Filed Pursuant to Rule 424(b)(3)
Registration No. 333-240314
Prospectus
AYRO, Inc.
878,680
Shares of Common Stock and Shares of Common Stock Underlying
Warrants
The
selling stockholders named in this prospectus may use this prospectus to offer and resell from time to time up to 878,680
shares of our common stock, which are the shares of common stock and shares of common stock issuable upon the conversion of warrants
held by the selling stockholders and 8,130 other shares of common stock (the “Shares”). These shares of common stock
consist of:
|
|
●
|
36,236
shares of our common stock issuable upon exercise of warrants
(the “Pre-funded Warrants”) we assumed in the Merger (defined herein) and that converted into the right to purchase
shares of our common stock in connection with the Merger;
|
|
|
|
|
|
|
●
|
100,000
shares of our common stock issuable upon exercise of the warrants (the “Penny Warrants”) we issued to certain
selling stockholders on May 28, 2020, in a private offering exempt from registration under the Securities Act, pursuant to
a subscription agreement dated as of February 20, 2020;
|
|
|
|
|
|
|
●
|
8,130
shares of our common stock (the “Non-Employee Director Grant”) we issued, pursuant to a Change of Control Letter
Agreement entered into in January 2020, to a non-employee director as consideration for his services to the Board of Directors
prior to the Merger on May 28, 2020;
|
|
|
|
|
|
|
●
|
232,403
shares of our common stock issuable upon exercise of the warrants (the “Palladium Bridge Warrants”) originally
issued to Palladium Capital Advisors, LLC (“Palladium”) as part of Palladium’s compensation for serving
as the placement agent of AYRO Operating Company, Inc. in connection with two private placements and a bridge loan, each dated
December 19, 2019, that were assumed in the Merger and that converted into the right to purchase shares of our common stock
in connection with the Merger and which have been transferred to Palladium Holdings, LLC (“Palladium Holdings”);
|
|
|
|
|
|
|
●
|
126,000
shares of our common stock issuable upon exercise of the warrants (the “June Palladium Warrants”) we issued to
Palladium Holdings as designee of Palladium as part of its tail fee in connection with an offering that closed on June 19,
2020;
|
|
|
|
|
|
|
●
|
147,368
shares of our common stock issuable upon exercise of the warrants (the “July Palladium Warrants”) we issued to
Palladium Holdings as designee of Palladium as part of its compensation for serving as our financial advisor in connection
with an offering that closed on July 8, 2020;
|
|
|
|
|
|
|
●
|
129,500
shares of our common stock issuable upon exercise of the warrants (the “July 23 Palladium Warrants” and, together
with the Palladium Bridge Warrants, June Palladium Warrants and July Palladium Warrants, the “Palladium Warrants”)
we issued to Palladium Holdings as designee of Palladium as part of its compensation for serving as our financial advisor
in connection with an offering that closed on July 23, 2020;
|
|
|
|
|
|
|
●
|
27,273
shares of our common stock issuable upon exercise of the warrants (the “June Spartan Warrants”) we issued to certain
selling stockholders as designees of Spartan Capital Securities, LLC (“Spartan”) as part of its compensation for
serving as a finder in connection with an offering that closed on June 19, 2020; and
|
|
|
|
|
|
|
●
|
71,770
shares of our common stock issuable upon exercise of the warrants (the “July Spartan Warrants” and, together with
the June Spartan Warrants, the “Spartan Warrants”) we issued to certain selling stockholders as designees of Spartan
as part of its compensation for serving as our financial advisor in connection with an offering that closed on July 8, 2020.
|
We
refer to the Pre-funded Warrants, the Penny Warrants, the Palladium Warrants and the Spartan Warrants collectively as the “Warrants,”
and the shares underlying the Warrants are the “Warrant Shares.”
We
will not receive any of the proceeds from the sale of our common stock by the selling stockholders. However, we will receive proceeds
from the exercise of the Warrants if the Warrants are exercised for cash. We intend to use those proceeds, if any, for general
corporate purposes. Any shares of common stock subject to resale hereunder will have been issued by us and acquired by the selling
stockholders prior to any resale of such shares pursuant to this prospectus.
The
selling stockholders named in this prospectus, or their donees, pledgees, transferees or other successors-in-interest, may offer
or resell the Shares from time to time through public or private transactions at prevailing market prices, at prices related to
prevailing market prices or at privately negotiated prices. The selling stockholders will bear all commissions and discounts,
if any, attributable to the sale of Shares. We will bear all costs, expenses and fees in connection with the registration of the
Shares. For additional information on the methods of sale that may be used by the selling stockholders, see “Plan of Distribution”
beginning on page 22 of this prospectus.
Effective
as of 6:05 pm Eastern Time on May 26, 2020, we filed an amendment to our Amended and Restated Certificate of Incorporation to
effect a reverse stock split of the issued and outstanding shares of our common stock, at a ratio of one share for ten shares.
Immediately following the reverse stock split,
we issued a stock dividend of one share of the Company’s common stock for each outstanding share of common stock to all
holders of record immediately following the effective time of the reverse stock split. The net result of the reverse stock split
and the stock dividend was a 1-for-5 reverse stock split. All share and per share prices
in this prospectus supplement have been adjusted to reflect the reverse stock split and the stock dividend.
Our
common stock is listed on the Nasdaq Capital Market under the symbol “AYRO.” On August 14, 2020, the last reported
sale price of our common stock was $3.74 per share.
Investing
in our securities involves a high degree of risk. These risks are discussed in this prospectus under “Risk Factors”
beginning on page 15 and in our most recent Annual Report on Form 10-K and in the Form S-4, which are incorporated
by reference in this prospectus, as well as in any other recently filed quarterly or current reports and, if any, in any applicable
prospectus supplement.
Neither
the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved
of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is August 14, 2020
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement on Form S-3 that we filed with the SEC using a “shelf” registration
process. The selling stockholders named in this prospectus may resell, from time to time, in one or more offerings, the common
stock offered by this prospectus. Information about the selling stockholders may change over time. When the selling stockholders
sells shares of common stock under this prospectus, we will, if necessary and required by law, provide a prospectus supplement
that will contain specific information about the terms of that offering. Any prospectus supplement may also add to, update, modify
or replace information contained in this prospectus. If a prospectus supplement is provided and the description of the offering
in the prospectus supplement varies from the information in this prospectus, you should rely on the information in the prospectus
supplement. You should carefully read this prospectus and the accompanying prospectus supplement, if any, along with all of the
information incorporated by reference herein and therein, before making an investment decision.
You
should rely only on the information contained or incorporated by reference in this prospectus or any applicable prospectus supplement.
We have not, and the selling stockholders have not, authorized any other person to provide you with different or additional information.
If anyone provides you with different or additional information, you should not rely on it. This prospectus is not an offer to
sell, nor are the selling stockholders seeking an offer to buy, the shares offered by this prospectus in any jurisdiction where
the offer or sale is not permitted. No offers or sales of any of the shares of common stock are to be made in any jurisdiction
in which such an offer or sale is not permitted. You should assume that the information contained in this prospectus or in any
applicable prospectus supplement is accurate only as of the date on the front cover thereof or the date of the document incorporated
by reference, regardless of the time of delivery of this prospectus or any applicable prospectus supplement or any sales of the
shares of common stock offered hereby or thereby.
You
should read the entire prospectus and any prospectus supplement and any related issuer free writing prospectus, as well as the
documents incorporated by reference into this prospectus or any prospectus supplement or any related issuer free writing prospectus,
before making an investment decision. Neither the delivery of this prospectus or any prospectus supplement or any issuer free
writing prospectus nor any sale made hereunder shall under any circumstances imply that the information contained or incorporated
by reference herein or in any prospectus supplement or issuer free writing prospectus is correct as of any date subsequent to
the date hereof or of such prospectus supplement or issuer free writing prospectus, as applicable. You should assume that the
information appearing in this prospectus, any prospectus supplement or any document incorporated by reference is accurate only
as of the date of the applicable documents, regardless of the time of delivery of this prospectus or any sale of securities. Our
business, financial condition, results of operations and prospects may have changed since that date.
CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This
prospectus and the documents incorporated by reference herein contain forward-looking statements. All statements other than statements
of historical fact contained herein, including statements regarding our business plans or strategies, projected or anticipated
benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us,
or projections involving anticipated revenues, earnings or other aspects of our operating results, are forward-looking statements.
Words such as “anticipates,” “assumes,” “believes,” “can,” “could,”
“estimates,” “expects,” “forecasts,” “guides,” “intends,” “is
confident that,” “may,” “plans,” “seeks,” “projects,” “targets,”
and “would,” and their opposites and similar expressions, as well as statements in future tense, are intended to identify
forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and
may not be accurate indications of when such performance or results will actually be achieved. Forward-looking statements are
based on information we have when those statements are made or our management’s good faith belief as of that time with respect
to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially
from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include,
but are not limited to:
|
|
●
|
we
have had a history of losses and have never been profitable, and we expect to incur additional losses in the future and may
never be profitable;
|
|
|
|
|
|
|
●
|
the
market for our products is developing and may not develop as expected;
|
|
|
|
|
|
|
●
|
our
business is subject to general economic and market conditions;
|
|
|
|
|
|
|
●
|
our
business, results of operations and financial condition may be adversely impacted by public health epidemics, including the
recent COVID-19 outbreak;
|
|
|
|
|
|
|
●
|
our
limited operating history makes evaluating our business and future prospects difficult and may increase the risk of any investment
in our securities;
|
|
|
|
|
|
|
●
|
we
may experience lower-than-anticipated market acceptance of our vehicles;
|
|
|
|
|
|
|
●
|
developments
in alternative technologies or improvements in the internal combustion engine may have a materially adverse effect on the
demand for our electric vehicles;
|
|
|
|
|
|
|
●
|
the
markets in which we operate are highly competitive, and we may not be successful in competing in these industries;
|
|
|
|
|
|
|
●
|
a
significant portion of our revenues are derived from a single customer;
|
|
|
|
|
|
|
●
|
we
rely on and intend to continue to rely on a single third-party supplier for the sub-assemblies in semi-knocked-down for all
of our vehicles;
|
|
|
|
|
|
|
●
|
we
may become subject to product liability claims, which could harm our financial condition and liquidity if we are 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 our vehicles;
|
|
|
|
|
|
|
●
|
increases
in costs, disruption of supply or shortage of raw materials, in particular lithium-ion cells, could harm our business;
|
|
|
|
|
|
|
●
|
our
business may be adversely affected by labor and union activities;
|
|
|
|
|
|
|
●
|
we
will be required to raise additional capital to fund our operations, and such capital raising may be costly or difficult to
obtain and could dilute our stockholders’ ownership interests, and our long-term capital requirements are subject to
numerous risks;
|
|
|
|
|
|
|
●
|
increased
safety, emissions, fuel economy, or other regulations may result in higher costs, cash expenditures, and/or sales restrictions;
|
|
|
|
|
|
|
●
|
we
may fail to comply with environmental and safety laws and regulations;
|
|
|
|
|
|
|
●
|
our
proprietary designs are susceptible to reverse engineering by our competitors;
|
|
|
|
|
|
|
●
|
if
we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by
others to compete against us;
|
|
|
|
|
|
|
●
|
should
we begin transacting business in other currencies, we would be subject to exposure from changes in the exchange rates of local
currencies;
|
|
|
|
|
|
|
●
|
we
are subject to governmental export and import controls that could impair our ability to compete in international market due
to licensing requirements and subject us to liability if we are not in compliance with applicable laws;
|
|
|
|
|
|
|
●
|
our
expected use of proceeds from this offering; and
|
|
|
|
|
|
|
●
|
other
factors discussed in this prospectus and the documents incorporated by reference herein, including those set forth under “Risk
Factors” in our Registration Statement on Form S-4 filed with the SEC on February 14, 2020, as amended on April 24, 2020
(the “Form S-4”).
|
We
have included important factors in the cautionary statements included in this prospectus and the documents we incorporate by reference
herein, including from the Form S-4, particularly in the “Risk Factors” sections of these documents, that we believe
could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking
statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments
we may make. No forward-looking statement is a guarantee of future performance.
You
should read this prospectus and the documents that we incorporate by reference herein completely and with the understanding that
our actual future results may be materially different from what we expect. The forward-looking statements in this prospectus and
the documents we incorporate by reference herein represent our views as of the date of this prospectus. We anticipate that subsequent
events and developments will cause our views to change. However, while we may elect to update these forward-looking statements
at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should,
therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this
prospectus.
PROSPECTUS
SUMMARY
This
summary provides an overview of selected information contained elsewhere or incorporated by reference in this prospectus and does
not contain all of the information you should consider before investing in our securities. You should carefully read the prospectus,
the information incorporated by reference and the registration statement of which this prospectus is a part in their entirety
before investing in our securities, including the information discussed under “Risk Factors” in this prospectus and
the documents incorporated by reference and our financial statements and notes thereto that are incorporated by reference in this
prospectus. Some of the statements in this prospectus and the documents incorporated by reference herein constitute forward-looking
statements that involve risks and uncertainties. See information set forth under the section “Special Note Regarding Forward-Looking
Statements.”
On
May 28, 2020, pursuant to the previously announced Agreement and Plan of Merger, dated December 19, 2019 (the “Merger Agreement”),
by and among AYRO, Inc., a Delaware corporation previously known as DropCar, Inc. (“we,” “us,” “our”
or the “Company”), 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”). In this prospectus, unless the context otherwise requires,
references to “we,” “us,” “our,” “our company” and “AYRO” refer to
AYRO, Inc. and its subsidiaries.
Overview
We
design and manufacture compact, sustainable electric vehicles for closed campus mobility, urban and community transport, local
on-demand and last mile delivery, and government use. Our three- and four-wheeled purpose-built electric vehicles are geared toward
commercial customers including universities, last mile delivery services and food service providers.
Our
Products
AYRO
vehicles provide the end user an environmentally friendly alternative to internal combustion engine vehicles (cars powered by
gasoline or diesel oil), for light duty uses, including low-speed logistics, maintenance and cargo services, at a lower total
cost.
AYRO
Club Car 411
The
AYRO Club Car 411 (the “AYRO 411 Fleet”) is a family of electric, four-wheel compact, light-duty utility trucks sold
exclusively through AYRO’s contracted partner, Club Car, as part of a global multi-year sustainability solution development,
sales and marketing agreement. Each of the AYRO 411 Fleet of vehicles is classified as a street legal low speed vehicle (“LSV”),
defined as a four-wheeled motor vehicle, other than an all-terrain vehicle, that is capable of reaching speeds of at least 20
miles per hour (“mph”) but not greater than 25 mph, with a gross vehicle weight rating of less than 3,000 pounds and
meets the safety standards in Title 49 of the U.S. Code of Federal Regulations, section 571.50.
The
AYRO 411 Fleet has an expected range of up to 50 miles and a maximum speed range of 25 mph (or 40 kilometers per hour), in line
with the United States Department of Transportation (“USDOT”) regulations for low-speed vehicles and with most state
statutes, which typically limit the speed of LSVs to 25 mph on 35 mph posted roads. The current AYRO 411 Fleet includes:
●
the 411 Flatbed truck, which provides drivers with considerable versatility of use;
●
the 411 Pickup truck, which is ideal for hauling; and
●
the 411 Cargo Van Box, a fully enclosed cargo box.
The
AYRO 411 Fleet has zero gas emissions, a recharge capability of up to six to eight hours using 120V/20A outlets and has a payload
capacity of up to 1,100 pounds. AYRO estimates that the AYRO 411 Fleet’s operating costs are approximately 50% lower per
year compared to similarly sized gas-powered trucks/vans. Vehicles in the AYRO 411 Fleet are equipped with:
●
reinforced steel (coated) chassis houses the motor, controller and enclosed battery operating system;
●
auto-grade suspension with Transverse Leaf Spring on the front and horizontal spring with coil-over shock in the rear;
●
power assisted steering;
●
street legal if registered/licensed per standard vehicles by dealer or user;
●
multi-point, anchored DOT compliant safety harnesses for driver and passenger;
●
a standard back-up camera (appears on larger LCD display – see below);
●
a standard 7-inch (17.7 centimeter) LCD display;
●
a standard manual parking break;
●
four-wheel all-disk braking system and corrosion resistant body panels; and
●
heating and ventilation systems in the cabin of the truck.
With
its low speed, zero-emissions, and cost-effectiveness, the AYRO 411 Fleet seeks to satisfy the needs of a variety of customers,
including university and college campuses, retailers, airports and ports, business parks and campuses, warehouses, production
facilities, resorts and theme parks, apartments and condos.
AYRO
311 Autocycle
The
AYRO 311 Autocycle (the “AYRO 311”) is a compact, light-duty street-legal electric vehicle with a maximum speed of
up to 50 mph. Strategically engineered with USDOT-compliant automotive parts, the AYRO 311 is built to a high-performance standard,
has standard automotive controls and does not require any special licenses or conditions in order to drive. Like the AYRO 411
Fleet, it has a range of up to 50 miles, has zero gas emissions and a recharge capability of up to six to eight hours using 120V/20A
and its operating costs are estimated to be approximately 50% lower per year compared to gas-powered vehicles.
AYRO
311’s equipment includes:
●
a standard back-up camera, a standard 7-inch (17.7 centimeter) LCD display;
●
a standard manual parking break; enclosed and corrosion resistant body panels;
●
heating, ventilation, and fan systems in the cabin of the vehicle;
●
standard automotive controls including foot accelerator and brake pedals;
●
a USDOT-approved windshield, a windshield wiper and washer system;
●
a driver’s 3-point safety belt and a passenger’s 4-point safety belt; warning flashers;
●
AM and FM radio;
●
Bluetooth capabilities;
●
a GPS system; and
●
an SD card slot.
With
its automotive-style controls (a steering wheel and foot pedals), the AYRO 311 drives like a regular car and accommodates the
average consumer and is designed for neighborhood food delivery, last mile delivery, parking enforcement and urban dwellers. More
specifically, this product targets urban dwellers due to its compact size in dense urban environments. The AYRO 311 also targets
commercial customers, such as neighborhood food and product delivery fleets, gated communities, country clubs, and colleges and
universities due to its highly customizable appearance with a range of brand and logo wraps, spot graphics, and color options
(glossy white or athletic red), its compact design and ability to go virtually anywhere. The AYRO 311 also targets municipalities
and facilities as customers for use in parking enforcement, special events, and public safety.
AYRO
511 (Concept)
AYRO
is currently investigating and researching the concept vehicle, the AYRO 511, a new full-time four-wheel drive electric vehicle.
The AYRO 511 is expected to have 13 inches (33 centimeters) of clearance and enhanced stability in a diverse array of terrains
and seasons. Additionally, the truck will be designed to operate with an automotive-style drive system, cutting driving noise
down to a minimum.
Additional
Models and Vehicles
AYRO
is currently in discussions with Club Car regarding a variety of new models and vehicles.
Manufacturing
and Supply Chain
Manufacturing
Agreement with Cenntro
In
2017, AYRO partnered with Cenntro Automotive Group, Ltd. (“Cenntro”), which operates a large electric vehicle factory
in the automotive district in Hangzhou, China, in a supply chain agreement to provide sub-assembly manufacturing services. Through
the partnership, Cenntro acquired nineteen percent (19%) of AYRO’s common stock. Cenntro beneficially owned approximately
13.7% as of December 31, 2019. Cenntro owns the design of the AYRO 411 Fleet vehicles and has granted AYRO an exclusive license
to purchase the AYRO 411 Fleet vehicles for sale in North America.
Under
AYRO’s Manufacturing License Agreement with Cenntro (the “MLA”), in order for AYRO to maintain its exclusive
territorial rights pursuant to the MLA, for the first three years after the effective date of April 27, 2017, AYRO must meet the
following minimum sale requirements: (i) a minimum of 300 units sold by the first anniversary of the effective date of the MLA;
(ii) a minimum of 800 units sold by the second anniversary of the effective date of the MLA; and (iii) a minimum of 1,300 units
sold by the third anniversary of the effective date of the MLA. Cenntro will determine the minimum sale requirements for the years
thereafter. Should any event of default occur, the other party may terminate the MLA by providing written notice to the defaulting
party, who will have 90 days from the effective date of the notice to cure the default. Unless waived by the party providing notice,
a failure to cure the default(s) within the time 90-day time frame will result in the automatic termination of the MLA. Events
of default under the MLA include a failure to make a required payment when due, the insolvency or bankruptcy of either party,
the subjection of either party’s property to any levy, seizure, general assignment for the benefit of creditors, and a failure
to make available or deliver the products in the time and manner provided for in the MLA.
Cenntro
is also being used to perform sub-assembly manufacturing of the AYRO 311. AYRO imports semi-knocked-down vehicle kits from Cenntro
for both the 411 and 311 models. The vehicle kits are received through shipping containers by AYRO’s assembly facility in
Round Rock, Texas. The vehicles are then assembled with limited customization requirements per order. As such, the partnership
with Cenntro allows AYRO to scale manufacturing operations without significant investment in capital expenditures, and therefore
bring products to market rapidly.
AYRO
currently occupies 24,000 square feet of manufacturing space configured in a “U”-shaped assembly line with multiple
stations per vehicle. AYRO’s manufacturing space allows multiple assembly lines plus adequate raw material storage. The
chart below indicates the number of vehicles and assembly time required for each. Assembly time also includes USDOT quality checks
and testing as the final step of the assembly process. Additionally, the number of vehicles indicated below assumes a single shift.
AYRO believes that its volumes could be doubled per line by adding a second shift that would operate from 4pm to midnight.
|
Vehicle
|
|
Assembly
time
(Man-Hours)
|
|
|
Vehicles
assembled
per
month
|
|
|
AYRO 411
|
|
|
12.0
|
|
|
|
200
|
|
|
AYRO 311
|
|
|
14.0
|
|
|
|
200
|
|
|
AYRO 311x (estimated)
|
|
|
15.0
|
|
|
|
200
|
|
Master
Procurement Agreement with Club Car
In
March 2019, AYRO entered into a five-year Master Procurement Agreement (the “MPA”) with Club Car for the sale of AYRO’s
four-wheeled vehicles. The MPA grants Club Car the exclusive right to sell the AYRO 411 Fleet in North America, provided that
Club Car orders a mutually agreed on number of AYRO vehicles per year. Under the terms of the MPA, AYRO receives orders from Club
Car dealers for vehicles of specific configurations, and AYRO invoices Club Car once the vehicle has shipped. The MPA has an initial
term of five years commencing January 1, 2019 and may be renewed by Club Car for successive one-year periods upon 60 days’
prior written notice. AYRO also agreed to collaborate with Club Car on developing new products similar to the AYRO 411 Fleet and
improvements to existing products, and AYRO granted Club Car a right of first refusal to purchase similar commercial utility vehicles
which AYRO develops during the term of the MPA. AYRO is currently engaged in discussions with Club Car to develop additional products
to be sold by Club Car in Europe and Asia, but there can be no assurance that these discussions will be successful. Pursuant to
the MPA, AYRO also granted Club Car a right of first refusal in the event that AYRO intends to sell 51% or more of its assets
or equity interests, which right of first refusal is exercisable for a period of 45 days following AYRO’s delivery of an
acquisition notice to Club Car.
Strategic
Partnership with Autonomic
Additionally,
AYRO is developing a technology platform that can be deployed to any vehicle as additional value-add subscriptions offered directly
to the end customer. AYRO has partnered with Autonomic, a wholly-owned subsidiary of Ford Smart Mobility LLC, to collect vehicle
health, use and location information (telematics) in its transportation mobility cloud and produce purpose-built information back
to AYRO, customers and fleet operators, generating an additional revenue stream. Working together, the companies aim to develop
a range of services to enable mobility applications for AYRO’s line of vehicles which power everything from moving products
and equipment to people and last-mile delivery services.
Engineering
Development and Production Process Validation
As
a baseline, AYRO’s product development and engineering efforts align with the Society of Automotive Engineering (“SAE”)
J2258_201611 standards for Light Utility Vehicles. The J2258 standard provides key compliance criteria for Gross Vehicle Weight
Rating (“GVWR”), occupant protection and safety restraint systems, lateral and longitudinal stability, center of gravity
and operating controls, among others. AYRO’s test validation and inspection standards follow Federal Motor Vehicle Safety
Standards (“FMVSS”) 49 CFR 571.500 for LSVs with the additions of SAE J585 and FMVSS 111 for rear visibility, lighting,
signaling, reflectors, changes in direction of movement, back-up camera response timing and field of view.
AYRO’s
development standards and test compliance validation processes are supported by a variety of test documentation including supplier
self-reporting, third party laboratory test reports and regional compliance validation with the California Air Resource Board
(“CARB”) for speed, range and environmental performance.
AYRO’s
production system follows a lean, cell-based, manufacturing model. The process involves the following five sequential cells: (1)
cab preparation, (2) chassis preparation, (3) system integration and testing, (4) final assembly and integration test, and (5)
QA & FMVSS Compliance. Assembly quality and shift efficiency metrics are measured daily by AYRO production staff at end of
every shift.
AYRO
maintains a certification and compliance check list for each vehicle. AYRO’s three and four-wheeled vehicles use an automotive
style steering wheel, turn signal stalk, headlight, running light and reverse light controls, a multi-speed windshield wiper and
washer and an accelerator and brake pedal consistent with controls employed in standard passenger cars. As the AYRO 311 and AYRO
411 are direct drive vehicles, there is no stick shift, clutch, paddle shift, or belt driven CSV (continuously variable) transmission
needed to operate the vehicles within the intended torque band and speed range. Accordingly, AYRO’s vehicles are homologated
under existing U.S., state and local LSV requirements and the corresponding motorcycle and autocycle requirements under 49 CFR
571.3.
The
Industry and AYRO’s Competitive Position
The
U.S. electric vehicle market is expected by many commentators to increase dramatically over the next decade, driven by factors
such as the country’s increasingly urbanized population, the significant cost of owning and operating gas-powered vehicles,
the growing global awareness of the damaging effects of pollution and greenhouse gas emissions, and rising investment in clean
technology and supporting infrastructure.
A
segment of the electric vehicle market, low speed electric vehicles (“LSEVs”)—which are LSVs but cannot be powered
by gas or diesel fuel—are growing increasingly popular as eco-friendly options for consumers and commercial entities. LSEVs
run on electric motors fueled by a variety of different batteries, such as lithium ion, molten salt, zinc-air and various nickel-based
designs.
In
2017, the global LSEV market was valued at approximately $2,395 million, according to Allied Market Research, and global sales
of LSEVs have only continued to grow over the past two years, with sales expected to reach 1.5 million units in 2021. According
to the Low Speed Electric Vehicles Market report conducted by Market Study Report, over the next five years, the LSEV market is
expected to register a 10.8% compound annual growth rate in terms of revenue, with the global market size expected to reach $8,870
million by 2024, up from $4,790 million in 2019.
Trends
Driving the Need for Electric Vehicles
Trends
such as increasingly stringent government regulations aimed toward reducing vehicle emissions, growing urban populations, and
social pressure to adopt sustainable lifestyles all create a demand for more ecologically and economically sustainable methods
of transportation. This demand continues to spur technological advancements and LSEV market growth.
Incentivizing
Effect of Government Rules and Regulations. Expanding rules and regulations governing vehicle emissions have contributed to
growth in the LSEV market. In particular, the U.S., Germany, France, and China have implemented stringent laws and regulations
governing vehicular emissions, requiring automobile manufacturers to use advanced technologies to combat high-emission levels
in vehicles. To incentivize clean-energy use, many governments are increasingly instituting substantial incentives for consumers
to purchase electric vehicles, such as:
●
tax credits, rebates, and exemptions; reduced vehicle registration fees;
●
reduced utility rates; and
●
parking incentives.
Further,
governments are establishing infrastructure benchmarks to support the growth of the electric vehicle industry.
A
prime example of government involvement in developing the electric vehicle industry, a recent New Jersey bill aims to have 330,000
electric vehicles on state roads by the end of 2024 and a total of 2 million by 2035. To facilitate this goal, the bill calls
for the state to have 400 fast-charging stations and another 1,000 slow-charging stations, both by 2025. Thirty percent of all
apartment, condo and townhouse developments in New Jersey would need to have chargers by 2030, while half of all franchise hotels
would need to have chargers by 2050. As the network of government rules and regulations expands, so too should investment in the
research and development of LSEV technology and infrastructure.
Urbanization
on the Rise. According to the U.N., in 2015, 55% of the world’s population was urban, and by 2050, it is estimated that
this percentage will increase to 68%. As the world population continues to urbanize, a growing number of consumers are expected
to seek alternatives, such as LSEVs, to internal combustion engine vehicles in order to save money and space in congested city
streets.
Increasing
Sense of Social Responsibility. In tandem with governmental efforts to curb pollution and encourage more sustainable transportation
practices, consumers face increasing social pressure to adopt eco-friendly lifestyles. As this demand grows, the LSEV market should
continue to develop.
Target
Markets
The
multipurpose applications and clean energy use of LSEVs make them popular across a wide array of industries and customers, including
college and university campuses, resorts and hotels, corporate parks, hospitals, warehouses, individual consumers, last mile delivery
service providers, municipalities, and the food service industry. A number of these market segments, and AYRO’s competitive
position within them, are discussed in greater detail below.
Universities.
LSEVs are growing increasingly common on university and college campuses due to a number of factors. LSEVs fulfill the versatile
needs of campuses better than golf carts or standard combustion vehicles because, not only does LSEVs’ low speed threshold
promote safer driving among pedestrians, the vehicles are also street legal with on-road safety features, enabling drivers to
drive on roads and free up pedestrian space along sidewalks and smaller pathways. Additionally, the significantly reduced carbon
imprint of LSEVs compared to internal combustion engine vehicles appeal to environmentally aware students and professors looking
to promote environmental sustainability on campus. By transitioning from internal combustion engine vehicles to LSEVs, campuses
should be able to reduce significantly the costs spent on fuel, oil, parts, and maintenance. AYRO’s vehicles, particularly
the AYRO 411 Fleet, provide all of these benefits to university and college campuses. AYRO estimates that in the U.S., there are
over 1,800 higher education campuses with over 10,000 students each with over 400 on-campus vehicles that are ideal targets for
the AYRO 411 Fleet as campuses transition from fossil-fueled campus fleet vehicles to EVs.
Food
Delivery Services. As the millennial generation assumes a more substantial portion of the consumer population, customers increasingly
favor convenience and timeliness, spurring dramatic growth in online ordering and delivery services across a wide swath of industries,
including food delivery and restaurant ordering services. Food delivery sales are anticipated to increase over 20% per year, culminating
in an expected $365 billion worldwide by 2030, according to Upserve. Upserve further estimates that approximately 60% of U.S.
consumers report that they order delivery or takeout at least once a week. Within the next decade, potentially over 40% of restaurant
sales will be attributable to delivery services, according to Morgan Stanley.
In
its market research, AYRO has determined that delivery services, including restaurants using the AYRO 311 as a delivery vehicle
rather than outsourcing delivery to third party services, have reduced their delivery costs by up to 50%. Delivery service companies
using the AYRO 311 as an in-house delivery vehicle rather than outsourcing delivery are also better equipped to manage the customer
experience and maintain customer relationships and data.
Last
Mile Delivery Service. Retail focus on last mile delivery—the movement of goods from a transportation hub to the final
delivery destination—has grown exponentially over the past few years due to the rise in online ordering and e-commerce.
Consumers’ ability to pick and choose products based on delivery speed and availability makes last mile delivery a key differentiator
among retailers. Last mile delivery provides retailers timelier and more convenient delivery options not offered by the main three
shipping services in the U.S. (the U.S. Postal Service, FedEx, and UPS). Additionally, given the increasing designation of low
emission zones in urban centers, retailers will need to continue to deploy eco-friendly vehicles. Retailers will likely expand
the use of LSEV fleets to make deliveries in low emission zones due to their zero gas emissions and lower price than competing
electric vehicles. AYRO expects that the AYRO 411 Fleet, with its variety of cargo bed options ideal for hauling and delivery
and its low price point, should stand out among the competition. Additionally, the AYRO 311 autocycle is ideal for short point-destination
deliveries for smaller packages and urgent urban courier-style deliveries.
Municipalities.
As more city governments adopt regulations geared toward reducing pollution from vehicles, cities are increasingly looking to
replace their municipal vehicles with zero-emission fleets. Such fleet overhauls, however, can be costly. LSEVs are a cheaper
and more practical option for cities daunted by the cost of standard electronic vehicles. AYRO’s LSEVs have both on and
off-road capabilities, making them particularly versatile for municipalities.
On-Road
and Personal Transportation. LSEVs offer a feasible and practical method of transportation, especially in urban centers. Because
AYRO’s LSEVs are street-legal, they offer city dwellers a more sustainable, cost-efficient, easily maneuverable, compact
and light weight option compared to internal combustion engine vehicles. AYRO LSEVs also offer a variety of specifications and
equipment, meaning that consumers do not have to sacrifice comfort or convenience.
Market
Considerations
AYRO
primarily focuses on the LSEV North American market, which is highly competitive and constitutes 28% of the global LSEV market
according to Wise Guy Reports. AYRO has examined various considerations with regard to the AYRO’s market impact, including
cost comparisons to existing vehicles in the market, market validation and target commercial markets.
Competition
The
worldwide automotive market, particularly for economy and alternative fuel vehicles, is highly competitive, and AYRO expects it
will become even more so in the future. Other manufacturers have entered the three-wheeled vehicle market, and AYRO expects additional
competitors to enter this market within the next several years. As the LSEV market grows increasingly saturated, AYRO expects
to experience significant competition. The most competitive companies in the global LSEV market include HDK Electric Vehicles,
Bradshaw Electric Vehicles, Textron Inc., Polaris Industries, Yamaha Motors Co. Ltd., Ingersoll Rand, Inc., Speedway Electric,
AGT Electric Cars, Bintelli Electric Vehicles and Ligier Group. AYRO’s relationship with Club Car, a division of Ingersoll
Rand, Inc., gives AYRO a strong competitive advantage. Despite this fact, many of the other competitors listed above have significantly
greater financial, technical, manufacturing, marketing and other resources than AYRO and may be able to devote greater resources
to the design, development, manufacturing, distribution, promotion, sale and support of their products. Many of these competitors
modify an existing fossil-fuel powered golf cart to meet utility and commercial needs for an all-electric commercial utility vehicle,
unlike the AYRO 411 Fleet, which was engineered, designed and produced as a portfolio of electric, light duty trucks and vans.
When
compared to internal combustion engine vehicles, AYRO’s vehicles are significantly more attractive based on tax, title and
license fees and CO2 emissions. Compared to a standard Ford F150 (gasoline) pickup truck (2.7 liter), the AYRO 411 Fleet provides
an approximate 49% reduction in operating expenses and an approximate 100% reduction in CO2 emissions (if renewed energy is used
to charge the AYRO vehicles, an increasing trend for most higher education campuses and government facilities). Compared to a
Nissan Versa (gasoline) four cylinder (1.6 liter) sub-compact car, the AYRO 311 provides a similarly drastic reduction in operating
expenses and CO2 emissions. Additionally, the AYRO 311’s starting manufacturer suggested retail price (“MSRP”)
is $9,999. Arcimoto and SOLO market three-wheeled electric vehicles with starting MSRPs of $19,900 and $15,888, respectively.
AYRO’s
most closely-matched competitor in the LSEV industry is Polaris Gem (“Gem”), an LSEV manufacturer that manufactures
products designed for applications similar to AYRO’s. Gem offers three passenger vehicle models and two utility vehicle
models. Although Gem’s GEM el XD model, which is similar to vehicles in the AYRO 411 Fleet, has a lower starting MSRP than
the AYRO 411 Fleet, the GEM el XD would need to be highly configured to match the standard AYRO 411 Fleet features and, with such
configuration, would exceed the base MSRP of each vehicle in the AYRO 411 Fleet. The AYRO 411 Fleet has a greater pick-up bed
and van box capacity that the GEM el XD, in addition to 13% more horsepower and a 48% better turning radius, allowing drivers
of the AYRO 411 Fleet to execute maneuvers in tighter spaces than they would using the GEM el XD.
AYRO
expects competition in its industry to intensify in the future in light of increased demand for alternative fuel vehicles, continuing
globalization and consolidation in the worldwide automotive industry. Factors affecting competition include product quality and
features, innovation and development time, pricing, reliability, safety, customer service and financing terms. Increased competition
may lead to lower vehicle unit sales and increased inventory, which may result in downward price pressure and may adversely affect
AYRO’s business, financial condition, operating results and prospects. AYRO’s ability to successfully compete in its
industry will be fundamental to its future success in existing and new markets and its market share. There can be no assurances
that AYRO will be able to compete successfully in its markets. If AYRO’s competitors introduce new cars or services that
compete with or surpass the quality, price or performance of AYRO’s vehicles or services, AYRO may be unable to satisfy
existing customers or attract new customers at the prices and levels that would allow AYRO to generate attractive rates of return
on its investment. Increased competition could result in price reductions and revenue shortfalls, loss of customers and loss of
market share, which could harm AYRO’s business, prospects, financial condition and operating results.
AYRO’s
Strategy
AYRO’s
goal is to continue to develop and commercialize automotive-grade, sustainable electric transportation solutions for the markets
and use cases that AYRO believes can be well served by AYRO’s purpose-built, street legal and road-ready electric vehicles.
AYRO’s business strategy includes the following:
●
Leverage the relationship with Club Car to expand AYRO’s product portfolio and increase its customer base. AYRO is working
on and has plans to expand its current electric transportation solutions portfolio in collaboration with Club Car. This plan includes
next generation light duty trucks and new purpose-driven electric vehicles. Additionally, AYRO is collaborating with Club Car’s
sales and marketing teams to expand adoption of its vehicles in the United States and intends to expand its geographical footprint
within Club Car’s global distribution and channel network.
●
Rapidly scale up AYRO’s operations to achieve growth. AYRO intends to direct resources to scale up AYRO’s operations,
which AYRO believes is needed to increase its revenue, including expanding and optimizing its automotive component supply chain
and AYRO’s flow-based assembly operations in Round Rock, Texas. Further, AYRO plans to expand sales territories and add
distribution channels, forming strategic partnerships to build-out its whole product offering and to access additional sales channels
or to accelerate product adoption for particular vertical markets, building AYRO’s brand, and increasing manufacturing capacity
to produce higher volumes of electric vehicles.
●
Identify defined markets and use cases which are currently under-served but represent sizable market opportunity sub-sets of the
electric vehicle market and focus development efforts on road-ready autocycles and other purpose-built electric vehicles to address
such markets. AYRO is currently developing a new series of automotive-grade autocycles, engineered and optimized to meet targeted
use cases such as last mile and urban delivery. AYRO is also working on Club Car’s next generation, electric light duty
trucks and developing a new purpose-built vehicle with Club Car. AYRO intends to direct resources to advance the development of
such purpose-built transportation solutions which AYRO believes will allow the company to address currently underserved, yet growing
markets, that are application specific. AYRO believes that AYRO’s all-electric transportation solutions, such as its compact,
lightweight and maneuverable campus and urban vehicles, can benefit targeted geographical and vertical customers by offering lower
annual/lifetime total cost of ownership for zero emissions/zero carbon footprint vehicles.
●
Invest in research and development and qualification of sensors, cameras, software and mobility services seeking to enhance the
value of using AYRO’s electric vehicles and to derive incremental potential revenue streams for AYRO and its partner ecosystem.
AYRO intends to integrate radio frequency-enabled hardware and develop data collection, communication processes and mobility services
in collaboration with Autonomic. AYRO and Autonomic plan to develop a technology platform that collects vehicle health, use and
location information (telematics) into its transportation mobility cloud and produces purpose-built information back to AYRO,
customers and fleet operators, the subscription to which can be offered to the end customers which AYRO believes will enhance
the value of using AYRO’s electric vehicles and provide additional revenue stream.
Reverse
Stock Split and Stock Dividend
Effective
as of 6:05 pm Eastern Time on May 28, 2020, we filed an amendment to our certificate of incorporation to effect a reverse stock
split of the issued and outstanding shares of our common stock, at a ratio of one share for ten shares (the “Reverse Stock
Split”). Immediately following the Reverse Stock Split, we issued a stock dividend of one share of the Company’s common
stock for each outstanding share of common stock to all holders of record immediately following the effective time of the Reverse
Stock Split (the “Stock Dividend”). The net result of the Reverse Stock Split and the Stock Dividend was a 1-for-5
reverse stock split. We made proportionate adjustments to the per share exercise price and/or the number of shares issuable upon
the exercise or vesting of all stock options, restricted stock units (if any) and warrants outstanding as of the effective times
of the Reverse Stock Split and the Stock Dividend in accordance with the terms of each security based on the split or dividend
ratio (i.e., the number of shares issuable under such securities has been divided by ten and multiplied by two, and, in the case
of stock options and warrants, the exercise or conversion price per share has been multiplied by ten and divided by two). Also,
we reduced the number of shares reserved for issuance under our equity compensation plans proportionately based on the split and
dividend ratios. Except for adjustments that resulted from the rounding up of fractional shares to the next whole share, the Reverse
Stock Split and Stock Dividend affected all stockholders uniformly and did not change any stockholder’s percentage ownership
interest in the Company. All share and related option and warrant information presented in this prospectus supplement have been
retroactively adjusted to reflect the reduced number of shares outstanding and the increase in share price which resulted from
these actions; however, common stock share and per share amounts in the accompanying prospectus and certain of the documents incorporated
by reference herein have not been adjusted to give effect to the Reverse Stock Split and the Stock Dividend.
Registered
Direct Offerings
In
June 2020, we entered into a Securities Purchase Agreement with certain institutional and accredited investors, pursuant to which
AYRO agreed to issue and sell in a registered direct offering an aggregate of 2,200,000 shares (the “June 2020 Shares”)
of our common stock, par value $0.0001 per share, at an offering price of $2.50 per share, for gross proceeds of approximately
$5.5 million before the deduction of fees and offering expenses. The June 2020 Shares were offered by us pursuant to a shelf registration
statement on Form S-3 (File No. 333-227858), previously filed with the Securities and Exchange Commission on October 16, 2018,
and declared effective by the Securities and Exchange Commission on November 9, 2018.
In
July 2020, we entered into a Securities Purchase Agreement with certain institutional and accredited investors, pursuant to which
AYRO agreed to issue and sell in a registered direct offering an aggregate of 3,157,895 shares (the “July 2020 Shares”)
of our common stock, par value $0.0001 per share, at an offering price of $4.75 per share, for gross proceeds of approximately
$15.0 million before the deduction of fees and offering expenses. The July 2020 Shares were offered by us pursuant to a shelf
registration statement on Form S-3 (File No. 333-227858), previously filed with the Securities and Exchange Commission on October
16, 2018, and declared effective by the Securities and Exchange Commission on November 9, 2018.
On
July 23, 2020, we entered into a Securities Purchase Agreement with certain institutional and accredited investors, pursuant to
which we agreed to issue and sell in a registered direct offering an aggregate of 1,850,000 shares of common stock and the option
to purchase 1,387,500 additional shares of common stock through October 19, 2020 (the “July 23, 2020 Shares”)
of our common stock, par value $0.0001 per share, at an offering price of $5.00 per share, for gross proceeds of approximately
$9.25 million at the initial closing before the deduction of fees and offering expenses (the “July 23 Offering”).
The July 23, 2020 Shares were offered by us pursuant to a shelf registration statement on Form S-3 (File No. 333-227858), previously
filed with the Securities and Exchange Commission on October 16, 2018, and declared effective by the Securities and Exchange Commission
on November 9, 2018.
Corporate
Information
We
were incorporated in the State of Delaware on December 18, 1997 under the name “Internet International Communications Ltd.”
Pursuant to a Certificate of Amendment to our Certificate of Incorporation filed on December 23, 2004, our name was changed to
“WPCS International Incorporated.” On January 30, 2018, we completed a business combination with DropCar, Inc., a
then privately held Delaware corporation (“Private DropCar”), in accordance with the terms of a merger agreement,
pursuant to which a merger subsidiary merged with and into Private DropCar, with Private DropCar surviving as our wholly owned
subsidiary (the “2018 Merger”). On January 30, 2018, immediately after completion of the 2018 Merger, we changed our
name to “DropCar, Inc.” The 2018 Merger was treated as a reverse merger under the acquisition method of accounting
in accordance with U.S. GAAP. In May 2020, we completed the Merger and changed our name to “AYRO, Inc.” Our principal
corporate office is located at AYRO, Inc., 900 E. Old Settlers Boulevard, Suite 100, Round Rock, TX 78664, telephone 512-994-4917.
Our internet address is https://ayro.com/. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and all amendments to those reports, are available to you free of charge through the “Investors” section
of our web site as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the
Securities and Exchange Commission. Information contained on our web site does not form a part of this prospectus.
THE
OFFERING
|
Securities
offered by the selling stockholders
|
|
Up
to 878,680 shares of our common stock, par value $0.0001 per share, including 864,550 shares that may be issued to
the selling stockholders upon exercise of the Warrants.
|
|
|
|
|
|
Selling
stockholders
|
|
All
of the shares of common stock are being offered by the selling stockholders named herein. See “Selling Stockholders”
on page 17 of this prospectus for more information on the selling stockholders.
|
|
|
|
|
|
Use
of proceeds
|
|
We
will not receive any proceeds from the sale of the common stock offered by the selling stockholders. However, we will receive
proceeds from the exercise price of the Warrants if the Warrants are exercised for cash. We intend to use those proceeds,
if any, for general corporate purposes. See “Use of Proceeds” on page 16 of this prospectus.
|
|
|
|
|
|
Plan
of Distribution
|
|
The
selling stockholders, or their pledgees, donees, transferees, distributees, beneficiaries or other successors-in-interest,
may offer or sell the shares from time to time through public or private transactions at prevailing market prices, at prices
related to prevailing market prices or at privately negotiated prices. The selling stockholders may also resell the shares
of common stock to or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts,
concessions or commissions. See “Plan of Distribution” beginning on page 22 of this prospectus
for additional information on the methods of sale that may be used by the selling stockholders.
|
|
|
|
|
|
Risk
factors
|
|
See
“Risk Factors” beginning on page 15 and the other information included elsewhere in this
prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.
|
|
|
|
|
|
NASDAQ
trading symbol for common stock
|
|
Our
common stock is listed on the Nasdaq Capital Market under the symbol “AYRO.”
|
RISK
FACTORS
An
investment in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should consider
carefully the specific factors discussed under the heading “Risk Factors” in the applicable prospectus supplement,
together with all of the other information contained or incorporated by reference in the prospectus supplement or appearing or
incorporated by reference in this prospectus. You should also consider the risks, uncertainties and assumptions discussed under
Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and to
the “Risk Factors” section in the Form S-4, which are incorporated herein by reference, as updated or superseded
by the risks and uncertainties described under similar headings in the other documents that are filed after the date hereof and
incorporated by reference into this prospectus and any prospectus supplement related to a particular offering. The risks and uncertainties
we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently
deem immaterial may also affect our operations. Past financial performance may not be a reliable indicator of future performance,
and historical trends should not be used to anticipate results or trends in future periods. If any of these risks actually occurs,
our business, business prospects, financial condition or results of operations could be seriously harmed. This could cause the
trading price of our common stock to decline, resulting in a loss of all or part of your investment. Please also read carefully
the section below entitled “Cautionary Statement Regarding Forward-Looking Statements.”
Risks
Related to Our Business
The
recent coronavirus outbreak may have a significant adverse effect on our business.
In
December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China and has reached multiple
other countries, resulting in government-imposed quarantines, travel restrictions and other public health safety measures in China
and such other countries. On March 12, 2020, the WHO declared COVID-19 to be a global pandemic, and the COVID-19 pandemic has
resulted in significant financial market volatility and uncertainty in recent months. A continuation or worsening of the levels
of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital, on
our business, results of operations and financial condition, and on the market price of our common stock.
Moreover,
the COVID-19 outbreak has caused and continues to cause indeterminable adverse effects on general commercial activity and the
world economy, and the Company’s business and results of operations could be adversely affected to the extent that COVID-19
or any other epidemic harms the global economy generally.
We
do not yet know the full extent of potential delays or impact on our business or the global economy as a whole. However, any one
or a combination of these events could have an adverse effect on the operation of and results from our business operations.
USE
OF PROCEEDS
All
shares of our common stock offered by this prospectus are being registered for the accounts of the selling stockholders and we
will not receive any proceeds from the sale of these shares. However, we will receive proceeds from the exercise price of the
Warrants if the Warrants are exercised for cash. We intend to use those proceeds, if any, for general corporate purposes.
SELLING
STOCKHOLDERS
The
selling stockholders named in the table below may from time to time offer and sell pursuant to this prospectus and any applicable
prospectus supplement up to 878,680 shares of common stock. This reflects the aggregate number of shares of common stock
into which the Warrants are exercisable and the Non-Employee Director Grant.
December
2019 Private Placements of the Pre-Funded Warrants and the Palladium Bridge Warrants (the “December 2019 Private Placements”)
On
December 19, 2019, the Company entered into the Merger Agreement with AYRO Operating, pursuant to which a subsidiary of DropCar
merged with and into AYRO, with AYRO continuing as a wholly owned subsidiary of DropCar. Simultaneously with the signing of the
Merger Agreement, certain accredited investors, including certain stockholders of DropCar, purchased $1.0 million of AYRO’s
convertible bridge notes (the “Bridge Notes”) in connection with a bridge loan (the “Bridge Loan”) and
agreed to purchase, prior to the Merger, shares of AYRO common stock and warrants for an aggregate purchase price of $850,000
in a private placement (the “$850K Private Placement”), $1.15 million in another private placement (the “$1.15M
Private Placement” and, collectively with the $850K Private Placement, the “AYRO Private Placements”) and 1,750,000
shares of AYRO common stock for nominal consideration in the Nominal Stock Subscription. Upon closing of the Merger in May 2020,
this debt was converted to equity under the terms of the Merger Agreement.
Pursuant
to the $850K Private Placement, on the closing date of the Merger, AYRO Operating issued to Alpha Capital Anstalt (“Alpha”)
pre-funded warrants to purchase a total of 286,896 shares of AYRO common stock at an exercise price of $0.000367 per pre-funded
warrant share (on a post-Reverse Stock Split and post-Stock Dividend basis). Alpha subsequently exercised the pre-funded warrant
to purchase 250,660 of these warrant shares and currently may exercise the pre-funded warrants to purchase an additional 36,236
shares of AYRO common stock. Pursuant to the $850K Private Placement, Alpha was also issued shares of AYRO Operating common
stock and warrants to purchase AYRO Operating common stock, which converted, pursuant to their terms or the Merger, into 80,435
shares of AYRO common stock and warrants to purchase a total of 367,331 shares of common stock at an exercise price of $0.7423
per warrant share, respectively (on a post-Reverse Stock Split and post-Stock Dividend basis).
Pursuant
to the $1.15M Private Placement, on the closing date of the Merger, AYRO Operating issued to Alpha shares of AYRO Operating common
stock, pre-funded warrants to purchase AYRO Operating common stock and warrants to purchase AYRO Operating common stock, all of
which converted, pursuant to their terms or the Merger, into 120,359 shares of AYRO common, pre-funded warrants to purchase 429,306
shares of AYRO Operating common stock at an exercise price of $0.000367 per pre-funded warrant share and warrants to purchase
549,665 shares of common stock at an exercise price of $1.3599 per warrant share (on a post-Reverse Stock Split and post-Stock
Dividend basis).
Pursuant
to the Bridge Loan, on the closing date of the Merger, AYRO Operating issued to Alpha shares of AYRO Operating common stock and
warrants to purchase shares of AYRO Operating common stock that converted, pursuant to their terms or the Merger, into 695,645
shares of AYRO common stock and warrants to purchase 695,645 shares of AYRO common stock at an exercise price of $1.1159 per warrant
share (on a post-Reverse Stock Split and post-Stock Dividend basis).
Pursuant
to an engagement agreement (the “Palladium Advisory Agreement”), dated December 19, 2019, between AYRO Operating and
Palladium, AYRO Operating engaged Palladium to (i) act as the non-exclusive placement agent in a private placement of, or similar
unregistered transaction involving, equity or equity-linked securities of AYRO to a limited number of institutional, accredited
individual or strategic investors, and (ii) serve as AYRO Operating’s non-exclusive advisor in connection with a merger.
Palladium served as the non-exclusive placement agent in the Bridge Loan and the AYRO Private Placements. AYRO Operating issued
to Palladium warrants to purchase AYRO Operating common stock that converted pursuant to their terms in the Merger into the right
to purchase an aggregate of 232,403 shares of AYRO common stock, of which 92,186 related to the $850K Private Placement, at an
exercise price of $0.7423 per warrant share, 68,075 related to the $1.15M Private Placement, at an exercise price of $1.3599 per
warrant share, and 72,142 related to the Bridge Loan, at an exercise price of $1.1159 per warrant share (on a post-Reverse Stock
Split and post-Stock Dividend basis).
February
2020 Private Offering and Concurrent Private Placement of the Penny Warrants (the “February 2020 Offering”)
On
February 20, 2020, certain investors of AYRO (the “Noteholders”) agreed to extend a loan in the aggregate amount of
$500,000 to AYRO Operating, which loan was evidenced by a Secured Promissory Note dated as of February 20, 2020 (the “Secured
Loan”). In connection with the Secured Loan, AYRO entered into a subscription agreement with Alpha, Iroquois Capital Investment
Group LLC (“ICIG”) and Iroquois Master Fund, Ltd. (“IMF”), pursuant to which, contingent upon the closing
of the Merger and effective immediately thereafter, AYRO agreed to issue and sell warrants to purchase 70,000 shares of AYRO common
stock to Alpha, warrants to purchase 12,999 shares of common stock to ICIG and warrants to purchase 17,001 shares of common stock
to IMF at an exercise price of $0.01 per share.
Non-Employee
Director Grant
Pursuant
to a Change of Control Letter Agreement entered into in January 2020 by and among AYRO and Solomon Mayer (the “Non-Employee
Director”), on May 28, 2020, AYRO issued the Non-Employee Director a total of 8,130 shares of AYRO common stock as consideration
for his services to the Board of Directors prior to the Merger.
Financial
Advisor Warrants
June
2020 Warrants
In
June 2020, AYRO entered into a Securities Purchase Agreement with certain institutional and accredited investors, pursuant to
which AYRO agreed to issue and sell in a registered direct offering an aggregate of 2,200,000 shares (the “June 2020 Shares”)
of common stock of AYRO, par value $0.0001 per share, at an offering price of $2.50 per share, for gross proceeds of approximately
$5.5 million before the deduction of fees and offering expenses (the “June Offering”). The June 2020 Shares were offered
by AYRO pursuant to a shelf registration statement on Form S-3 (File No. 333-227858), previously filed with the Securities and
Exchange Commission on October 16, 2018, and declared effective by the Securities and Exchange Commission on November 9, 2018.
Pursuant
to the Palladium Advisory Agreement, upon the closing of the June Offering, we issued to Palladium the June Palladium Warrants
to purchase an aggregate of 126,000 shares of our common stock (which equals 7% of the aggregate number of shares sold in the
June Offering to investors introduced to us by Palladium) at an exercise price of $2.875 per share (which represents 115% of the
offering price per share sold in the June Offering). The June Palladium Warrants are exercisable at any time and from time to
time, in whole or in part, following the date of issuance and until June 19, 2025.
Pursuant
to our Investment Banking Agreement, dated March 6, 2020, with Spartan, in connection with the June Offering in which Spartan
acted as a finder, Spartan was entitled to a fee that included compensation warrants to purchase a number of shares of our common
stock equal to 7.5% of the gross proceeds raised in the June Offering to investors introduced to us by Spartan at an exercise
price of 110% of the offering price per share sold in the June Offering. We issued to Spartan the June Spartan Warrants to purchase
27,273 shares of our common stock at an exercise price of $2.75 per share. The compensation warrants are immediately exercisable,
have a term of five years, contain cashless exercise provisions and piggyback registration rights.
July
2020 Warrants
In
July 2020, AYRO entered into a Securities Purchase Agreement with certain institutional and accredited investors, pursuant to
which AYRO agreed to issue and sell in a registered direct offering an aggregate of 3,157,895 shares (the “July 2020 Shares”)
of common stock of AYRO, par value $0.0001 per share, at an offering price of $4.75 per share, for gross proceeds of approximately
$15 million before the deduction of fees and offering expenses (the “July Offering”). The July 2020 Shares were offered
by AYRO pursuant to a shelf registration statement on Form S-3 (File No. 333-227858), previously filed with the Securities and
Exchange Commission on October 16, 2018, and declared effective by the Securities and Exchange Commission on November 9, 2018.
Pursuant
to the Palladium Advisory Agreement, upon the closing of the July Offering, we issued to Palladium the July Palladium Warrants
to purchase an aggregate of 147,368 shares of our common stock (which equals 7% of the aggregate number of shares sold in this
offering to investors introduced to us by Palladium) at an exercise price of $5.4625 per share (which represents 115% of the offering
price per share sold in this offering). The July Palladium Warrants are exercisable at any time and from time to time, in whole
or in part, following the date of issuance and until July 8, 2025.
Pursuant
to our Investment Banking Agreement, dated March 6, 2020, with Spartan, in connection with the July Offering in which Spartan
acted as a finder, we issued to Spartan the July Spartan Warrants to purchase 71,770 shares of our common stock (which represents
a number of shares equal to 7.5% of the gross proceeds raised in this offering to investors introduced to us by Spartan divided
by 110% of the purchase price per share sold in this offering) at an exercise price of $5.225 per share (which represents 110%
of the offering price per share sold in this offering). The compensation warrants are immediately exercisable, have a term of
five years, contain cashless exercise provisions and piggyback registration rights.
On
July 23, 2020, AYRO entered into a Securities Purchase Agreement with certain institutional and accredited investors, pursuant
to which AYRO agreed to issue and sell in a registered direct offering an aggregate of 1,850,000 shares of common stock and options
to purchase 1,387,500 shares of common stock through October 19, 2020 (the “July 23, 2020 Shares”) of common
stock of AYRO, par value $0.0001 per share, at an offering price of $5.00 per share, for gross proceeds of approximately $9.25
million before the deduction of fees and offering expenses (the “July 23 Offering”). The July 23, 2020 Shares were
offered by AYRO pursuant to a shelf registration statement on Form S-3 (File No. 333-227858), previously filed with the Securities
and Exchange Commission on October 16, 2018, and declared effective by the Securities and Exchange Commission on November 9, 2018.
Pursuant
to the Palladium Advisory Agreement, upon the closing of the July 23 Offering, we issued to Palladium the July 23 Palladium Warrants
to purchase an aggregate of 129,500 shares of our common stock (which equals 7% of the aggregate number of shares sold in this
offering to investors introduced to us by Palladium) at an exercise price of $5.75 per share (which represents 115% of the offering
price per share sold in this offering). The July 23 Palladium Warrants are exercisable at any time and from time to time, in whole
or in part, following the date of issuance and until July 23, 2025.
Relationships
with the Selling Stockholders
Each
of Alpha, ICIG and IMF have participated in our financings.
Alpha,
ICIG and IMF acted as investors in our Secured Loan, the Bridge Loan and the $1.15M Private Placement. Alpha also participated
in the $850K Private Placement.
Each
of Alpha, ICIG and IMF was an investor in the June Offering, pursuant to which Alpha purchased an aggregate of 800,000 shares
of our common stock, ICIG purchased an aggregate of 346,667 shares of our common stock and IMF purchased an aggregate of 453,333
shares of our common stock.
Each
of Alpha, ICIG and IMF was an investor in the July Offering, pursuant to which Alpha purchased an aggregate of 1,052,632
shares of our common stock, ICIG purchased an aggregate of 631,579 shares of our common stock and IMF purchased an aggregate of
421,053 shares of our common stock.
Each
of Jason Diamond and Robert Malin are affiliated with Spartan. Spartan served as our finder in the June Offering and financial
advisor in the July Offering, pursuant to which Spartan received cash and warrant compensation. In connection with the June Offering
and the July Offering, each of Jason Diamond and Robert Malin, as designees of Spartan, received Spartan Warrants.
Palladium
served as our placement agent and/or financial advisor in connection with the Bridge Loan, the $850K Private Placement, the $1.15M
Private Placement, the July Offering and the July 23 Offering.
The
Non-Employee Director was a director of AYRO.
Except
with respect to the foregoing, none of the selling stockholders has, or within the past three years has had, any position, office
or other material relationship with us.
Information
About Selling Stockholder Offering
The
following table sets forth the number and percentage of our common stock beneficially owned by the selling stockholders as of
July 31, 2020, and assumes exercise of the Warrants, if any, held by such selling stockholders on that date in full for
cash, without regard to any limitations on exercises; and thus, the Warrant Shares are deemed to be outstanding and to be beneficially
owned by the selling stockholders holding the Warrants, but are not treated as outstanding for the purpose of computing the percentage
ownership of any other selling stockholders.
Under
the terms of the Warrants, a selling stockholder may not exercise Warrants to the extent that such selling stockholder, together
with its affiliates, would beneficially own, after such exercise more than 4.99% of the shares of common stock then outstanding
(subject to the right of the selling stockholders to increase or decrease such beneficial ownership limitation upon notice to
us, provided that such limitation cannot exceed 9.99%) and provided that any increase in the beneficial ownership limitation shall
not be effective until 61 days after such notice is delivered. The number of shares does not reflect this limitation.
The
percentage of shares owned after the offering is based on 24,167,549 shares of common stock outstanding as of July 31,
2020. Unless otherwise indicated in the footnotes to this table, we believe that the selling stockholders have sole voting
and investment power with respect to the shares of common stock indicated as beneficially owned.
As
used in this prospectus, the term “selling stockholders” includes the selling stockholders set forth below and any
donees, pledgees, transferees or other successors-in-interest selling shares of common stock received after the date of this prospectus
from the selling stockholders as a gift, pledge, or other non-sale related transfer.
The
third and fourth column in the table below assume the sale of all of the shares offered by each selling stockholder pursuant to
this prospectus and that the selling stockholder does not acquire any additional shares of common stock before the completion
of this offering. However, because the selling stockholders may sell all or some of its shares under this prospectus from time
to time, or in another permitted manner, we cannot assure you as to the actual number of shares that will be sold by the selling
stockholders or that will be held by the selling stockholders after completion of any sales. The selling stockholders may sell
some, all or none of their shares in this offering. We do not know how long the selling stockholders will hold the shares before
selling them, and we currently have no agreements, arrangements or understandings with the selling stockholders regarding the
sale of any of the shares.
|
|
|
Ownership Before Offering
|
|
|
Ownership After Offering
|
|
|
Selling Stockholders
|
|
Number of shares of common stock owned
|
|
|
Maximum Number of shares offered
|
|
|
Number of shares of common stock owned
|
|
|
Percentage of common stock owned
|
|
|
Iroquois Master Fund Ltd. (1)
|
|
|
160,668
|
(2)
|
|
|
17,001
|
(3)
|
|
|
143,667
|
|
|
|
*
|
%
|
|
Iroquois Capital Investment Group LLC (1)
|
|
|
139,333
|
(4)
|
|
|
12,999
|
(5)
|
|
|
126,334
|
|
|
|
*
|
%
|
|
Alpha Capital Anstalt (6)
|
|
|
1,002,646
|
(7)
|
|
|
106,236
|
(8)
|
|
|
896,410
|
|
|
|
3.7
|
%
|
|
Palladium Holdings, LLC (9)
|
|
|
1,135,207
|
(10)
|
|
|
635,271
|
(11)
|
|
|
499,936
|
|
|
|
2.0
|
%
|
|
Spartan Capital Securities, LLC (12)
|
|
|
99,043
|
(13)
|
|
|
99,043
|
(14)
|
|
|
0
|
|
|
|
*
|
|
|
Solomon Mayer (15)
|
|
|
8,130
|
(16)
|
|
|
8,130
|
(17)
|
|
|
0
|
|
|
|
*
|
|
*
Less than 1%
(1)
Richard Abbe has the sole authority and responsibility for the investments made on behalf of Iroquois Capital Investment Group
LLC (“ICIG”) as its managing member and shares authority and responsibility for the investments made on behalf of
Iroquois Master Fund Ltd. (the “Fund”) with Kimberly Page, each of whom is a director of the Fund. As such, Mr. Abbe
may be deemed to be the beneficial owner of all shares of common stock held by and underlying the Warrants (subject to the beneficial
ownership blockers) held by, the Fund and ICIG. Each of the Iroquois Funds and the selling stockholders disclaims any beneficial
ownership of any such shares of common stock, except to the extent of their pecuniary interest therein. The selling stockholder’s
address is 125 Park Ave., 25th Fl. NY, NY 10017.
(2)
Represents (1) 20,000 shares of common stock, (ii) 123,667 shares of common stock issuable upon exercise of warrants assumed
in the Merger, and (iii) 17,001 shares of common stock issuable upon exercise of the Warrants issued pursuant to the Secured
Loan.
(3)
Represents 17,001 shares of common stock issuable upon exercise of the Warrants issued pursuant to the Secured Loan.
(4)
Represents (1) 30,000 shares of common stock, (ii) 96,334 shares of common stock issuable upon exercise of warrants assumed
in the Merger, and (iii) 12,999 shares of common stock issuable upon exercise of the Warrants issued pursuant to the Secured
Loan.
(5)
Represents 12,999 shares of common stock issuable upon exercise of the Warrants issued pursuant to the Secured Loan.
(6)
Nicola Feuerstein each has sole voting and dispositive power over the securities held for the account of this selling stockholder.
The selling stockholder’s address is Lettstrasse 32, 9490 Vaduz, Principality of Liechtenstein.
(7)
Represents (i) 646,745 shares of common stock, (ii) 249,665 shares of common stock issuable upon exercise of certain warrants,
and (iii) 106,236 shares of common stock issuable upon the exercise of pre-funded warrants.
(8)
Represents (i) 36,236 shares of common stock issuable upon exercise of the Warrants issued in connection with the $850K
Private Placement and (ii) 70,000 shares of common stock issuable upon exercise of the Warrants issued pursuant to the Secured
Loan.
(9)
Joel Padowitz has sole voting and dispositive power over the securities held for the account of this selling stockholder. The
selling stockholder’s address is 10 Rockefeller Plaza, #909, New York, NY 10020.
(10)
Represents (1) 417,001 shares of common stock, (ii) 232,403 shares of common stock issuable upon exercise of the Palladium Bridge
Warrants, (iii) 126,000 shares of our common stock issuable upon exercise of the June Palladium Warrants, (iv) 147,368 shares
of our common stock issuable upon exercise of the July Palladium Warrants, (v) 129,500 shares of our common stock issuable
upon exercise of the July 23 Palladium Warrants and (vi) 82,935 shares of common stock issuable upon exercise of DropCar
warrants.
(11)
Represents (i) 232,403 shares of common stock issuable upon exercise of the Palladium Bridge Warrants, (ii) 126,000 shares
of our common stock issuable upon exercise of the June Palladium Warrants, (iii) 147,368 shares of our common stock issuable
upon exercise of the July Palladium Warrants and (iv) 129,500 shares of our common stock issuable upon exercise of the July
23 Palladium Warrants.
(12)
John D. Lowry has sole voting and dispositive power over the securities held for the account of this selling stockholder. The
selling stockholder’s address is 45 Broadway, 19th Floor, New York, NY 10006.
(13)
Represents (i) 27,273 shares of our common stock issuable upon exercise of the June Spartan Warrants and (iii) 71,770 shares of
our common stock issuable upon exercise of the July Spartan Warrants.
(14)
Represents (i) 27,273 shares of our common stock issuable upon exercise of the June Spartan Warrants and (ii) 71,770 shares of
our common stock issuable upon exercise of the July Spartan Warrants.
(15)
Mr. Mayer was a director of the Company prior to the Merger.
(16)
Represents 8,130 shares of our common stock issued pursuant to a Change of Control Letter Agreement entered into in January
2020.
(17)
Represents 8,130 shares of our common stock issued pursuant to a Change of Control Letter Agreement entered into in January 2020.
PLAN
OF DISTRIBUTION
The
selling stockholders, including their pledgees, donees, transferees, distributees, beneficiaries or other successors in interest,
may from time to time offer some or all of the shares of common stock covered by this prospectus. We will not receive any of the
proceeds from the sale of the shares of common stock covered by this prospectus by the selling stockholders. We will bear all
fees and expenses incident to our obligation to register the shares of our common stock covered by this prospectus.
The
selling stockholders may sell all or a portion of the shares of common stock beneficially owned by them and offered hereby from
time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through
underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent’s
commissions. The shares of common stock may be sold on any national securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale, in the over-the-counter market or in transactions otherwise than on these exchanges
or systems or in the over-the-counter market and in one or more transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale, or at privately negotiated prices. These sales may be effected
in transactions, which may involve crosses or block transactions.
The
selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:
|
●
|
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
|
|
|
|
●
|
block
trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block
as principal to facilitate the transaction;
|
|
|
|
|
●
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
|
|
|
|
|
●
|
an
over-the-counter distribution;
|
|
|
|
|
●
|
an
exchange distribution in accordance with the rules of the applicable exchange;
|
|
|
|
|
●
|
privately
negotiated transactions;
|
|
|
|
|
●
|
short
sales effected after the effective date of the registration statement of which this prospectus is a part;
|
|
|
|
|
●
|
through
the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
|
|
|
|
|
●
|
broker-dealers
may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;
|
|
|
|
|
●
|
a
combination of any such methods of sale; or
|
|
|
|
|
●
|
any
other method permitted pursuant to applicable law.
|
The
selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock
owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer
and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act, amending the list of the selling stockholders to include the
pledgee, transferee, or other successors in interest as selling stockholders under this prospectus. The selling stockholders also
may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
In
connection with the sale of shares of our common stock or interests therein, the selling stockholders may enter into hedging transactions
with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course
of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these
securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution
of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
Broker-dealers
engaged by a selling stockholder may arrange for other broker-dealers to participate in sales. If a selling stockholder effects
certain transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders
or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal.
Such commissions will be in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case
of an agency transaction will not be in excess of a customary brokerage commission in compliance with applicable Financial Industry
Regulatory Authority (“FINRA”) rules; and in the case of a principal transaction a markup or markdown in compliance
with applicable FINRA rules.
The
aggregate proceeds to a selling stockholder from the sale of the common stock offered by it will be the purchase price of the
common stock less discounts or commissions, if any. The selling stockholders reserve the right to accept and, together with their
agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering.
The
selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under
the Securities Act, provided that they meet the criteria and conform to the requirements of that rule.
The
selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests
therein may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act. Any discounts,
commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the
Securities Act. The selling stockholders are subject to the prospectus delivery requirements of the Securities Act.
To
the extent required pursuant to Rule 424(b) under the Securities Act, the shares of our common stock to be sold, the name of the
selling stockholder, the purchase price and public offering price, the names of any agents, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus or, if appropriate,
a post-effective amendment to the registration statement that includes this prospectus.
In
order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only
through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has
been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied
with.
The
selling stockholders and any other person participating in a sale of the common stock registered under this prospectus will be
subject to applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any other participating
person. All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity
to engage in market-making activities with respect to the shares of common stock. In addition, we will make copies of this prospectus
(as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the
prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities
Act.
LEGAL
MATTERS
The
validity of the securities offered by this prospectus will be passed upon for us by Haynes and Boone, LLP, New York, New York.
EXPERTS
The
consolidated financial statements of DropCar, Inc. as of and for the year ended December 31, 2019, incorporated by reference in
this Registration Statement has been so included in reliance on the report of Friedman LLP, an independent registered public accounting
firm, (such report includes an explanatory paragraph regarding the Company’s ability to continue as a going concern), given
on the authority of said firm as experts in auditing and accounting.
The
balance sheets of AYRO, Inc. as of December 31, 2019 and 2018 and the related statements of income, comprehensive income, stockholders’
equity, and cash flows for the years then ended, have been audited by Plante & Moran, PLLC, independent registered public
accounting firm, as stated in their report, which is incorporated herein by reference. Such financial statements have been included
herein in reliance on the report of such firm given upon their authority as experts in accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
are subject to the informational requirements of the Exchange Act, and in accordance therewith file annual, quarterly and current
reports, proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy and information
statements and other information regarding registrants that file electronically with the SEC. The address of the SEC’s website
is www.sec.gov.
We
make available free of charge on or through our website at https://ayro.com/, our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d)
of the Exchange Act, as soon as reasonably practicable after we electronically file such material with or otherwise furnish it
to the SEC.
We
have filed with the SEC a registration statement under the Securities Act of 1933, as amended, relating to the offering of these
securities. The registration statement, including the attached exhibits, contains additional relevant information about us and
the securities. This prospectus does not contain all of the information set forth in the registration statement. You can obtain
a copy of the registration statement for free at www.sec.gov. The registration statement and the documents referred to below under
“Incorporation of Documents By Reference” are also available on our website, https://ayro.com/,
We
have not incorporated by reference into this prospectus the information on our website, and you should not consider it to be a
part of this prospectus.
INCORPORATION
OF DOCUMENTS BY REFERENCE
The
SEC allows us to “incorporate by reference” the information we have filed with it, which means that we can disclose
important information to you by referring you to those documents. The information we incorporate by reference is an important
part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information.
We specifically are incorporating by reference the following documents filed with the SEC (excluding those portions of any Current
Report on Form 8-K that are furnished and not deemed “filed” pursuant to the General Instructions of Form 8-K):
|
|
●
|
our
Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 30, 2020, as amended by our Annual
Report on Form 10-K/A, filed with the SEC on April 10, 2020;
|
|
|
|
|
|
|
●
|
our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 14, 2020;
|
|
|
|
|
|
|
●
|
our
Current Reports on Form 8-K filed with the SEC on February 5, 2020, February 7, 2020 (and as amended on February 14, 2020),
February 24, 2020, March 6, 2020, May 15, 2020, May 19, 2020, May 26, 2020, May 28, 2020, May 29, 2020 (and as amended on
June 3, 2020), June 19, 2020, July 8, 2020 and July 23, 2020;
|
|
|
|
|
|
|
●
|
the
following sections from the Form S-4: “Risk Factors,” “Management of the Combined Company,” “Information
About AYRO,” “Information About DropCar—Legal Proceedings,” “Principal Stockholders of AYRO
and the Combined Company,” “Principal Stockholders of DropCar and the Combined Company” and “Description
of DropCar Capital Stock;” and
|
|
|
|
|
|
|
●
|
the
description of our common stock contained in the “Description of DropCar Capital Stock” in the Form S-4.
|
All
reports and definitive proxy or information statements subsequently filed after the date of this initial registration statement
and prior to effectiveness of this registration statement by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act, but excluding information furnished to, rather than filed with, the SEC, shall be deemed to be incorporated by reference
herein and to be a part hereof from the date such documents are filed.
Any
statement contained herein or in any document incorporated or deemed to be incorporated by reference shall be deemed to be modified
or superseded for purposes of the registration statement of which this prospectus forms a part to the extent that a statement
contained in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or supersedes
such statement. Any such statement so modified or superseded shall not be deemed to constitute a part of the registration statement
of which this prospectus forms a part, except as so modified or superseded.
You
should rely only on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else
to provide you with different information. You should not assume that the information in this prospectus is accurate as of any
date other than the date of this prospectus or the date of the documents incorporated by reference in this prospectus.
We
will provide without charge to each person to whom a copy of this prospectus is delivered, upon written or oral request, a copy
of any or all of the information that has been incorporated by reference in this prospectus but not delivered with this prospectus
(other than an exhibit to these filings, unless we have specifically incorporated that exhibit by reference in this prospectus).
Any such request should be addressed to us at:
AYRO,
Inc.
Attn:
Curtis Smith
900
E. Old Settlers Boulevard, Suite 100
Round
Rock, Texas 78664
512-994-4917
You
may also access the documents incorporated by reference in this prospectus through our website at https://ayro.com/. Except for
the specific incorporated documents listed above, no information available on or through our website shall be deemed to be incorporated
in this prospectus or the registration statement of which it forms a part.
878,680
Shares of Common Stock and Shares of Common Stock Underlying
Warrants
PROSPECTUS
AYRO (NASDAQ:AYRO)
Historical Stock Chart
From Mar 2024 to Apr 2024
AYRO (NASDAQ:AYRO)
Historical Stock Chart
From Apr 2023 to Apr 2024
