AYRO, Inc.
For the period ended Jun 30, 2025. Filed Aug 14, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 14, 2025
FABC$1.59+3.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-14.
0001641172-25-010337
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001641172-25-023974
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 90 previous paragraphs and 123 current paragraphs.
57 unchanged; 20 reworded; 39 added; 11 removed; 2 previous and 7 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
The Company’s Business Strategy
Current report
The Company has historically been engaged in the design, manufacture and commercialization of electric vehicles. In July 2025, the Company commenced a strategic transition toward a new business model focused on digital asset initiatives, with a focus on targeting the acquisition of crypto tokens that are directly capitalizing on the rapid growth of the stablecoin industry. The Company views the stablecoin ecosystem as a rapidly growing segment of the global financial infrastructure and believes that the entry into this market can provide a complementary revenue stream and enhance stockholder value. The Company’s approach is intended to focus on acquiring and holding crypto assets within the stablecoin space and deploying them in a manner designed to generate yield while managing associated risks. In connection with this strategic shift, the Company announced a target goal of acquiring up to $100 million in crypto assets, subject to available capital, market conditions and regulatory considerations.
Current report
Termination of GM Partnership
Current report
On August 8, 2025, General Motors LLC cancelled its development projects with the Company effective as of such date. Accordingly, no further obligations will arise between the parties pursuant to their prior partnership.
Current report
Consulting Agreement with James Altucher and Z-List Media
Current report
In connection with the Company’s strategic transition toward a new business model focused on digital asset initiatives, on August 4, 2025, the Company entered into a consulting agreement (the “Altucher Consulting Agreement”) with James Altucher and Z-List Media, Inc. (the “Consultant”), pursuant to which, the Consultant agreed to provide certain consulting services to the Company, including fund raising, crypto portfolio management, investor relations, strategic planning, deal flow analysis, introductions to further its business goals, advice related to sector growth initiatives and any other consulting or advisory services which the Company reasonably requests that Consultant provide to the Company. The Altucher Consulting Agreement has a term of two years unless earlier terminated pursuant to the terms of the Altucher Consulting Agreement or upon the mutual written consent of the Company and the Consultant in accordance with the terms of the Altucher Consulting Agreement.
Current report
Pursuant to the Altucher Consulting Agreement, the Company issued to the Consultant warrants to purchase up to an aggregate of 1,000,000 shares of common stock, consisting of: (i) a warrant to purchase up to 300,000 shares of common stock at an exercise price of $8.00 per share, which are immediately exercisable upon issuance (the “First Tranche Warrant”), (ii) a warrant to purchase up to 200,000 shares of common stock at an exercise price of $12.00 per share, which will be exercisable six months from the date of issuance (the “Second Tranche Warrant”), (iii) a warrant to purchase up to 200,000 shares of common stock at an exercise price of $15.00 per share (the “Third Tranche Warrant”), which will be exercisable twelve months from the date of issuance, and (iv) a warrant to purchase up to 300,000 shares of common stock at exercise price of $17.50 per share (the “Fourth Tranche Warrant” and together the First Tranche Warrant, the Second Tranche Warrant and the Third Tranche Warrant, the “Consultant Warrants”), which will be exercisable eighteen months from the date of issuance, in each case, with each Consultant Warrant subject to exercisability, forfeiture and such other terms as set forth therein.
Current report
Authorized Share Increase
Current report
On May 29, 2025, at the Company’s annual meeting of stockholders (“Annual Meeting”), the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Share Increase Amendment”) to increase the number of authorized shares of the Company’s common stock, par value $0.0001 per share (“common stock”) from 200,000,000 shares to 1,200,000,000 shares and to make a corresponding change to the number of authorized shares of the Company’s capital stock. Following the Annual Meeting, on May 23, 2025, the Company filed the Share Increase Amendment with the Secretary of State of the State of Delaware.
Current report
Reverse Stock Split
Current report
On June 23, 2025, the Company filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to effect a 1-for-16 reverse stock split of the shares of the Company’s common stock, either issued and outstanding or held by the Company as treasury stock, effective as of 4:05 p.m. (New York time) on June 25, 2025 (the “Reverse Stock Split”) and began trading on a Reverse Stock Split-adjusted basis on Nasdaq on June 26, 2025. All share amounts have been retroactively adjusted for the Reverse Stock Split.
Current report
August 2025 Financing
Current report
On August 4, 2025, the Company entered into a Securities Purchase Agreement (the “Series I Purchase Agreement”) with certain accredited investors, pursuant to which it agreed to sell (i) an aggregate of 7,000 shares of the Company’s newly-designated Series I Convertible Preferred Stock, with a par value of $0.0001 per share and a stated value of $1,000 per share (“Stated Value”), initially convertible into up to 875,000 shares of the Company’s common stock at an initial conversion price of $8.00 per share and (ii) warrants to acquire up to an aggregate of 875,000 shares of common stock (the “Series I Warrants”) at an exercise price of $8.00 per share (collectively, the “Private Placement”). The closing of the Private Placement occurred on August 8, 2025. The aggregate gross proceeds from the Private Placement were $7,000,000.
Current report
Six months ended June 30, 2025, compared to six months ended June 30, 2024
Current report
Cost of goods decreased by $2,019,063 or 89% for the six months ended June 30, 2025, as compared to the same period in 2024. The decrease in cost of goods sold was mainly due to the decrease of $887,922 and $167,187 in impairment of inventory adjustments and a decrease in materials purchases, respectively, related to the Vanish, a decrease in overhead allocations of $432,843, and a decrease of $511,803 adjustments to inventory stock counts that were the result of inventory write downs during the six months ended June 30, 2024.
Current report
Sales and marketing expense was $0 for the six months ended June 30, 2025, as compared to $553,390 for the same period in 2024, a decrease of $553,390, or 100%. For the six months ended June 30, 2025, as compared to the same period in 2024, the Company had a decrease of $200,121 in depreciation expense of their fleet vehicles and a decrease of $162,701 in personnel expenses. The decrease primarily resulted from no depreciation of the vehicles during 2025 due to the impairment of the vehicles by the end of the year 2024.
Current report
For the six months ended June 30, 2025, the Company recorded a $21,987,819 decrease of net other income. The Company recognized a loss of $12,174,100 and a gain of $9,010,300 for the six months ended June 30, 2025 and 2024, respectively, for the change in fair value - warrant liability, a decrease of $21,184,400 primarily due to the increase in the trading price of the Company’s common stock and the decrease in the exercise price. For the six months ended June 30, 2025, the Company recorded a $259,664 decrease in interest income primarily due to a $259,664 decrease in interest income on cash accounts, a decrease in realized gains of $146,567 on marketable securities, and a decrease of $346,066 in the unrealized gain on marketable securities. For the six months ended June 30, 2025, the Company recorded a $350,000 increase in consent and waiver fees related to the Series H-7 Preferred Stock. For the six months ended June 30, 2025, the Company recorded an $264,878 increase in other income and expense primarily due to a decrease in vendor settlements of $131,798 and an increase of $101,664 in miscellaneous income and expense.
Current report
Research and development expense
Current report
Sales and marketing expense
Current report
Sales and marketing expense was $0 for the three months ended June 30, 2025, as compared to $285,035 for the same period in 2024, a decrease of $285,035, or 100%. For the three months ended June 30, 2025, as compared to the same period in 2024, the Company had a decrease of $200,121 in depreciation expense of their fleet vehicles. The decrease primarily resulted from no depreciation of the vehicles during 2025 due to the impairment of the vehicles by the end of the year 2024.
Current report
General and administrative expenses
Current report
Other income and expense
Current report
We are also implementing a multi-token investment strategy, pursuant to which we intend to use capital in excess of working capital requirements to invest in one or more alternative investments or assets, which may include digital assets linked to stablecoin. We intend to target $100 million in crypto tokens that capitalize on the stablecoin industry and we will continue to monitor market conditions in determining whether to engage in additional financings to purchase such crypto tokens. This overall strategy also contemplates that we may (i) periodically sell the crypto tokens we purchase for general corporate purposes, including to generate cash for treasury management (which may include debt repayment), or in connection with strategies that generate tax benefits in accordance with applicable law, (ii) enter into additional capital raising transactions that are collateralized by our potential digital asset holdings, and (iii) consider pursuing additional strategies to create income streams or otherwise generate funds using potential digital asset holdings.
Current report
On August 4, 2025, the Company entered into an Omnibus Waiver, Consent, Notice and Amendment (the “Series H-7 Agreement”) with the Required Holders. Pursuant to the Series H-7 Agreement, the Required Holders agreed to (i) amend the Series H-7 Purchase Agreement to amend the definition of “Excluded Securities” as set forth in the Series H-7 Amendment, (ii) waive certain rights under the Series H-7 Purchase Agreement, Series H-7 Warrants and Series H-7 Certificate of Designations in respect of the issuance of the Preferred Stock and entrance by the Company into the Purchase Agreement, and (iii) consent to the issuance of the Preferred Stock, as required pursuant to certain terms of the Series H-7 Certificate of Designations, the Series H-7 Purchase Agreement and the Series H-7 Warrants, as applicable. In consideration of the foregoing, the Company agreed to pay to the Required Holders an aggregate of $350,000 by September 30, 2025, which may be paid in the form of cash, or, at the holders’ sole election, added to the outstanding aggregate stated value of the Series H-7 Preferred Stock.
Current report
The Company and the Required Holders further agreed pursuant to the Series H-7 Agreement to amend the Series H-7 Certificate of Designations by filing a Certificate of Amendment to the Series H-7 Certificate of Designations (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware. The Certificate of Amendment amends the Series H-7 Certificate of Designations to (i) extend the maturity date to February 4, 2027, (ii) revise the applicable payment dates and corresponding payable amounts of Dividends and Installment Amounts (each as defined in the Series H-7 Certificate of Designations), (iii) modify the definition of “Excluded Securities” and (iv) modify the schedule of Installment Dates (as defined in the Series H-7 Certificate of Designations). The Certificate of Amendment to the Series H-7 Certificate of Designations was filed with the Secretary of State for the State of Delaware on August 6, 2025.
Current report
Series I Preferred Stock
Current report
On August 4, 2025, the Company entered into the Series I Securities Purchase Agreement with certain accredited investors, pursuant to which it agreed to sell (i) an aggregate of 7,000 shares of the Company’s newly-designated Series I Convertible Preferred Stock, with a par value of $0.0001 per share and a stated value of $1,000 per share, initially convertible into up to 875,000 shares of the Company’s common stock at an initial conversion price of $8.00 per share and (ii) warrants to acquire up to an aggregate of 875,000 Series I Warrants at an exercise price of $8.00 per share. The closing of the Private Placement occurred on August 8, 2025. The aggregate gross proceeds from the Private Placement were $7,000,000.
Current report
Among other covenants, the Series I Purchase Agreement requires the Company to hold a meeting of its stockholders not later than October 3, 2025, to seek approval for the issuance of shares of common stock in excess of 19.99% of the Company’s issued and outstanding shares of common stock at prices below the “Minimum Price” (as defined in Rule 5635 of the Rules of the Nasdaq Stock Market) on the date of the Series I Purchase Agreement pursuant to the terms of the Series I Preferred Stock and the applicable Series I Warrants.
Current report
In connection with the Private Placement, pursuant to (A) an engagement letter (the “GPN Agreement”) with GP Nurmenkari Inc. (“GPN”) and (B) an engagement letter (the “Palladium Agreement,” and collectively with the GPN Agreement, the “Engagement Letters”) with Palladium Capital Group, LLC (“Palladium,” and collectively with GPN, the “Placement Agents”), the Company engaged the Placement Agents to act as non-exclusive placement agents in connection with the Private Placement, pursuant to which, the Company agreed to (i) pay each Placement Agent a cash fee equal to 4% of the gross proceeds of the Private Placement (including any cash proceeds realized by the Company from the exercise of any outstanding warrants of the Company), (ii) reimbursement and payment of certain expenses, and (iii) issue to each of the Placement Agents on the closing date, warrants to purchase up to an aggregate number of shares of common stock equal to 4% of the aggregate number of shares of common stock underlying the securities issued in the Private Placement, including upon exercise of any outstanding warrants of the Company, with terms identical to the Series I Warrants
Current report
In connection with the Purchase Agreement, the Company and the investors entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Company is required to file a resale registration statement (the “Registration Statement”) with the SEC to register for resale 200% of the shares of common stock issuable upon conversion of the Series I Preferred Stock and upon exercise of the Series I Warrants promptly following the closing date, but in no event later than 30 calendar days after the closing date, and to have such Registration Statement declared effective by the Effectiveness Deadline (as defined in the Registration Rights Agreement).
Current report
The terms of the Series I Preferred Stock are as set forth in the form of Certificate of Designations of the Series I Convertible Preferred Stock (“Series I Certificate of Designations”) which was filed with the Secretary of State for the State of Delaware on August 6, 2025. All shares of capital stock of the Company rank junior to shares of the Series I Preferred Stock, with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company. Further to the foregoing, the shares of Seres I Preferred Stock rank junior to shares of Series H-7 Convertible Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company.
Current report
The shares of Series I Preferred Stock are convertible into shares of common stock at the election of the holder at any time at an initial conversion price of $8.00 per share (the “Series I Conversion Price”). The Series I Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like and dilutive issuances (in each case, subject to certain exceptions). The Company is required to redeem the Series I Preferred Stock in equal installments, commencing on November 30, 2025, and thereafter on the last trading day of the third calendar month immediately following the previous Installment Date, until the maturity date of February 4, 2027.
Current report
The Installment Amount (as defined in the Seres I Certificate of Designations) due upon such redemption are payable, at the Company’s election, in cash at 107% of the applicable Installment Redemption Price (as defined in the Seres I Certificate of Designations).
Current report
The holders of the Series I Preferred Stock are entitled to dividends of 7% per annum, compounded each calendar quarter, which are payable in arrears (i) quarterly on each Installment Date (as defined in the Seres I Certificate of Designations), in cash out of funds legally available therefor and, (ii) prior to the first Installment Date, payable by way of inclusion of the dividends in the Conversion Amount (as defined in the Seres I Certificate of Designations) on each conversion date occurring prior to the first Installment Date. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Seres I Certificate of Designations), the Seres I Preferred Stock accrue dividends at the rate of 15% per annum. The holders of the Series I Preferred Stock are entitled to vote with holders of the common stock on as as-converted basis, with the number of votes to which each holder of Series I Preferred Stock is entitled to be calculated assuming a conversion price of $7.628 per share, which was the Minimum Price (as defined in Rule 5635 of the Rules of the Nasdaq Stock Market) applicable immediately before the execution and delivery of the Series I Purchase Agreement, subject to certain beneficial ownership limitations as set forth in the Series I Certificate of Designations.
Current report
Notwithstanding the foregoing, the Company’s ability to settle conversions using shares of common stock is subject to certain limitations set forth in the Series I Certificate of Designations, including a limit on the number of shares that may be issued until the time, if any, that the Company has obtained the Stockholder Approval. Further, the Series I Certificate of Designations contains a certain beneficial ownership limitation after giving effect to the issuance of shares of Series I Common Stock issuable upon conversion of the Series I Preferred Stock under the Series I Certificate of Designations.
Current report
The Company is subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Series I Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters. In addition, the Company is required to maintain at all times unencumbered, unrestricted cash and cash equivalents on hand in amount equal to at least 50% of the aggregate Stated Value of the outstanding shares of Series I Preferred Stock then outstanding.
Current report
The Series I Warrants are exercisable for shares of common stock immediately, at an exercise price of $8.00 per share and expire five years from the date of issuance. The exercise price of each Seres I Warrant is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like and dilutive issuances (in each case, subject to certain exceptions).
Current report
Stablecoin and other digital assets are relatively novel and are subject to various risks and uncertainties that may adversely impact their price. For example, the application of securities laws and other regulations to such assets is unclear in many respects, and it is possible that regulators in the United States or foreign countries may create new regulations or interpret laws in a manner that adversely affects the price of stablecoin. The growth of the digital assets industry in general, and the use and acceptance of stablecoin in particular, may also impact the price of stablecoin and is subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of stablecoin may depend, for instance, on public familiarity with digital assets, ease of buying and accessing stablecoin, institutional demand for stablecoin as an investment asset, consumer demand for stablecoin as a means of payment, and the availability and popularity of alternatives to stablecoin. Even if growth in stablecoin adoption occurs in the near or medium-term, there is no assurance that stablecoin usage will continue to grow over the long-term. Because stablecoins have no physical existence beyond the record of transactions on the stablecoin blockchain, a variety of technical factors related to the stablecoin blockchain could also impact the price of stablecoin. For example, malicious attacks by “miners” who validate stablecoin transactions, inadequate mining fees to incentivize validating of stablecoin transactions, hard “forks” of the stablecoin blockchain into multiple blockchains, and advances in quantum computing could undercut the integrity of the stablecoin blockchain and negatively affect the price of stablecoin.
Current report
Digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of stablecoin.
Removed paragraphs (11)
Previous report
Nasdaq Deficiency
Previous report
On July 18, 2024, the Company received a letter from the Listing Qualifications Department of the Nasdaq Stock Market indicating that, based upon the closing bid price of the Company’s common stock for the 30 consecutive business days between June 3, 2024, to July 17, 2024, the Company did not meet the minimum bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). The letter also indicated that the Company will be provided with a compliance period of 180 calendar days, or until January 14, 2025, in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A).
Previous report
On January 15, 2025, the Company received notice from the Staff granting the Company’s request for a 180-day extension to regain compliance with the Rule, or until July 14, 2025 (the “Compliance Period”). In order to regain compliance with Nasdaq’s minimum bid price requirement, the Company’s common stock must maintain a minimum closing bid price of $1.00 for at least ten consecutive business days during the Compliance Period. However, if it appears to Nasdaq that the Company will be unable to cure the deficiency Nasdaq will provide notice that the Company’s common stock will be subject to delisting. There can be no assurance that the Nasdaq staff would grant the Company’s request for continued listing subsequent to any delisting notification. In the event of such a notification, the Company may appeal the Nasdaq staff’s determination to delist its securities.
Previous report
There is no assurance that we will maintain compliance with such minimum listing requirements. If Nasdaq delists our common stock from trading on its exchange for failure to meet the listing standards, an investor would likely find it significantly more difficult to dispose of or obtain our shares, and our ability raise future capital through the sale of our shares could be severely limited. Delisting could also have other negative results, including the potential loss of confidence by employees, the loss of institutional investor interest and fewer business development opportunities.
Previous report
Products
Previous report
Our 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 services, cargo services, and personal/group transport in a quiet, zero emissions vehicle with a lower total cost of ownership.
Previous report
Factors Affecting Results of Operations
Previous report
Internal Restructuring
Previous report
On January 31, 2024, the Company began implementing an internal restructuring to achieve greater efficiency in pursuit of its strategic goals. As part of the Company’s internal restructuring, among other things, the Company eliminated a substantial number of positions at the Company, which may impact its financial position and results of operations, as the Company re-evaluates its sales, marketing, and manufacturing functions. Following the internal restructuring, as of March 31, 2025, we did not have any direct, full-time employees. In connection with the restructuring, the Company began working closely with consultants to complete a thorough review of its new 411 fleet vehicle model year 2023 refresh, the Vanish (the “Vanish”), to achieve the Company’s objective of lowering the bill of materials (“BOM”) and overall manufacturing expenses, which in turn will reduce the Manufacturer’s Suggested Retail Price (“MSRP”) of the Vanish.
Previous report
As part of this effort, in August 2024, Gilbert Villarreal was appointed as President of the Company’s subsidiary, Ayro Operating Company, Inc., and has been leading the review of the Vanish, including working with the Company’s vendors and partners in connection with the Vanish.
Previous report
Sales and marketing expense was $0 for the three months ended March 31, 2025, as compared to $268,355 for the same period in 2024, a decrease of $268,355, or 100%. For the three months ended March 31, 2025, as compared to the same period in 2024, the Company had a decrease of $131,062 in salaries and related expenses, a decrease of $68,297 in bad debt expenses, a decrease of $13,366 in travel and entertainment, a decrease of $26,540 in advertising and trade shows, and a decrease of $10,000 in other consulting. The decrease primarily resulted from the suspension of marketing efforts and related expenses while the Company focuses on reengineering the Vanish to optimize its design and lower manufacturing costs.
Reworded paragraphs (20)
Previous wording
We design and manufacture compact, sustainable electric vehicles for closed campus mobility, low speed urban and community transport, local on-demand and last mile delivery and government use. Our four-wheeled purpose-built electric vehicles are geared toward commercial customers, including universities, business and medical campuses, last mile delivery services and food service providers.
Current wording
We have historically designed and manufactured compact, sustainable electric vehicles for closed campus mobility, low speed urban and community transport, local on-demand and last mile delivery and government use. Recently, the Company began a digital asset-based treasury strategy, involving the deployment of corporate treasury assets for the acquisition of crypto tokens that are directly capitalizing on the rapid growth of the stablecoin industry. The strategy intends to target tokens that support stablecoin issuance and infrastructure, combining the potential for long-term capital appreciation with consistent yield generation. Many of these assets are expected to deliver returns from both embedded yields and long-term price appreciation, as adoption of stablecoin is expected to accelerate globally.
Previous wording
Our goal is to continue to develop and commercialize automotive-grade, sustainable electric transportation solutions for the markets and use cases that we believe can be well served by our purpose-built, street legal low speed electric vehicles. Our business strategy includes the following:
Current wording
Historically, our goal has been to develop and commercialize automotive-grade, sustainable electric transportation solutions for the markets and use cases that we believe can be well served by our purpose-built, street legal low speed electric vehicles. Our business strategy includes, evaluating our operations to align with anticipated market conditions for electric vehicles, identifying 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 purpose-built electric vehicles to address such markets, and investing in research and development and qualification of sensors, cameras, software and mobility services, seeking to enhance the value of using our electric vehicles and to derive incremental potential revenue streams for us and our partner ecosystem
Previous wording
On August 27, 2024, the Company partnered with Lithion Battery Inc. (“Lithion”), a manufacturer of certain iron phosphate and lithium-ion battery cells, modules and battery packs, and entered into a purchase agreement with Lithion (the “Lithion Purchase Agreement”), pursuant to which, the Company agreed to purchase batteries from Lithion for an aggregate of $1,211,150 through 2025. As of March 31, 2025, $541,160 under the Lithion Purchase Agreement remained outstanding.
Current wording
On August 27, 2024, the Company partnered with Lithion Battery Inc. (“Lithion”), a manufacturer of certain iron phosphate and lithium-ion battery cells, modules and battery packs, and entered into a purchase agreement with Lithion (the “Lithion Purchase Agreement”), pursuant to which, the Company agreed to purchase batteries from Lithion for an aggregate of $1,211,150 through 2025. As of June 30, 2025, $541,160 under the Lithion Purchase Agreement remained outstanding. On June 17, 2025, Lithion filed a complaint with the Supreme Court of the State of the State of New York Country of New York, pursuant to which, Lithion claimed the Company was in breach of contract of the Lithion Purchase Agreement for failure to pay amounts owed under the Lithion Purchase Agreement in connection with the order of certain batteries. Lithion seeks damages equal to $717,120 plus interest. On July 28, 2025, the Company entered into a Settlement Agreement (as defined herein) with Lithion, pursuant to which the Company paid Lithion $540,000 on July 30, 2025, and upon payment, the Company took possession of the remaining battery cells, modules, and battery packs. Pursuant to the Settlement Agreement, all causes of action, counterclaims, and claims that were asserted or could have been asserted by the parties against each other in connection with the Lithion Purchase Agreement were settled in full, with no party having continuing liability to the other party.
Previous wording
The Company continues to work on the engineering of the Vanish, while the Company evaluates the commercialization of the product during the internal restructuring. Going forward, the Company expects to recognize revenue upon successful re-engineering of the Vanish and is exploring strategic partnerships to support scaling.
Current wording
The Company continues to work on engineering of the Vanish while the Company evaluates the commercialization of the product. Going forward, the Company expects to recognize revenue upon successful re-engineering of the Vanish and is exploring strategic partnerships to support scaling.
Previous wording
Cost of goods sold primarily consists of costs of materials and personnel costs associated with manufacturing operations, and an accrual for post-sale warranty claims. Personnel costs consist of wages and associated taxes and benefits. The cost of goods sold also includes freight and changes to our warranty reserves. Allocated overhead costs consist of certain facilities and utility costs.
Current wording
Cost of goods sold primarily consists of costs of materials and personnel costs associated with manufacturing operations, and an accrual for post-sale warranty claims. Personnel costs consist of wages and associated taxes and benefits. The cost of goods sold also includes adjustments to inventory, freight and changes to our warranty reserves. Allocated overhead costs consist of certain facilities and utility costs.
Previous wording
Revenue was $0 for the three months ended March 31, 2025, as compared to $58,351 for the same period in 2024, a decrease of 100%, or $58,351. The decrease in revenue was primarily due to a reduction of $37,775 in product sales and $18,249 decrease in service revenue, mainly due to the pause in manufacturing of the Vanish as the Company focuses on re-engineering the vehicle to optimize its design and improve manufacturing efficiencies.
Current wording
Revenue was $0 for the six months ended June 30, 2025, as compared to $58,351 for the same period in 2024, a decrease of 100%, or $58,351. The decrease in revenue was primarily due to a reduction of $37,775 in product sales and a $18,249 decrease in service revenue, mainly due to the pause in manufacturing of the Vanish as the Company focuses on re-engineering the vehicle to optimize its design and improve manufacturing efficiencies.
Previous wording
Cost of goods decreased by $1,183,207 or 100% for the three months ended March 31, 2025, as compared to the same period in 2024. The decrease in cost of goods sold was mainly due to the decrease of $766,248 in impairment of inventory adjustments related to the Vanish, a decrease in overhead allocations of $218,550, and a decrease of $162,946 in materials due to decrease in sales.
Current wording
Cost of goods decreased by $835,856 or 80% for the three months ended June 30, 2025, as compared to the same period in 2024. The decrease in cost of goods sold was mainly due to the decrease of $121,672 in impairment of inventory adjustments related to the Vanish, a decrease in overhead allocations of $214,293, and a decrease of $476,340 adjustments to inventory stock counts that were the result of inventory write downs during the six months ended June 30, 2024.
Previous wording
Research and development (“R&D”) expense was $307,730 for the three months ended March 31, 2025, as compared to $760,417 for the same period in 2024, a decrease of $452,687 or 60%. For the three months ended March 31, 2025, as compared to the same period in 2024, the Company had a decrease of $444,449, $64,673, and $10,779 in salaries and related personnel costs, R&D design, and dues and subscriptions, respectively, offset by an increase in other consulting of $70,825. The decrease was primarily due to the Company being substantially completed with the R&D on the Vanish in 2024, offset by the increase in re-engineering work and design changes in the current year associated with the Company’s objective of lowering the bill of material and overall manufacturing expenses of the Vanish.
Current wording
Research and development (“R&D”) expense was $349,951 for the three months ended June 30, 2025, as compared to $622,567 for the same period in 2024, a decrease of $272,616 or 44%. For the three months ended June 30, 2025, as compared to the same period in 2024, the Company had a decrease of $287,850 and $93,702 in R&D design and salaries and related personnel costs, respectively, offset by an increase in other consulting of $71,525. The decrease was primarily due to the Company being substantially completed with the R&D on the Vanish in 2024, offset by the increase in re-engineering work and design changes in the current year associated with the Company’s objective of lowering the bill of material and overall manufacturing expenses of the Vanish.
Previous wording
General and administrative expense was $1,665,822 for the three months ended March 31, 2025, compared to $3,062,326 for the same period in 2024, a decrease of $1,396,504, or 46%. The decrease was primarily attributable to cost reduction initiatives completed in late 2024 and early 2025.
Current wording
General and administrative expense was $1,199,323 for the three months ended June 30, 2025, compared to $1,977,358 for the same period in 2024, a decrease of $778,035, or 39%. The decrease was primarily attributable to cost reduction initiatives completed in late 2024 and early 2025.
Previous wording
Salaries and related expenses decreased by $931,724 for the three months ended March 31, 2025, compared to the same period in 2024, due to the decrease in headcount associated with the internal restructuring. Depreciation decreased by $170,494 for the three months ended March 31, 2025, compared to the same period in 2024, due to assets being fully impaired and written down to zero at the end of 2024. Consultants and professional services decreased by $275,813 for the three months March 31, 2025, compared to the same period in 2024, primarily due to fewer engagements that required external professional services. Insurance decreased by $35,215 for the three months ended March 31, 2025, compared to the same period in 2024, due to meaningful reductions across both Directors and Officers liability and broader casualty property programs. Travel and entertainment decreased by $16,245 for the three months ended March 31, 2025 compared to the same period in 2024, due to reduced activities stemming from internal restructuring. Software subscription fees decreased by $66,782 for the three months ended March 31, 2025, compared to the same period in 2024, driven by non-renewals of under-utilized subscriptions. Rent, franchise taxes, and dues and subscriptions increased by $83,012, $50,200, and 26,301, respectively, for the three months ended March 31, 2025, compared to the same period in 2024.
Current wording
Legal expenses decreased by $426,656 for the three months ended June 30, 2025, compared to the same period in 2024, due to the finalization and settlement of legal issues during 2024. Depreciation decreased by $232,170 for the three months ended June 30, 2025, compared to the same period in 2024, due to assets being fully impaired and written down to zero at the end of 2024. Consultants and professional services decreased by $137,190 for the three months June 30, 2025, compared to the same period in 2024, primarily due to fewer engagements that required external professional services. Insurance decreased by $47,357 for the three months ended June 30, 2025, compared to the same period in 2024, due to meaningful reductions across both Directors and Officers liability and broader casualty property programs.
Previous wording
For the three months ended March 31, 2025, the Company recorded a $1,241,361 increase of net other income. For the three months ended March 31, 2025 and 2024, the Company recognized a gain of $1,531,000 and $9,000, respectively, for the change in fair value - derivative liability, an increase of $1,522,000, mainly due to the decrease in the trading price of the Company’s common stock and redemptions of Series H-7 Preferred Stock, which results in the decrease in carrying amount of derivative liability associated with the redemptions of Series H-7 Preferred Stock. The Company recognized a gain of $1,080,600 and $1,072,800 for the three months ended March 31, 2025 and 2024, respectively, for the change in fair value - warrant liability, an increase of $7,800 primarily due to the decrease in the trading price of the Company’s common stock and the increase in the risk-free rate. For the three months ended March 31, 2025, the Company recorded $127,058 decrease in interest income on cash accounts, a decrease in realized gains of $166,061 on marketable securities, and a decrease of $36,688 in the unrealized gain on marketable securities.
Current wording
For the three months ended June 30, 2025, the Company recorded a $23,229,180 decrease of net other income. For the three months ended June 30, 2025 and 2024, the Company recognized a gain of $1,130,000 and $2,618,000, respectively, for the change in fair value - derivative liability, a decrease of $1,488,000, mainly due to the final installment notice of the Series H-7 Preferred Stock redemption. The Company recognized a loss of $13,254,700 and a gain of $7,937,500 for the three months ended June 30, 2025 and 2024, respectively, for the change in fair value - warrant liability, a decrease of $21,192,200 primarily due to the increase in the trading price of the Company’s common stock and the decrease in the exercise price. For the three months ended June 30, 2025, the Company recorded a $132,606 decrease in interest income primarily due to a $132,606 decrease in interest income on cash accounts, an increase in realized gains of $19,494 on marketable securities, and a decrease of $309,378 in the unrealized gain on marketable securities. For the three months ended June 30, 2025, the Company recorded a $350,000 increase in consent and waiver fees related to the Series H-7 Preferred Stock. For the three months ended June 30, 2025, the Company recorded a $223,510 increase in other income and expense primarily due to a decrease in vendor settlements of $131,798 and an increase of $66,712 in miscellaneous income and expense.
Previous wording
The Company has incurred recurring losses from operations and has insufficient liquidity to fund its future operations. As of March 31, 2025, we had $12,818,283 in cash and cash equivalents, $109,215 in restricted cash, $2,479,725 in marketable securities, and working capital of $8,586,452. As of December 31, 2024, we had $16,035,475 in cash and cash equivalents, $164,682 in restricted cash, $4,089,832 in marketable securities and working capital of $17,100,605. The decrease in cash and cash equivalents and working capital was primarily a result of the payment of Series H-7 Preferred Stock redemptions. Our sources of cash since inception have been predominately from the sale of equity and debt.
Current wording
The Company has incurred recurring losses from operations and has insufficient liquidity to fund its future operations. As of June 30, 2025, we had $5,132,867 in cash and cash equivalents, $109,576 in restricted cash, $3,291,450 in marketable securities, and working capital of $1,230,158. As of December 31, 2024, we had $16,035,475 in cash and cash equivalents, $164,682 in restricted cash, $4,089,832 in marketable securities and working capital of $17,100,605. The decrease in cash and cash equivalents and working capital was primarily a result of the payment of Series H-7 Preferred Stock redemptions. Our sources of cash since inception have been predominately from the sale of equity and debt, including the issuance of the Series H-7 Preferred Stock and Series I Preferred Stock.
Previous wording
We are evaluating other options for the strategic deployment of capital beyond our ongoing strategic initiatives, including potentially entering other segments of the electric vehicle market. We anticipate being opportunistic with our capital, and we intend to explore potential partnerships and acquisitions that could be synergistic with our competitive stance in the market.
Current wording
We are evaluating other options for the strategic deployment of capital beyond our ongoing strategic initiatives. We anticipate being opportunistic with our capital, and we intend to explore potential partnerships and acquisitions that could be synergistic with our competitive stance in the market.
Previous wording
On August 7, 2023, the Company entered into the Securities Purchase Agreement with certain accredited investors (the “Investors”), pursuant to which it agreed to sell to the Investors (i) an aggregate of 22,000 Series H-7 Preferred Stock with a stated value of $1,000 per share, initially convertible into up to 2,750,000 shares of the Company’s common stock at an initial conversion price of $8.00 per share, and (ii) warrants (“Warrants”) initially exercisable for up to an aggregate of 2,750,000 shares of common stock.
Current wording
On August 7, 2023, the Company entered into the Securities Purchase Agreement with certain accredited investors (the “Investors”), pursuant to which it agreed to sell to the Investors (i) an aggregate of 22,000 Series H-7 Preferred Stock with a stated value of $1,000 per share, initially convertible into up to 171,875 shares of the Company’s common stock at an initial conversion price of $128.00 per share, and (ii) warrants (“Warrants”) initially exercisable for up to an aggregate of 171,875 shares of common stock.
Previous wording
The shares of Series H-7 Preferred Stock are convertible into common stock (the “Conversion Shares”) at the election of the holder at any time at an initial conversion price of $8.00 (the “Conversion Price”), which, following the Company’s one-for-eight reverse stock split effected on September 15, 2023 (the “Reverse Stock Split”) and pursuant to the stock combination event adjustment provisions in the Certificate of Designations, was subsequently reduced to $2.00. The Conversion Price is subject to adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable Conversion Price (subject to certain exceptions). The Company is required to redeem the Series H-7 Preferred Stock in 12 equal monthly installments from, and including, the applicable Installment Date (as defined in the Certificate of Designations). On February 9, 2024, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment of Certificate of Designations of Series H-7 Preferred Stock, which became effective upon filing, which amended the commencement of the monthly installment dates, to be between May 7, 2024, and August 7, 2025. The first such installment date was May 7, 2024 and August 7, 2024, as elected by the applicable investor.
Current wording
The shares of Series H-7 Preferred Stock are convertible into common stock (the “Conversion Shares”) at the election of the holder at any time at an initial conversion price of $128.00 (the “Conversion Price”), which, and pursuant to the stock combination event adjustment provisions in the Certificate of Designations, was subsequently reduced to $32.00. The Conversion Price is subject to adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of common stock, or securities convertible, exercisable or exchangeable for common stock, at a price below the then-applicable Conversion Price (subject to certain exceptions). The Company is required to redeem the Series H-7 Preferred Stock in 12 equal monthly installments from, and including, the applicable Installment Date (as defined in the Certificate of Designations). On February 9, 2024, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment of Certificate of Designations of Series H-7 Preferred Stock, which became effective upon filing, which amended the commencement of the monthly installment dates, to be between May 7, 2024, and August 7, 2025. The first such installment date was May 7, 2024 and August 7, 2024, as elected by the applicable investor. On June 25, 2025, in connection with the Reverse Stock Split and pursuant to the stock combination event adjustment provisions, (i) the Series H-7 Conversion Price was adjusted from $7.616 per share to $6.1933 per share and (ii) the exercise price of the Series H-7 Warrants was adjusted from $7.616 per share to $6.1933 per share and the number of shares of common stock issuable upon exercise of such warrants was adjusted proportionally.
Previous wording
The amortization payments due upon redemption of the Series H-7 Preferred Stock are payable, at the Company’s election, in cash at 105% of the Installment Redemption Amount (as defined in the Certificate of Designations), or subject to certain limitations, in shares of common stock valued at the lower of (i) the Conversion Price then in effect and (ii) the greater of (A) 80% of the average of the three lowest closing prices of the Company’s common stock during the thirty consecutive trading day period immediately prior to the date the amortization payment is due and (B) $0.744 (as adjusted for the Company’s Reverse Stock Split and subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events) or, in any case, such lower amount as permitted, from time to time, by the Nasdaq Stock Market. The holders of the Series H-7 Preferred Stock have the option to defer amortization payments or, subject to certain limitations as specified in the Certificate of Designations, can elect to accelerate installment conversion amounts.
Current wording
The amortization payments due upon redemption of the Series H-7 Preferred Stock are payable, at the Company’s election, in cash at 105% of the Installment Redemption Amount (as defined in the Certificate of Designations), or subject to certain limitations, in shares of common stock valued at the lower of (i) the Conversion Price then in effect and (ii) the greater of (A) 80% of the average of the three lowest closing prices of the Company’s common stock during the thirty consecutive trading day period immediately prior to the date the amortization payment is due and (B) $11.90 (as adjusted for the Company’s Reverse Stock Split and subject to adjustment for stock splits, stock dividends, stock combinations, recapitalizations or other similar events) or, in any case, such lower amount as permitted, from time to time, by the Nasdaq Stock Market. The holders of the Series H-7 Preferred Stock have the option to defer amortization payments or, subject to certain limitations as specified in the Certificate of Designations, can elect to accelerate installment conversion amounts.
Previous wording
The Certificate of Designations provides that, except as required by applicable law, the holders of the Series H-7 Preferred Stock will be entitled to vote with holders of the common stock on an as converted basis, with the number of votes to which each holder of Series H-7 Preferred Stock is entitled to be determined by dividing the Stated Value by a conversion price equal to $5.76 per share (as adjusted for the Reverse Stock Split), which was the “Minimum Price” (as defined in Nasdaq Listing Rule 5635(d)) applicable immediately before the execution and delivery of the Purchase Agreement, subject to certain beneficial ownership limitations and adjustments for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions, as set forth in the Certificate of Designations.
Current wording
The Certificate of Designations provides that, except as required by applicable law, the holders of the Series H-7 Preferred Stock will be entitled to vote with holders of the common stock on an as converted basis, with the number of votes to which each holder of Series H-7 Preferred Stock is entitled to be determined by dividing the Stated Value by a conversion price equal to $92.16 per share (as adjusted for the Reverse Stock Split), which was the “Minimum Price” (as defined in Nasdaq Listing Rule 5635(d)) applicable immediately before the execution and delivery of the Purchase Agreement, subject to certain beneficial ownership limitations and adjustments for any stock splits, stock dividends, stock combinations, recapitalizations or other similar transactions, as set forth in the Certificate of Designations.
Previous wording
During the three months ended March 31, 2025, we used $1,476,150 in cash from operating activities, a decrease in use of $3,205,894 compared to the cash used in operating activities of $4,682,044 during the same period in 2024. The decrease in cash used in operating activities was primarily a result of the decrease in net loss adjusted for non-cash items. During the three months ended March 31, 2025, the Company recognized net loss after non-cash adjustments of $1,850,689, a $1,928,840 improvement compared with a $3,779,529 adjusted net loss during the same period in 2024. During the three months ended March 31, 2025, cash used in inventory was $0 as compared to $1,010,767 for the same period in 2024, a decrease of $1,010,767, mainly due to the temporary pause on procurement of materials and manufacturing activities while re-engineering the Vanish. For the three months ended March 31, 2025, cash provided by prepaid expenses and other assets was $645,525 as compared to cash provided of $477,592 for the same period in 2024, an increase in cash provided of $167,933, mainly due to advance purchases of inventory that has been received and expensed, and insurance premiums amortized over the policy period. During the three months ended March 31, 2025, cash used in accrued expenses and other current liabilities was $13,692 as compared to cash used of $204,153 for the same period in 2024, an increase in cash provided of $190,461.
Current wording
During the six months ended June 30, 2025, we used $4,100,960 in cash from operating activities, a decrease in use of $2,733,106 compared to the cash used in operating activities of $6,834,066 during the same period in 2024. The decrease in cash used in operating activities was primarily a result of the decrease in net income adjusted for non-cash items. During the six months ended June 30, 2025, the Company recognized net loss after non-cash adjustments of $3,486,636, a $2,840,266 improvement compared with a $6,326,902 adjusted net loss during the same period in 2024. During the six months ended June 30, 2025, cash used in inventory was $0 as compared to $1,704,756 for the same period in 2024, a decrease of $1,704,756, mainly due to the temporary pause on procurement of materials and manufacturing activities while re-engineering the Vanish. For the six months ended June 30, 2025, cash provided by prepaid expenses and other assets was $785,631 as compared to cash provided of $587,476 for the same period in 2024, an increase in cash provided of $198,155, mainly due to advance purchases of inventory that has been received and expensed, and insurance premiums amortized over the policy period. During the six months ended June 30, 2025, cash used in accounts payable was $828,324 as compared to cash provided by of $1,115,255 for the same period in 2024, a decrease in cash provided of $1,943,579. During the six months ended June 30, 2025, cash used in accrued expenses and other current liabilities was $472,719 as compared to cash used of $434,295 for the same period in 2024, an increase in cash provided of $38,424.
Previous wording
During the three months ended March 31, 2025, the Company provided $1,749,462 in cash from investing activities as compared to $23,298,533 of cash used in investing activities during the same period in 2024, an increase of $25,047,995. During the three months ended March 31, 2025, the Company used $16,350,538 to invest in marketable securities as compared to $29,048,533 cash used for the same period in 2024, and received $18,100,000 in proceeds from the sale of marketable securities as compared to $5,750,000 in proceeds during the same period in 2024.
Current wording
During the six months ended June 30, 2025, the Company had $1,024,773 in cash provided by investing activities as compared to $22,153,128 of cash used in investing activities during the same period in 2024, an increase of $23,177,901. During the six months ended June 30, 2025, the Company used $23,257,290 to invest in marketable securities as compared to $57,991,814 cash used for the same period in 2024, and received $24,282,063 in proceeds from the sale of marketable securities as compared to $35,838,686 in proceeds during the same period in 2024.
Previous wording
During the three months ended March 31, 2025, the Company used cash of $3,545,971 from financing activities as compared to $0 cash used in financing activities for the same period in 2024, a decrease of $3,545,971. The decrease in cash used was due to cash redemptions of the Series H-7 Preferred Stock.
Current wording
During the six months ended June 30, 2025, the Company used cash of $7,881,527 from financing activities as compared to $362,573 cash used in financing activities for the same period in 2024, an increase of $7,518,954. The increase in cash used was due to cash redemptions of the Series H-7 Preferred Stock.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Research and development (“R&D”) expense was $657,681 for the six months ended June 30, 2025, as compared to $1,382,984 for the same period in 2024, a decrease of $725,303 or 52%. For the six months ended June 30, 2025, as compared to the same period in 2024, the Company had a decrease of $538,151 and $352,524 in salaries and related personnel costs and R&D design, respectively, offset by an increase in other consulting of $149,350. The decrease was primarily due to the Company being substantially completed with the R&D on the Vanish in 2024, offset by the increase in re-engineering work and design changes in the current year associated with the Company’s objective of lowering the bill of material and overall manufacturing expenses of the Vanish.
Current report — wording carried from elsewhere
General and administrative expense was $2,865,145 for the six months ended June 30, 2025, compared to $5,039,684 for the same period in 2024, a decrease of $2,174,539, or 43%. The decrease was primarily attributable to cost reduction initiatives completed in late 2024 and early 2025.
Current report — wording carried from elsewhere
Salaries and related expenses decreased by $892,160 for the six months ended June 30, 2025, compared to the same period in 2024, due to the decrease in headcount associated with the internal restructuring. Legal expenses decreased by $506,433 for the six months ended June 30, 2025, compared to the same period in 2024, due to the finalization and settlement of legal issues during 2024. Depreciation decreased by $342,664 for the six months ended June 30, 2025, compared to the same period in 2024, due to assets being fully impaired and written down to zero at the end of 2024. Consultants and professional services decreased by $181,330 for the six months June 30, 2025, compared to the same period in 2024, primarily due to fewer engagements that required external professional services.
Current report — wording carried from elsewhere
The following table sets forth our results of operations for each of the periods set forth below:
Current report — wording carried from elsewhere
Costof goods sold and gross loss
Current report — wording carried from elsewhere
The majority of our operating losses from continuing operations resulted from general and administrative expenses. General and administrative expenses consist primarily of costs associated with our overall operations and with being a public company. These costs include personnel, legal and financial professional services, insurance, investor relations, and compliance related fees.
Current report — wording carried from elsewhere
The Series I Certificate of Designations includes certain Triggering Events, including, among other things, the Company’s failure to pay any amounts due to the holders of the Series I Preferred Stock when due. In connection with a Triggering Event, each holder of Series I Preferred Stock will be able to require the Company to redeem in cash any or all of the holder’s Series I Preferred Stock at a premium set forth in the Series I Certificate of Designations.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
On March 30, 2025, the Company entered into an Omnibus Waiver and Amendment Agreement (“Waiver and Amendment Agreement”) with the Required Holders (as defined in the Certificate of Designations (the “Certificate of Designations”) for the Series H-7 Convertible Preferred Stock (“Series H-7 Preferred Stock”)), pursuant to which, the Required Holders agreed (A) to amend (i) the Series H-7 Certificate of Designations, as described below, by filing a Certificate of Amendment to the Series H-7 Certificate of Designations with the Secretary of State of the State of Delaware (the “March 2025 Certificate of Amendment”), and (ii) that certain Purchase Agreement, dated as of August 7, 2023, pursuant to which the Company issued the Series H-7 Preferred Stock and related warrants (the “Series H-7 Purchase Agreement”), to amend the definition of “Excluded Securities” such that the definition includes the issuance of common stock issued after the date of the Series H-7 Purchase Agreement pursuant to an Approved Stock Plan (as defined in the Series H-7 Purchase Agreement), which in the aggregate does not exceed more than 2% of the shares of common stock issued and outstanding on the date immediately prior to the date of the Series H-7 Purchase Agreement (the “Excluded Securities Modification”), and (B) to waive certain restrictive covenants contained in the Series H-7 Purchase Agreement as described therein.
Previous report — wording carried elsewhere
The March 2025 Certificate of Amendment amends the Series H-7 Certificate of Designations to (i) amend the restrictive covenant of the Series H-7 Certificate of Designations such that the Company is required from January 1, 2025, until no shares of Series H-7 Preferred Stock are outstanding, to maintain unencumbered, unrestricted cash and cash equivalents on hand in amount equal to at least 120% of the aggregate Stated Value (as defined in the Series H-7 Certificate of Designations) of the Series H-7 Preferred Stock then outstanding, (ii) amend the definition of “Excluded Securities” substantially similar to the Excluded Securities Modification, and (iii) remove the restrictive covenant provision relating to the Segregated Cash (as defined in the Series H-7 Certificate of Designations) requirement. The March 2025 Certificate of Amendment was filed with the Secretary of State of the State of Delaware, effective as of March 31, 2025.