at Dec. 31, 2021 | 8 | 1,234 | 50 | 36,866,956 | |||
Net loss | (16,234,682) | ||||||
Ending balance at Sep. 30, 2022 | $ 3,713 | 132,907,975 | (74,468,913) | 58,442,775 | |||
Ending balance, shares at Sep. 30, 2022 | 8 | 1,234 | 50 | 37,131,380 | |||
Beginning balance, value at Mar. 31, 2022 | $ 3,691 | 132,272,263 | (62,812,891) | 69,463,063 | |||
Beginning balance, shares at Mar. 31, 2022 | 8 | 1,234 | 50 | 36,909,956 | |||
Stock Based Compensation | 303,553 | 303,553 | |||||
Restricted stock vesting | $ 11 | (11) | |||||
Restricted stock vesting, shares | 110,562 | ||||||
Net loss | (5,974,448) | (5,974,448) | |||||
Ending balance at Jun. 30, 2022 | $ 3,702 | 132,575,805 | (68,787,339) | 63,792,168 | |||
Ending balance, shares at Jun. 30, 2022 | 8 | 1,234 | 50 | 37,020,518 | |||
Stock Based Compensation | 332,181 | 332,181 | |||||
Restricted stock vesting | $ 11 | (11) | |||||
Restricted stock vesting, shares | 110,862 | ||||||
Net loss | (5,681,574) | (5,681,574) | |||||
Ending balance at Sep. 30, 2022 | $ 3,713 | $ 132,907,975 | $ (74,468,913) | $ 58,442,775 | |||
Ending balance, shares at Sep. 30, 2022 | 8 | 1,234 | 50 | 37,131,380 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (16,234,682) | $ (25,299,657) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 442,890 | 384,157 |
Stock-based compensation | 923,844 | 6,997,986 |
Amortization of right-of-use asset | 155,308 | 149,376 |
Bad debt expense | 2,136 | 92,176 |
Realized gain on marketable securities | (110,490) | |
Unrealized loss on marketable securities | 75,204 | |
Impairment of inventory and prepaid | 2,351,947 | |
Change in operating assets and liabilities: | ||
Accounts receivable | 510,922 | (66,550) |
Inventory | 462,025 | (1,568,687) |
Prepaid expenses and other current assets | (1,430,565) | (841,465) |
Deposits | 18,798 | (18,797) |
Accounts payable | 516,347 | 420,420 |
Accrued expenses | (473,953) | 1,168,858 |
Contract liability | (24,000) | |
Lease obligations - operating leases | (168,935) | (117,474) |
Net cash used in operating activities | (12,959,204) | (18,723,657) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (970,557) | (512,298) |
Purchase of marketable securities, net | (15,755,309) | |
Purchase of intangible assets | (46,546) | (57,227) |
Net cash used in investing activities | (16,772,412) | (569,525) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayments of debt | (21,609) | |
Proceeds from exercise of warrants, net of fees | 100,000 | |
Proceeds from exercise of stock options | 1,506,999 | |
Proceeds from issuance of Common Stock, net of fees and expenses | 58,269,829 | |
Net cash provided by financing activities | 59,855,219 | |
Net change in cash | (29,731,616) | 40,562,037 |
Cash, beginning of year | 69,160,466 | 36,537,097 |
Cash, end of quarter | 39,428,850 | 77,099,134 |
Supplemental disclosure of cash and non-cash transactions: | ||
Cash paid for interest | 1,971 | |
Restricted Stock issued, previously accrued | 329,381 | |
Accrued Fixed Assets | 193,053 | |
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets | $ 120,440 |
ORGANIZATION AND NATURE OF OPER
ORGANIZATION AND NATURE OF OPERATIONS | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND NATURE OF OPERATIONS | NOTE 1. ORGANIZATION AND NATURE OF OPERATIONS AYRO, Inc. (“AYRO” or the “Company”), a Delaware corporation formerly known as DropCar, Inc. (“DropCar”), a corporation headquartered outside Austin, Texas, is the merger successor (as discussed below) of AYRO Operating Company, Inc. (“AYRO Operating”), which was formed under the laws of the State of Texas on May 17, 2016 as Austin PRT Vehicle, Inc. and subsequently changed its name to Austin EV, Inc. under an Amended and Restated Certificate of Formation filed with the State of Texas on March 9, 2017. On July 24, 2019, the Company changed its name to AYRO, Inc. and converted its corporate domicile to Delaware. The Company was founded on the basis of promoting resource sustainability. The Company, and its wholly-owned subsidiaries, are principally engaged in manufacturing and sales of environmentally-conscious, minimal-footprint electric vehicles. The all-electric vehicles are typically sold both directly and to dealers in the United States. Strategic Review Following the hiring of our new Chief Executive Officer in the third quarter of 2021, we initiated a strategic review of our product development strategy, as we focus on creating value within the electric vehicle, last-mile delivery, smart payload and enabling infrastructure markets. In connection with the strategic review, we canceled development of our planned next-generation three-wheeled high speed vehicle. For the past several years, the Company’s primary supplier has been Cenntro Automotive Group, Ltd. (“Cenntro”), which operates a large electric vehicle factory in the automotive district in Hangzhou, China. As a result of rising shipping costs, quality issues with certain components and persistent delays, the Company has decided to cease production of the AYRO 411x from Cenntro in September 2022 in order to focus its resources on the development and launch of the new 411 fleet vehicle model year 2023 refresh, the Vanish. In December 2021, the Company began design and development on the Vanish, including updates on its supply chain evolution, offshoring/onshoring mix, manufacturing strategy, and annual model year refresh program. Merger On May 28, 2020, pursuant to the previously announced Agreement and Plan of Merger, dated December 19, 2019, by and among AYRO, Inc., a Delaware corporation previously known as DropCar, Inc., ABC Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and AYRO Operating Company, Inc., a Delaware corporation previously known as AYRO, Inc. (“AYRO Operating”), Merger Sub was merged with and into AYRO Operating, with AYRO Operating continuing after the merger as the surviving entity and a wholly owned subsidiary of the Company (the “Merger”). |
LIQUIDITY AND OTHER UNCERTAINTI
LIQUIDITY AND OTHER UNCERTAINTIES | 9 Months Ended |
Sep. 30, 2022 | |
Liquidity And Other Uncertainties | |
LIQUIDITY AND OTHER UNCERTAINTIES | NOTE 2. LIQUIDITY AND OTHER UNCERTAINTIES The unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”), which contemplates continuation of the Company as a going concern. The Company is subject to a number of risks similar to those of earlier stage commercial companies, including dependence on key individuals and products, the difficulties inherent in the development of a commercial market, the potential need to obtain additional capital, competition from larger companies, other technology companies and other technologies. The Company has a limited operating history and the sales and income potential of its business and market are unproven. The Company incurred net losses of $ 16,234,682 for the nine months ended September 30, 2022, and negative cash flows from operations of $ 12,959,204 for the nine months ended September 30, 2022. At September 30, 2022, the Company had cash balances totaling $ 39,428,850 and marketable securities of $ 15,790,595 . In addition, as a result of the net losses incurred working capital has decreased by $ 15,768,697 during the nine months ended September 30, 2022. Management believes that the existing cash at September 30, 2022 will be sufficient to fund operations for at least the next twelve months following the issuance of these unaudited condensed consolidated financial statements. Since early 2020, when the World Health Organization declared the spread of the transmissible and pathogenic coronavirus a global pandemic, there have been business slowdowns and decreased demand for AYRO products. The outbreak of such a communicable disease has resulted in a widespread health crisis which has adversely affected general commercial activity and the economies and financial markets of many countries, including the United States. As the outbreak of the disease has continued through 2020, 2021 and into 2022, the measures taken by the governments of countries affected has adversely affected the Company’s business, financial condition, and results of operations. The Company has historically relied on foreign suppliers, including Cenntro which has been its largest supplier, for a number of raw materials, instruments and technologies that the Company purchases. The Company intends to reduce its reliance on foreign suppliers by sourcing components for the Vanish from vendors in the United States and in Europe, but its vendors may be reliant on foreign suppliers. The Company’s success is dependent on the ability for it and its suppliers to import or transport such products from vendors in a timely and cost-effective manner. The Company relies heavily on third parties, including ocean carriers and truckers, in that process. The global shipping industry is experiencing ocean shipping disruptions, trucking shortages, increased ocean shipping rates and increased trucking and fuel costs, and the Company cannot predict when these disruptions will end. There is currently a shortage of shipping capacity worldwide, and as a result, receipt of imported products by the Company or its vendors may be disrupted or delayed. The shipping industry is also experiencing issues with port congestion and pandemic-related port closures and ship diversions. Labor disputes among freight carriers and at ports of entry are common, and the Company expects labor unrest and its effects on shipping products to be a challenge for it and its vendors. A port worker strike, work slow-down or other transportation disruption in domestic ports could significantly disrupt the Company’s business. The Company is currently experiencing such disruption at the port due to multiple factors brought about by the COVID-19 pandemic, such as supply and demand imbalance, a shortage of warehouse workers, truck drivers, transport equipment (tractors and trailers) and other causes, which have resulted in heightened congestion, bottlenecks and gridlock, leading to abnormally high transportation delays. This has materially and adversely affected the Company’s business and could continue to materially and adversely affect our business and financial results. If significant disruptions along these lines continue, this could lead to further significant disruptions in the Company’s business, delays in shipments, (including shipments of components from overseas to the Company’s vendors), and revenue and profitability shortfalls, which could adversely affect the business, prospects, financial condition and operating results. On October 3, 2022, AYRO, Inc. (the “Company”) received a letter from the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock for the 30 consecutive business day period between August 19, 2022 and September 30, 2022, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). The letter also indicated that the Company will be provided with a compliance period of 180 calendar days, or until April 3, 2023 (the “Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A). The global shipping industry is also experiencing unprecedented increases in shipping rates from ocean carriers due to various factors, including limited availability of shipping capacity. For example, the cost of shipping products by ocean freight has recently increased to at least three times historical levels and has a corresponding impact on profitability. The Company and its vendors may find it necessary to rely on an increasingly expensive spot market and other alternative sources to make up any shortfall in shipping needs. Additionally, if further increases in fuel prices occur, transportation costs would likely further increase. Similarly, supply chain disruptions such as those described in the preceding paragraphs may lead to an increase in transportation costs. Such cost increases have adversely affected the Company’s business and could have additional adverse effects on the Company’s business, prospects, financial condition and operating results. The Company and its vendors may experience increases in the cost or a sustained interruption in the supply or shortage of raw materials, including lithium-ion battery cells, semiconductors, and integrated circuits. Any such increase or supply interruption could materially negatively impact the Company’s business, prospects, financial condition and operating results. Currently, the Company is experiencing supply chain shortages, including with respect to lithium-ion battery cells, integrated circuits, vehicle control chips, and displays. Even if the Company reduces its reliance on foreign vendors, it still may be impacted by such shortages if its domestic vendors rely upon foreign sources for components. Certain production-ready components may be delayed in shipment to Company facilities which has and may continue to cause delays in validation and testing for these components, which would in turn create a delay in the availability of saleable vehicles. The Company uses various raw materials, including aluminum, steel, carbon fiber, non-ferrous metals (such as copper), and cobalt. The prices for these raw materials fluctuate depending on market conditions, and global demand and could adversely affect business and operating results. For instance, the Company is exposed to multiple risks relating to price fluctuations for lithium-ion cells. These risks include: ● the inability or unwillingness of current battery manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric vehicle industry as demand for such cells increases; ● disruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers; and ● an increase in the cost of raw materials, such as cobalt, used in lithium-ion cells. Any disruption in the supply of lithium-ion battery cells, semiconductors, or integrated circuits could temporarily disrupt production of the Company’s vehicles until a different supplier is fully qualified. Moreover, battery cell manufacturers may refuse to supply electric vehicle manufacturers if they determine that the vehicles are not sufficiently safe. Furthermore, fluctuations or shortages in petroleum and other economic conditions may cause the Company to experience significant increases in freight charges and raw material costs. Substantial increases in the prices for our raw materials would increase operating costs and could reduce our margins if the increased costs cannot be recouped through increased electric vehicle prices. There can be no assurance that the Company will be able to recoup increasing costs of raw materials by increasing vehicle prices. We have made certain indemnities, under which we may be required to make payments to an indemnified party, in relation to certain transactions. We indemnify our directors and officers to the maximum extent permitted under the laws of the State of Delaware. In connection with our facility leases, we have indemnified our lessors for certain claims arising from the use of the facilities. The duration of the indemnities vary and, in many cases, are indefinite. These indemnities do not provide for any limitation of the maximum potential future payments we could be obligated to make. Historically, we have not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and in conformity with the instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, AYRO Operating and DropCar Operating Company, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the three and nine months ended September 30, 2022, are not necessarily indicative of the results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2021, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 23, 2022 as amended May 2, 2022. Use of Estimates The preparation of the accompanying unaudited condensed consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the accompanying unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s most significant estimates include allowance for doubtful accounts, valuation of inventory reserve, valuation of deferred tax asset allowance, valuation of long lived assets, sales warranties, and the measurement of stock-based compensation expenses. Actual results could differ from these estimates. Marketable Securities Marketable securities include investment in fixed income bonds and U.S. Treasury securities that are considered to be highly liquid and easily tradeable. The marketable securities are considered trading securities and are measured at fair value and are accounted for in accordance with ASC 320. The marketable securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within the Company’s fair value hierarchy. The Company held $ 15,790,595 Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. Nature of goods and services The following is a description of the Company’s products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each: Product revenue Product revenue from customer contracts is recognized on the sale of each electric vehicle as vehicles are shipped to customers. The majority of the Company’s vehicle sales orders generally have only one performance obligation: sale and delivery of complete vehicles. Ownership and risk of loss transfers to the customer based on FOB shipping point and freight charges are the responsibility of the customer. Revenue is typically recognized at the point control transfers or in accordance with payment terms customary to the business. The Company provides product warranties to assure that the product assembly complies with agreed upon specifications. The Company’s product warranty is similar in all material respects to the product warranties provided by the Company’s suppliers, therefore minimizing the warranty liability to the standard labor rates associated with the defective part replacement. Customers do not have the option to purchase a warranty separately; as such, warranty is not accounted for as a separate performance obligation. The Company’s policy is to exclude taxes collected from a customer from the transaction price of automotive contracts. Shipping revenue Amounts billed to customers related to shipping and handling are classified as shipping revenue. The Company has elected to recognize the cost for freight and shipping when control over vehicles has transferred to the customer as an operating expense. The Company has reported shipping expenses of $ 79,767 98,464 335,812 208,139 Services and other revenue Services and other revenue consist of non-warranty after-sales vehicle services. Revenue is typically recognized at a point in time when services and replacement parts are provided. Miscellaneous income Miscellaneous income consists of late fees charged for receivables not paid within the terms of the customer agreement based upon the outstanding customer receivable balance. This revenue is earned when a customer’s receivable balance becomes delinquent and its collection is reasonably assured and is calculated using a stated late fee rate multiplied by the outstanding balance that is subject to a late fee charge. Warrants and Preferred Shares The accounting treatment of warrants and preferred share series issued is determined pursuant to the guidance provided by ASC 470, Debt Distinguishing Liabilities from Equity Derivatives and Hedging Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”). The Company recognizes all employee and non-employee share-based compensation as an expense in the financial statements on a straight-line basis over the requisite service period, based on the terms of the awards. Equity-classified awards principally related to stock options, restricted stock awards (“RSAs”) and equity-based compensation, are measured at the grant date fair value of the award. The Company determines grant date fair value of stock option awards using the Black-Scholes option-pricing model. The fair value of RSAs is determined using the closing price of the Company’s common stock on the grant date. For service based vesting grants, expense is recognized ratably over the requisite service period based on the number of options or shares. For value-based vesting grants, expense is recognized via straight line expense over the expected period per grant as determined by outside valuation experts. Stock-based compensation is reversed for forfeitures in the period of forfeiture. We estimate the fair value of stock-based and cash unit awards containing a market condition using a Monte Carlo simulation model. Key inputs and assumptions used in the Monte Carlo simulation model include the stock price of the award on the grant date, the expected term, the risk-free interest rate over the expected term, the expected annual dividend yield and the expected stock price volatility. The expected volatility is based on a combination of the historical and implied volatility of the Company’s publicly traded, near-the-money stock options, and the valuation period is based on the vesting period of the awards. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant and, since the Company does not currently pay or plan to pay a dividend on its common stock, the expected dividend yield was zero. Stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the underlying equity instrument. The attribution of the fair value of the equity instrument is charged directly to compensation expense over the period during which services are rendered. Basic and Diluted Loss Per Share Basic and diluted net loss per share is determined by dividing net loss by the weighted average ordinary shares outstanding during the period. For all periods presented with a net loss, the shares underlying the ordinary share options and warrants have been excluded from the calculation because their effect would be anti-dilutive. Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per share are the same for periods with a net loss. The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE 2022 2021 2022 2021 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Options to purchase common stock 785,422 1,362,765 785,422 1,362,765 Restricted stock unvested 770,824 493,000 770,824 493,000 Restricted stock vested – unissued - 434,166 - 434,166 Warrants outstanding 6,106,023 6,108,823 6,106,023 6,108,823 Preferred stock outstanding 2,475 2,475 2,475 2,475 Total 7,664,744 8,401,229 7,664,744 8,401,229 |
REVENUES
REVENUES | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | NOTE 4. REVENUES Disaggregation of Revenue Revenue by type was as follows: SCHEDULE OF DISAGGREGATION OF REVENUE 2022 2021 2022 2021 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue type Product revenue $ 332,792 $ 494,011 $ 2,170,943 $ 1,710,579 Shipping revenue 35,507 65,359 165,762 123,040 Miscellaneous income 4,887 - 44,887 - Service income - - - 36,687 Total Revenue $ 373,186 $ 559,370 $ 2,381,592 $ 1,870,306 Warranty Reserve The Company records a reserve for warranty repairs upon the initial delivery of vehicles to its dealer network. The Company provides a product warranty on each vehicle including powertrain, battery pack and electronics package. Such warranty matches the product warranty provided by its supply chain for warranty parts for all unaltered vehicles and is not considered a separate performance obligation. The supply chain warranty does not cover warranty-based labor needed to replace a part under warranty. Warranty reserves include management’s best estimate of the projected cost of labor to repair/replace all items under warranty. The Company reserves a percentage of all dealer-based sales to cover an industry-standard warranty fund to support dealer labor warranty repairs. Such percentage is recorded as a component of cost of revenues in the statement of operations. As of September 30, 2022 and December 31, 2021, warranty reserves were recorded within accrued expenses of $ 410,017 240,517 |
ACCOUNTS RECEIVABLE, NET
ACCOUNTS RECEIVABLE, NET | 9 Months Ended |
Sep. 30, 2022 | |
Credit Loss [Abstract] | |
ACCOUNTS RECEIVABLE, NET | NOTE 5. ACCOUNTS RECEIVABLE, NET Accounts receivable, net, consists of amounts due from invoiced customers and product deliveries and were as follows: SCHEDULE OF ACCOUNTS RECEIVABLE 2022 2021 September 30, December 31, 2022 2021 Trade receivables $ 456,372 $ 1,142,567 Less: Allowance for doubtful accounts - (173,138 ) Accounts receivable, net $ 456,372 $ 969,429 The Company reduced allowance for doubtful accounts by $ 173,138 2,136 |
INVENTORY
INVENTORY | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 6. INVENTORY Inventory consisted of the following: SCHEDULE OF INVENTORY September 30, December 31, 2022 2021 Raw materials $ 537,166 $ 3,481,614 Work-in-progress - 51,441 Finished goods 942,335 210,982 Total $ 1,479,501 $ 3,744,037 For the three months ended September 30, 2022 and 2021, depreciation recorded for fleet inventory was $ 23,886 23,886 71,661 71,658 1,317,289 413,561 |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, December 31, 2022 2021 Prepaid final assembly services $ 167,331 $ 439,660 Prepayments for inventory 1,101,693 1,622,617 Prepayments for insurance 207,599 - Prepayments on advances on design 608,159 - Prepayments on software 133,099 - Prepaid other 109,682 213,901 Total Prepaid Expenses and Other Current Assets $ 2,327,563 $ 2,276,178 During the nine months ended September 30, 2022 the Company impaired prepaid balances of $ 1,377,709 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | NOTE 8. PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT, NET September 30, December 31, 2022 2021 Computer and equipment $ 1,344,204 $ 853,695 Furniture and fixtures 316,665 173,155 Lease improvements 662,013 282,271 Prototypes 450,225 300,376 Computer software 455,875 455,875 Property and equipment, gross 3,228,982 2,065,372 Less: Accumulated depreciation (1,565,597 ) (1,230,212 ) Property and equipment, net $ 1,663,385 $ 835,160 Depreciation expense for the three months ended September 30, 2022 and 2021 was $ 151,980 74,655 335,385 220,535 |
MARKETABLE SECURITIES
MARKETABLE SECURITIES | 9 Months Ended |
Sep. 30, 2022 | |
Cash and Cash Equivalents [Abstract] | |
MARKETABLE SECURITIES | NOTE 9. MARKETABLE SECURITIES Marketable securities consisted of the following: SCHEDULE OF MARKETABLE SECURITIES September 30, 2022 Realized Unrealized Transferred Cost Basis Gains Loss to Cash Total Bonds $ 12,235,258 $ 110,490 $ (75,204 ) $ (4,244,691 ) $ 8,025,853 US Treasury securities 7,764,742 - - - 7,764,742 $ 20,000,000 $ 110,490 $ (75,204 ) $ (4,244,691 ) $ 15,790,595 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | NOTE 10. STOCKHOLDERS’ EQUITY Restricted Stock On February 24, 2021, pursuant to the AYRO, Inc. 2020 Long-Term Incentive Plan, the Company granted 172,000 7.66 43,000 On February 1, 2022, pursuant to the AYRO, Inc. 2020 Long-Term Incentive Plan, the Company granted 442,249 1.29 221,424 Preferred Stock Series H Convertible Preferred Stock As of September 30, 2022, in the event of liquidation, the holders of preferred stock were entitled to receive payments as follows: SCHEDULE OF PAYMENT OF PREFERRED STOCK Number of Series H Preferred Stock outstanding as of September 30, 2022 8 Multiplied by the stated value $ 154 Equals the gross stated value $ 1,232 Divided by the conversion price $ 184.8 Equals the convertible shares of Company Common Stock 7 Multiplied by the fair market value of Company Common Stock as of September 30, 2022 $ 0.59 Liquidation Value $ 4 Series H-3 Convertible Preferred Stock As of September 30, 2022, in the event of liquidation, the holders of preferred stock were entitled to receive payments as follows: SCHEDULE OF PAYMENT OF PREFERRED STOCK Number of Series H-3 Preferred Stock outstanding as of September 30, 2022 1,234 Multiplied by the stated value $ 138.00 Equals the gross stated value $ 170,292 Divided by the conversion price $ 165.6 Equals the convertible shares of Company Common Stock 1,028 Multiplied by the fair market value of Company Common Stock as of September 30, 2022 $ 0.59 Liquidation Value $ 607 Series H-6 Convertible Preferred Stock As of September 30, 2022, in the event of liquidation, the holders of preferred stock were entitled to receive payments as follows: SCHEDULE OF PAYMENT OF PREFERRED STOCK Number of Series H-6 Preferred Stock outstanding as of September 30, 2022 50 Number of Series H Preferred Stock outstanding as of September 30, 2022 50 Multiplied by the stated value $ 72.00 Equals the gross stated value $ 3,600 Divided by the conversion price $ 2.5 Equals the convertible shares of Company Common Stock 1,440 Multiplied by the fair market value of Company Common Stock as of September 30, 2022 $ 0.59 Liquidation Value $ 850 Warrants SCHEDULE OF WARRANT ACTIVITY Shares Underlying Weighted Average Weighted Average Outstanding at December 31, 2021 6,108,823 $ 7.37 2.31 Granted - - Exercised - - Expired (2,800 ) 165.60 Outstanding at September 30, 2022 6,106,023 $ 7.30 1.57 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 11. STOCK-BASED COMPENSATION 2014 Equity Incentive Plan The Company’s equity incentive plan created in 2014 (the “2014 Plan”) was amended in 2018 to increase the number of shares of Company common stock available for issuance. Pursuant to the 2014 Plan, 141,326 no AYRO 2017 Long Term Incentive Plan The Company has reserved a total of 477,983 128,606 no AYRO 2020 Long Term Incentive Plan The Company has reserved a total of 4,089,650 1,366,183 shares 1,151,399 Stock-based compensation, including restricted stock awards, stock options and warrants is included in the unaudited condensed consolidated statement of operations as follows: SCHEDULE OF STOCK-BASED COMPENSATION Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Research and development $ 5,269 $ 18,786 $ 15,069 $ 62,980 Sales and marketing 6,001 60,771 19,816 184,853 General and administrative 320,911 3,580,935 888,959 6,750,153 Total $ 332,181 $ 3,660,492 $ 923,844 $ 6,997,986 Stock based compensation $ 332,181 $ 3,660,492 $ 923,844 $ 6,997,986 Options The following table reflects the stock option activity: SCHEDULE OF STOCK-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY Number of Shares Weighted Average Contractual Life (Years) Outstanding at December 31, 2021 1,338,675 $ 5.14 8.26 Granted 173,500 0.97 Forfeitures (726,753 ) 3.14 Outstanding at September 30, 2022 785,422 $ 6.10 7.97 Of the outstanding options, 608,726 0 The Company recognized $ 18,821 669,999 44,899 1,170,958 191,176 a The Company uses the following inputs when valuing stock-based awards. SCHEDULE OF FUTURE STOCK OPTION COMPENSATION EXPENSE For the nine months ended Company Common Stock as of Grant Date May 6, 2022 0.97 Time to Maturity 6 Dividend - Annual risk-free interest rate 2.04 % Annualized volatility 130.23 % Black-Scholes Value 0.87 Restricted Stock SCHEDULE OF STOCK-BASED COMPENSATION, RESTRICTED STOCK Number of Weighted Average Outstanding at December 31, 2021 450,000 $ 2.48 Granted 542,248 1.06 Vested (221,424 ) 1.29 Outstanding at September 30, 2022 770,824 $ 1.89 On February 1, 2022, pursuant to the Plan, the Company issued 442,248 1.29 100,000 0.03 313,360 2,990,493 878,945 5,827,028 631,307 |
CONCENTRATIONS AND CREDIT RISK
CONCENTRATIONS AND CREDIT RISK | 9 Months Ended |
Sep. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS AND CREDIT RISK | NOTE 12. CONCENTRATIONS AND CREDIT RISK Revenues In March 2019, the Company entered into a five-year Master Procurement Agreement, or the MPA, with Club Car, LLC (“Club Car”) for the sale of AYRO’s four-wheeled vehicle. The MPA grants Club Car the exclusive right to sell AYRO’s four-wheeled vehicle in North America, provided that Club Car orders at least 500 vehicles per year. The MPA has an initial term of five (5) years commencing January 1, 2019 and may be renewed by Club Car for successive one-year periods upon 60 days’ prior written notice, so long as those minimums are met. One customer accounted for approximately 100 99 96% 4 71% 28% In connection with the forthcoming introduction of the Vanish, the Company is reevaluating its channel strategy with an eye towards distributing their next-generation platform and payloads in a manner that maximizes visibility, moderates channel costs and creates value. Accordingly, the Company is evaluating their relationship with Club Car and may seek to replace Club Car with new business partners and channel partners for selling their products beginning with the Vanish. Any loss of Club Car as a customer, or significant reduction in purchases by Club Car, could have an adverse impact on the Company’s financial condition and operating results. Accounts Receivable As of September 30, 2022 one customer accounted for approximately 100 10 87 10 Purchasing The Company places orders with various suppliers. During the nine months ended September 30, 2022 and 2021, three suppliers provided more than 10% of the Company’s raw materials purchases. During the nine months ended September 30, 2022, one supplier accounted for approximately 57 12 51 11 49 17 13 56 16 Manufacturing Cenntro owns the design of the AYRO 411x model and has granted the Company an exclusive license to manufacture the AYRO 411x model for sale in North America. Under the Manufacturing License Agreement, dated April 27, 2017, between Cenntro and the Company (the “MLA”), the Company is required to purchase a minimum volume of product units from Cenntro, among other obligations, to maintain the license. On May 31, 2022, the Company received a letter from Cenntro purporting to terminate all agreements and contracts between the Company and Cenntro. Although the Company does not believe Cenntro’s termination of the MLA is valid, the Company has determined to cease production of the AYRO 411x and focus its resources on the development and launch of the Vanish. The Company has canceled all purchase orders and future builds with Cenntro and currently intends to only order replacement parts for vehicles from Cenntro in the future. The Company is in discussions with Cenntro concerning the potential repurchase by Cenntro of unsaleable inventory due to quality concerns. AYRO expects to lose its exclusive license under the MLA, in which case Cenntro could sell similar products through other companies or directly to the Company’s customers, which could have a material adverse effect on its results of operations and financial condition. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 13. COMMITMENTS AND CONTINGENCIES Manufacturing Agreements On September 25, 2020, AYRO entered into a Master Manufacturing Services Agreement (the “Karma Agreement”) with Karma Automotive, LLC (“Karma”). The Karma Agreement expired in September 2022. Pursuant to the agreement Karma agreed to provide certain manufacturing services, starting in 2021, under an attached statement of work including final assembly, raw material storage and logistical support of our vehicles in return for compensation of $ 1,160,800 The Company paid Karma an amount of $ 440,000 80,000 66,845 641,140 468,480 73,333 167,331 110,349 60,520 90,780 Litigation The Company is subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business, that it believes are incidental to the operation of its business. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have a material adverse effect on its results of operations, financial positions or cash flows. Supply Chain Agreements In 2017, the Company executed a supply chain contract with Cenntro, which has historically been the Company’s primary supplier. Prior to the Merger, Cenntro was a significant shareholder in AYRO Operating. Cenntro owns the design of the AYRO 411 Fleet vehicles and has granted the Company an exclusive license to purchase the AYRO 411 Fleet vehicles for sale in North America. The Company purchased 100% of its vehicle chassis, cabs and wheels for AYRO 411 Fleet Vehicles through this supply chain relationship with Cenntro. The Company must sell a minimum number of units in order to maintain its exclusive supply chain contract. See Note 12 for concentration amounts. As of December 31, 2021 the net balance between prepaid expenses and accrued expenses with Cenntro was a prepaid balance of $ 602,016 zero 621,097 1,317,289 The Company has canceled all purchase orders and future builds with Cenntro and currently intends to only order replacement parts from Cenntro in the future. Other As of January 1, 2019, DropCar had accrued approximately $ 232,000 $ 3,500 On March 23, 2018, DropCar was made aware of an audit being conducted by the New York State Department of Labor (“DOL”) regarding a claim filed by an employee. The DOL is investigating whether DropCar properly paid overtime for which DropCar has raised several defenses. In addition, the DOL is conducting its audit to determine whether the Company owes spread of hours pay (an hour’s pay for each day an employee worked or was scheduled for a period over ten hours in a day). Management believes the case has no merit. DropCar was a defendant in a class action lawsuit which resulted in a judgement entered into whereby the Company is required to pay legal fees in the amount of $ 45,000 $ 45,000 186,000 DropCar was audited by the New York State Department of Taxation and Finance (“DOTF”) for its sales tax paid over the period of 2017 – 2020. The DOTF believed DropCar owed additional sales tax plus interest. Management investigated the details. As of December 31, 2021 the Company had accrued the balance and as of June 30, 2022 paid the balance of $ 476,280 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and in conformity with the instructions on Form 10-Q and Rule 8-03 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, AYRO Operating and DropCar Operating Company, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of such statements. The results of operations for the three and nine months ended September 30, 2022, are not necessarily indicative of the results that may be expected for the entire year. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2021, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 23, 2022 as amended May 2, 2022. |
Use of Estimates | Use of Estimates The preparation of the accompanying unaudited condensed consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the accompanying unaudited condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s most significant estimates include allowance for doubtful accounts, valuation of inventory reserve, valuation of deferred tax asset allowance, valuation of long lived assets, sales warranties, and the measurement of stock-based compensation expenses. Actual results could differ from these estimates. |
Marketable Securities | Marketable Securities Marketable securities include investment in fixed income bonds and U.S. Treasury securities that are considered to be highly liquid and easily tradeable. The marketable securities are considered trading securities and are measured at fair value and are accounted for in accordance with ASC 320. The marketable securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within the Company’s fair value hierarchy. The Company held $ 15,790,595 |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation. Nature of goods and services The following is a description of the Company’s products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each: Product revenue Product revenue from customer contracts is recognized on the sale of each electric vehicle as vehicles are shipped to customers. The majority of the Company’s vehicle sales orders generally have only one performance obligation: sale and delivery of complete vehicles. Ownership and risk of loss transfers to the customer based on FOB shipping point and freight charges are the responsibility of the customer. Revenue is typically recognized at the point control transfers or in accordance with payment terms customary to the business. The Company provides product warranties to assure that the product assembly complies with agreed upon specifications. The Company’s product warranty is similar in all material respects to the product warranties provided by the Company’s suppliers, therefore minimizing the warranty liability to the standard labor rates associated with the defective part replacement. Customers do not have the option to purchase a warranty separately; as such, warranty is not accounted for as a separate performance obligation. The Company’s policy is to exclude taxes collected from a customer from the transaction price of automotive contracts. Shipping revenue Amounts billed to customers related to shipping and handling are classified as shipping revenue. The Company has elected to recognize the cost for freight and shipping when control over vehicles has transferred to the customer as an operating expense. The Company has reported shipping expenses of $ 79,767 98,464 335,812 208,139 Services and other revenue Services and other revenue consist of non-warranty after-sales vehicle services. Revenue is typically recognized at a point in time when services and replacement parts are provided. Miscellaneous income Miscellaneous income consists of late fees charged for receivables not paid within the terms of the customer agreement based upon the outstanding customer receivable balance. This revenue is earned when a customer’s receivable balance becomes delinquent and its collection is reasonably assured and is calculated using a stated late fee rate multiplied by the outstanding balance that is subject to a late fee charge. |
Warrants and Preferred Shares | Warrants and Preferred Shares The accounting treatment of warrants and preferred share series issued is determined pursuant to the guidance provided by ASC 470, Debt Distinguishing Liabilities from Equity Derivatives and Hedging |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation (“ASC 718”). The Company recognizes all employee and non-employee share-based compensation as an expense in the financial statements on a straight-line basis over the requisite service period, based on the terms of the awards. Equity-classified awards principally related to stock options, restricted stock awards (“RSAs”) and equity-based compensation, are measured at the grant date fair value of the award. The Company determines grant date fair value of stock option awards using the Black-Scholes option-pricing model. The fair value of RSAs is determined using the closing price of the Company’s common stock on the grant date. For service based vesting grants, expense is recognized ratably over the requisite service period based on the number of options or shares. For value-based vesting grants, expense is recognized via straight line expense over the expected period per grant as determined by outside valuation experts. Stock-based compensation is reversed for forfeitures in the period of forfeiture. We estimate the fair value of stock-based and cash unit awards containing a market condition using a Monte Carlo simulation model. Key inputs and assumptions used in the Monte Carlo simulation model include the stock price of the award on the grant date, the expected term, the risk-free interest rate over the expected term, the expected annual dividend yield and the expected stock price volatility. The expected volatility is based on a combination of the historical and implied volatility of the Company’s publicly traded, near-the-money stock options, and the valuation period is based on the vesting period of the awards. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect at the time of grant and, since the Company does not currently pay or plan to pay a dividend on its common stock, the expected dividend yield was zero. Stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the underlying equity instrument. The attribution of the fair value of the equity instrument is charged directly to compensation expense over the period during which services are rendered. |
Basic and Diluted Loss Per Share | Basic and Diluted Loss Per Share Basic and diluted net loss per share is determined by dividing net loss by the weighted average ordinary shares outstanding during the period. For all periods presented with a net loss, the shares underlying the ordinary share options and warrants have been excluded from the calculation because their effect would be anti-dilutive. Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per share are the same for periods with a net loss. The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE 2022 2021 2022 2021 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Options to purchase common stock 785,422 1,362,765 785,422 1,362,765 Restricted stock unvested 770,824 493,000 770,824 493,000 Restricted stock vested – unissued - 434,166 - 434,166 Warrants outstanding 6,106,023 6,108,823 6,106,023 6,108,823 Preferred stock outstanding 2,475 2,475 2,475 2,475 Total 7,664,744 8,401,229 7,664,744 8,401,229 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE | The following potentially dilutive securities have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive: SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE 2022 2021 2022 2021 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Options to purchase common stock 785,422 1,362,765 785,422 1,362,765 Restricted stock unvested 770,824 493,000 770,824 493,000 Restricted stock vested – unissued - 434,166 - 434,166 Warrants outstanding 6,106,023 6,108,823 6,106,023 6,108,823 Preferred stock outstanding 2,475 2,475 2,475 2,475 Total 7,664,744 8,401,229 7,664,744 8,401,229 |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
SCHEDULE OF DISAGGREGATION OF REVENUE | Revenue by type was as follows: SCHEDULE OF DISAGGREGATION OF REVENUE 2022 2021 2022 2021 Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue type Product revenue $ 332,792 $ 494,011 $ 2,170,943 $ 1,710,579 Shipping revenue 35,507 65,359 165,762 123,040 Miscellaneous income 4,887 - 44,887 - Service income - - - 36,687 Total Revenue $ 373,186 $ 559,370 $ 2,381,592 $ 1,870,306 |
ACCOUNTS RECEIVABLE, NET (Table
ACCOUNTS RECEIVABLE, NET (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Credit Loss [Abstract] | |
SCHEDULE OF ACCOUNTS RECEIVABLE | Accounts receivable, net, consists of amounts due from invoiced customers and product deliveries and were as follows: SCHEDULE OF ACCOUNTS RECEIVABLE 2022 2021 September 30, December 31, 2022 2021 Trade receivables $ 456,372 $ 1,142,567 Less: Allowance for doubtful accounts - (173,138 ) Accounts receivable, net $ 456,372 $ 969,429 |
INVENTORY (Tables)
INVENTORY (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
SCHEDULE OF INVENTORY | Inventory consisted of the following: SCHEDULE OF INVENTORY September 30, December 31, 2022 2021 Raw materials $ 537,166 $ 3,481,614 Work-in-progress - 51,441 Finished goods 942,335 210,982 Total $ 1,479,501 $ 3,744,037 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, December 31, 2022 2021 Prepaid final assembly services $ 167,331 $ 439,660 Prepayments for inventory 1,101,693 1,622,617 Prepayments for insurance 207,599 - Prepayments on advances on design 608,159 - Prepayments on software 133,099 - Prepaid other 109,682 213,901 Total Prepaid Expenses and Other Current Assets $ 2,327,563 $ 2,276,178 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
SCHEDULE OF PROPERTY AND EQUIPMENT, NET | Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT, NET September 30, December 31, 2022 2021 Computer and equipment $ 1,344,204 $ 853,695 Furniture and fixtures 316,665 173,155 Lease improvements 662,013 282,271 Prototypes 450,225 300,376 Computer software 455,875 455,875 Property and equipment, gross 3,228,982 2,065,372 Less: Accumulated depreciation (1,565,597 ) (1,230,212 ) Property and equipment, net $ 1,663,385 $ 835,160 |
MARKETABLE SECURITIES (Tables)
MARKETABLE SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Cash and Cash Equivalents [Abstract] | |
SCHEDULE OF MARKETABLE SECURITIES | Marketable securities consisted of the following: SCHEDULE OF MARKETABLE SECURITIES September 30, 2022 Realized Unrealized Transferred Cost Basis Gains Loss to Cash Total Bonds $ 12,235,258 $ 110,490 $ (75,204 ) $ (4,244,691 ) $ 8,025,853 US Treasury securities 7,764,742 - - - 7,764,742 $ 20,000,000 $ 110,490 $ (75,204 ) $ (4,244,691 ) $ 15,790,595 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Class of Stock [Line Items] | |
SCHEDULE OF WARRANT ACTIVITY | SCHEDULE OF WARRANT ACTIVITY Shares Underlying Weighted Average Weighted Average Outstanding at December 31, 2021 6,108,823 $ 7.37 2.31 Granted - - Exercised - - Expired (2,800 ) 165.60 Outstanding at September 30, 2022 6,106,023 $ 7.30 1.57 |
Convertible Preferred Stock Series H [Member] | |
Class of Stock [Line Items] | |
SCHEDULE OF PAYMENT OF PREFERRED STOCK | As of September 30, 2022, in the event of liquidation, the holders of preferred stock were entitled to receive payments as follows: SCHEDULE OF PAYMENT OF PREFERRED STOCK Number of Series H Preferred Stock outstanding as of September 30, 2022 8 Multiplied by the stated value $ 154 Equals the gross stated value $ 1,232 Divided by the conversion price $ 184.8 Equals the convertible shares of Company Common Stock 7 Multiplied by the fair market value of Company Common Stock as of September 30, 2022 $ 0.59 Liquidation Value $ 4 |
Convertible Preferred Stock Series H-3 [Member] | |
Class of Stock [Line Items] | |
SCHEDULE OF PAYMENT OF PREFERRED STOCK | As of September 30, 2022, in the event of liquidation, the holders of preferred stock were entitled to receive payments as follows: SCHEDULE OF PAYMENT OF PREFERRED STOCK Number of Series H-3 Preferred Stock outstanding as of September 30, 2022 1,234 Multiplied by the stated value $ 138.00 Equals the gross stated value $ 170,292 Divided by the conversion price $ 165.6 Equals the convertible shares of Company Common Stock 1,028 Multiplied by the fair market value of Company Common Stock as of September 30, 2022 $ 0.59 Liquidation Value $ 607 |
Convertible Preferred Stock Series H-6 [Member] | |
Class of Stock [Line Items] | |
SCHEDULE OF PAYMENT OF PREFERRED STOCK | As of September 30, 2022, in the event of liquidation, the holders of preferred stock were entitled to receive payments as follows: SCHEDULE OF PAYMENT OF PREFERRED STOCK Number of Series H-6 Preferred Stock outstanding as of September 30, 2022 50 Number of Series H Preferred Stock outstanding as of September 30, 2022 50 Multiplied by the stated value $ 72.00 Equals the gross stated value $ 3,600 Divided by the conversion price $ 2.5 Equals the convertible shares of Company Common Stock 1,440 Multiplied by the fair market value of Company Common Stock as of September 30, 2022 $ 0.59 Liquidation Value $ 850 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
SCHEDULE OF STOCK-BASED COMPENSATION | Stock-based compensation, including restricted stock awards, stock options and warrants is included in the unaudited condensed consolidated statement of operations as follows: SCHEDULE OF STOCK-BASED COMPENSATION Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Research and development $ 5,269 $ 18,786 $ 15,069 $ 62,980 Sales and marketing 6,001 60,771 19,816 184,853 General and administrative 320,911 3,580,935 888,959 6,750,153 Total $ 332,181 $ 3,660,492 $ 923,844 $ 6,997,986 Stock based compensation $ 332,181 $ 3,660,492 $ 923,844 $ 6,997,986 |
SCHEDULE OF STOCK-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY | The following table reflects the stock option activity: SCHEDULE OF STOCK-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY Number of Shares Weighted Average Contractual Life (Years) Outstanding at December 31, 2021 1,338,675 $ 5.14 8.26 Granted 173,500 0.97 Forfeitures (726,753 ) 3.14 Outstanding at September 30, 2022 785,422 $ 6.10 7.97 |
SCHEDULE OF FUTURE STOCK OPTION COMPENSATION EXPENSE | The Company uses the following inputs when valuing stock-based awards. SCHEDULE OF FUTURE STOCK OPTION COMPENSATION EXPENSE For the nine months ended Company Common Stock as of Grant Date May 6, 2022 0.97 Time to Maturity 6 Dividend - Annual risk-free interest rate 2.04 % Annualized volatility 130.23 % Black-Scholes Value 0.87 |
SCHEDULE OF STOCK-BASED COMPENSATION, RESTRICTED STOCK | SCHEDULE OF STOCK-BASED COMPENSATION, RESTRICTED STOCK Number of Weighted Average Outstanding at December 31, 2021 450,000 $ 2.48 Granted 542,248 1.06 Vested (221,424 ) 1.29 Outstanding at September 30, 2022 770,824 $ 1.89 |
LIQUIDITY AND OTHER UNCERTAIN_2
LIQUIDITY AND OTHER UNCERTAINTIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Liquidity And Other Uncertainties | |||||||||
Net losses | $ 5,681,574 | $ 5,974,448 | $ 4,578,660 | $ 12,002,075 | $ 7,663,749 | $ 5,633,833 | $ 16,234,682 | $ 25,299,657 | |
Net cash provided by (used in) operating activities | 12,959,204 | $ 18,723,657 | |||||||
Cash and cash equivalents, at carrying value | 39,428,850 | 39,428,850 | $ 69,160,466 | ||||||
Marketable securities, current | 15,790,595 | 15,790,595 | |||||||
Working capital | $ 15,768,697 | $ 15,768,697 |
SCHEDULE OF ANTIDILUTIVE SECURI
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 7,664,744 | 8,401,229 | 7,664,744 | 8,401,229 |
Options to Purchase Common Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 785,422 | 1,362,765 | 785,422 | 1,362,765 |
Restricted Stock Unvested [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 770,824 | 493,000 | 770,824 | 493,000 |
Restricted Stock Vested Unissued [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 434,166 | 434,166 | ||
Warrants Outstanding [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 6,106,023 | 6,108,823 | 6,106,023 | 6,108,823 |
Preferred Stock Outstanding [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 2,475 | 2,475 | 2,475 | 2,475 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | |||||
Marketable securities | $ 15,790,595 | $ 15,790,595 | |||
Shipping expenses | $ 79,767 | $ 98,464 | $ 335,812 | $ 208,139 |
SCHEDULE OF DISAGGREGATION OF R
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 373,186 | $ 559,370 | $ 2,381,592 | $ 1,870,306 |
Product [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 332,792 | 494,011 | 2,170,943 | 1,710,579 |
Shipping Revenue [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 35,507 | 65,359 | 165,762 | 123,040 |
Miscellaneous Income [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 4,887 | 44,887 | ||
Service Income [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 36,687 |
REVENUES (Details Narrative)
REVENUES (Details Narrative) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Warranty reserves | $ 410,017 | $ 240,517 |
SCHEDULE OF ACCOUNTS RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Credit Loss [Abstract] | ||
Trade receivables | $ 456,372 | $ 1,142,567 |
Less: Allowance for doubtful accounts | (173,138) | |
Accounts receivable, net | $ 456,372 | $ 969,429 |
ACCOUNTS RECEIVABLE, NET (Detai
ACCOUNTS RECEIVABLE, NET (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Credit Loss [Abstract] | ||
Changes in allowance for doubtful accounts receivable | $ 173,138 | |
Bad debt expense | $ 2,136 | $ 92,176 |
SCHEDULE OF INVENTORY (Details)
SCHEDULE OF INVENTORY (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 537,166 | $ 3,481,614 |
Work-in-progress | 51,441 | |
Finished goods | 942,335 | 210,982 |
Total | $ 1,479,501 | $ 3,744,037 |
INVENTORY (Details Narrative)
INVENTORY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Inventory [Line Items] | ||||
Depreciation expenses | $ 151,980 | $ 74,655 | $ 335,385 | $ 220,535 |
Fleet Inventory [Member] | ||||
Inventory [Line Items] | ||||
Depreciation expenses | 23,886 | $ 23,886 | 71,661 | $ 71,658 |
Inventory write down | 1,317,289 | |||
Club Car Discount [Member] | ||||
Inventory [Line Items] | ||||
Inventory write down | $ 413,561 | $ 413,561 |
SCHEDULE OF PREPAID EXPENSES AN
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid final assembly services | $ 167,331 | $ 439,660 |
Prepayments for inventory | 1,101,693 | 1,622,617 |
Prepayments for insurance | 207,599 | |
Prepayments on advances on design | 608,159 | |
Prepayments on software | 133,099 | |
Prepaid other | 109,682 | 213,901 |
Total Prepaid Expenses and Other Current Assets | $ 2,327,563 | $ 2,276,178 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details Narrative) | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Cenntro Automotive Group, Ltd [Member] | |
Impairment of prepaid expense | $ 1,377,709 |
SCHEDULE OF PROPERTY AND EQUIPM
SCHEDULE OF PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 3,228,982 | $ 2,065,372 |
Less: Accumulated depreciation | (1,565,597) | (1,230,212) |
Property and equipment, net | 1,663,385 | 835,160 |
Computer and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,344,204 | 853,695 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 316,665 | 173,155 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 662,013 | 282,271 |
Prototypes [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 450,225 | 300,376 |
Computer Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 455,875 | $ 455,875 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 151,980 | $ 74,655 | $ 335,385 | $ 220,535 |
SCHEDULE OF MARKETABLE SECURITI
SCHEDULE OF MARKETABLE SECURITIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Net Investment Income [Line Items] | |||||
Cost Basis | $ 20,000,000 | $ 20,000,000 | |||
Gross Realized Gains | 103,000 | 110,490 | |||
Gross Unrealized Losses | (32,135) | (75,204) | |||
Transferred to Cash | (4,244,691) | (4,244,691) | |||
Fair Value | 15,790,595 | 15,790,595 | |||
Bonds [Member] | |||||
Net Investment Income [Line Items] | |||||
Cost Basis | 12,235,258 | 12,235,258 | |||
Gross Realized Gains | 110,490 | ||||
Gross Unrealized Losses | (75,204) | ||||
Transferred to Cash | (4,244,691) | (4,244,691) | |||
Fair Value | 8,025,853 | 8,025,853 | |||
US Treasury Securities [Member] | |||||
Net Investment Income [Line Items] | |||||
Cost Basis | 7,764,742 | 7,764,742 | |||
Gross Realized Gains | |||||
Gross Unrealized Losses | |||||
Transferred to Cash | |||||
Fair Value | $ 7,764,742 | $ 7,764,742 |
SCHEDULE OF PAYMENT OF PREFERRE
SCHEDULE OF PAYMENT OF PREFERRED STOCK (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Convertible Preferred Stock Series H [Member] | ||
Class of Stock [Line Items] | ||
Number of Series H Preferred Stock outstanding as of September 30, 2022 | 8 | 8 |
Multiplied by the stated value | $ 154 | |
Equals the gross stated value | $ 1,232 | |
Divided by the conversion price | $ 184.8 | |
Equals the convertible shares of Company Common Stock | 7 | |
Multiplied by the fair market value of Company Common Stock as of September 30, 2022 | $ 0.59 | |
Liquidation Value | $ 4 | |
Convertible Preferred Stock Series H-3 [Member] | ||
Class of Stock [Line Items] | ||
Number of Series H Preferred Stock outstanding as of September 30, 2022 | 1,234 | 1,234 |
Multiplied by the stated value | $ 138 | |
Equals the gross stated value | $ 170,292 | |
Divided by the conversion price | $ 165.6 | |
Equals the convertible shares of Company Common Stock | 1,028 | |
Multiplied by the fair market value of Company Common Stock as of September 30, 2022 | $ 0.59 | |
Liquidation Value | $ 607 | |
Convertible Preferred Stock Series H-6 [Member] | ||
Class of Stock [Line Items] | ||
Number of Series H Preferred Stock outstanding as of September 30, 2022 | 50 | 50 |
Multiplied by the stated value | $ 72 | |
Equals the gross stated value | $ 3,600 | |
Divided by the conversion price | $ 2.5 | |
Equals the convertible shares of Company Common Stock | 1,440 | |
Multiplied by the fair market value of Company Common Stock as of September 30, 2022 | $ 0.59 | |
Liquidation Value | $ 850 |
SCHEDULE OF WARRANT ACTIVITY (D
SCHEDULE OF WARRANT ACTIVITY (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Equity [Abstract] | |
Shares Underlying Warrants Outstanding, Beginning | shares | 6,108,823 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 7.37 |
Weighted Average Remaining Contractual Life, Beginning | 2 years 3 months 21 days |
Shares Underlying Warrants Granted | shares | |
Weighted Average Exercise Price Granted | $ / shares | |
Shares Underlying Warrants Exercised | shares | |
Weighted Average Exercise Price Exercised | $ / shares | |
Shares Underlying Warrants Expired | shares | (2,800) |
Weighted Average Exercise Price Expired | $ / shares | $ 165.60 |
Shares Underlying Warrants Outstanding, Ending | shares | 6,106,023 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 7.30 |
Weighted Average Remaining Contractual Life, Ending | 1 year 6 months 25 days |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - Director [Member] - Restricted Stock [Member] - $ / shares | 9 Months Ended | ||
Feb. 01, 2022 | Feb. 24, 2021 | Sep. 30, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of restricted shares | 442,248 | ||
Share price | $ 1.29 | ||
2020 Long-Term Incentive Plan [Member] | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Number of restricted shares | 442,249 | 172,000 | 43,000 |
Share price | $ 1.29 | $ 7.66 | |
Number of restricted shares issued and vested | 221,424 |
SCHEDULE OF STOCK-BASED COMPENS
SCHEDULE OF STOCK-BASED COMPENSATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock based compensation | $ 332,181 | $ 3,660,492 | $ 923,844 | $ 6,997,986 |
Research and Development Expense [Member] | ||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock based compensation | 5,269 | 18,786 | 15,069 | 62,980 |
Selling and Marketing Expense [Member] | ||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock based compensation | 6,001 | 60,771 | 19,816 | 184,853 |
General and Administrative Expense [Member] | ||||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock based compensation | $ 320,911 | $ 3,580,935 | $ 888,959 | $ 6,750,153 |
SCHEDULE OF STOCK-BASED COMPE_2
SCHEDULE OF STOCK-BASED COMPENSATION, STOCK OPTIONS, ACTIVITY (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Number of Stock options outstanding, Beginning | 1,338,675 | |
Weighted average exercise price outstanding, Beginning | $ 5.14 | |
Weighted average remaining contractual life, ending | 7 years 11 months 19 days | 8 years 3 months 3 days |
Number of Stock options granted | 173,500 | |
Weighted average exercise price granted | $ 0.97 | |
Number of Stock options forfeitures | (726,753) | |
Weighted average exercise price forfeitures | $ 3.14 | |
Number of Stock options outstanding, Ending | 785,422 | 1,338,675 |
Weighted average exercise price outstanding, Ending | $ 6.10 | $ 5.14 |
SCHEDULE OF FUTURE STOCK OPTION
SCHEDULE OF FUTURE STOCK OPTION COMPENSATION EXPENSE (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares | |
Share-Based Payment Arrangement [Abstract] | |
Company Common Stock, Granted | $ 0.97 |
Time to Maturity | 6 months |
Dividend | |
Annual risk-free interest rate | 2.04% |
Annualized volatility | 130.23% |
Black-Scholes Value | $ 0.87 |
SCHEDULE OF STOCK-BASED COMPE_3
SCHEDULE OF STOCK-BASED COMPENSATION, RESTRICTED STOCK (Details) - Restricted Stock Units (RSUs) [Member] | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of shares, Outstanding Beginning | shares | 450,000 |
Weighted Average Grant Price, Outstanding Beginning | $ / shares | $ 2.48 |
Number of shares, Granted | shares | 542,248 |
Weighted Average Grant Price, Granted | $ / shares | $ 1.06 |
Number of shares, Vested | shares | (221,424) |
Weighted Average Grant Price, Vested | $ / shares | $ 1.29 |
Number of shares, Outstanding Ending | shares | 770,824 |
Weighted Average Grant Price, Outstanding Ending | $ / shares | $ 1.89 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Aug. 23, 2022 | Feb. 01, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Options to purchase shares outstanding | 785,422 | 785,422 | 1,338,675 | ||||
Compensation expenses | $ 332,181 | $ 3,660,492 | $ 923,844 | $ 6,997,986 | |||
Share-Based Payment Arrangement, Option [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Number of stock options vested and exercisable | 608,726 | 608,726 | |||||
Aggregate intrinsic value of stock options vested and exercisable | $ 0 | $ 0 | |||||
Stock or unit option plan expense | 18,821 | 669,999 | 44,899 | 1,170,958 | |||
Cost not yet recognized | 191,176 | 191,176 | |||||
Restricted Stock [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Cost not yet recognized | 631,307 | 631,307 | |||||
Compensation expenses | $ 313,360 | $ 2,990,493 | $ 878,945 | $ 5,827,028 | |||
Restricted Stock [Member] | Director [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Restricted stock award, Gross | 442,248 | ||||||
Shares issued, price per share | $ 1.29 | ||||||
Restricted Stock [Member] | David E. Hollingsworth [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Restricted stock award, Gross | 100,000 | ||||||
Shares issued, price per share | $ 0.03 | ||||||
2014 Equity Incentive Plan [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Number of shares reserved | 141,326 | 141,326 | |||||
Number of stock options available for grants | 0 | 0 | |||||
2017 Long Term Incentive Plan [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Number of shares reserved | 477,983 | 477,983 | |||||
Number of stock options available for grants | 0 | 0 | |||||
Options to purchase shares outstanding | 128,606 | 128,606 | |||||
2020 Long Term Incentive Plan [Member] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||
Number of shares reserved | 4,089,650 | 4,089,650 | |||||
Number of stock options available for grants | 1,151,399 | 1,151,399 | |||||
Options to purchase shares outstanding | 1,366,183 | 1,366,183 |
CONCENTRATIONS AND CREDIT RISK
CONCENTRATIONS AND CREDIT RISK (Details Narrative) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
One Customer [Member] | Sales Revenue [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 100% | 99% | |||
One Customer [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 100% | ||||
Customer One [Member] | Sales Revenue [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 96% | 71% | |||
Customer One [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 87% | ||||
Customer Two [Member] | Sales Revenue [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 4% | 28% | |||
Customer Two [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10% | ||||
Two Customer [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10% | ||||
One Supplier [Member] | Cost of Goods and Service, Product and Service Benchmark [Member] | Supplier Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 57% | 51% | |||
Two Supplier [Member] | Cost of Goods and Service, Product and Service Benchmark [Member] | Supplier Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 12% | ||||
Another Supplier [Member] | Cost of Goods and Service, Product and Service Benchmark [Member] | Supplier Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 11% | ||||
Supplier One [Member] | Cost of Goods and Service, Product and Service Benchmark [Member] | Supplier Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 49% | 56% | |||
Supplier Two [Member] | Cost of Goods and Service, Product and Service Benchmark [Member] | Supplier Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 17% | 16% | |||
Supplier Three [Member] | Cost of Goods and Service, Product and Service Benchmark [Member] | Supplier Concentration Risk [Member] | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 13% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 25, 2020 | Jan. 01, 2019 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jun. 30, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Share based compensation | $ 923,844 | $ 6,997,986 | ||||||
Operating expense | $ 5,222,414 | $ 11,618,233 | 13,763,289 | 25,178,147 | ||||
Cost of goods sold | 955,003 | 955,466 | 4,959,660 | 2,030,447 | ||||
Other accrued liabilities, current | $ 476,280 | $ 476,280 | ||||||
Cenntro Automotive Group, Ltd [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Prepaid balance | 0 | 0 | 602,016 | |||||
Cost of goods sold | 621,097 | |||||||
Inventory written-off | 1,317,289 | |||||||
Drop Car Operating Inc [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Settlement of multiple employment disputes | $ 232,000 | |||||||
Remaning accounts payable and accrued liabilities | 3,500 | 3,500 | 3,500 | |||||
Legal fees | 45,000 | |||||||
Loss contingency damages awarded value | 45,000 | 45,000 | ||||||
Other liabilities | 186,000 | 186,000 | 186,000 | |||||
Master Manufacturing Services Agreement [Member] | Karma Automotive, LLC [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Share based compensation | $ 1,160,800 | |||||||
Prepaid production cost | 167,331 | 167,331 | ||||||
Master Manufacturing Services Agreement [Member] | Karma Automotive, LLC [Member] | Advisor [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Repayments of related party | 66,845 | |||||||
Master Manufacturing Services Agreement [Member] | Karma Automotive, LLC [Member] | First Production Level Builds [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Repayments of related party | 440,000 | |||||||
Operating expense | 110,349 | $ 60,520 | $ 90,780 | $ 641,140 | ||||
Settlement of multiple employment disputes | 468,480 | |||||||
Pre-production costs | $ 73,333 | $ 73,333 | ||||||
Master Manufacturing Services Agreement [Member] | Karma Automotive, LLC [Member] | Setup Costs [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Repayments of related party | $ 80,000 |