RELATED PARTY TRANSACTIONS
|9 Months Ended|
Sep. 30, 2021
|Related Party Transactions [Abstract]|
|RELATED PARTY TRANSACTIONS||
NOTE 13. RELATED PARTY TRANSACTIONS
Supply Chain Agreements
In 2017, the Company executed a supply chain contract with Cenntro, the Company’s primary supplier, a manufacturer located in the People’s Republic of China. Prior to the Merger, Cenntro was a significant shareholder in AYRO Operating. Through the partnership, Cenntro acquired 19% of AYRO Operating’s common stock. Cenntro owns the design of the AYRO 411 Fleet vehicles and has granted the Company an exclusive license to purchase the AYRO 411 Fleet vehicles for sale in North America. Currently, the Company purchases 100% of its vehicle chassis, cabs and wheels through this supply chain relationship with Cenntro. The Company must sell a minimum number of units in order to maintain its exclusive supply chain contract upon availability of the next-generation AYRO 411, the 411x. As of September 30, 2021 and December 31, 2020, the amounts outstanding to Cenntro as a component of accounts payable were $0 and $44,594, respectively. See Note 12 for concentration amounts.
Under a memo of understanding signed between the Company and Cenntro on March 22, 2020, the Company agreed to purchase 300 units within the following twelve months of signing the memo of understanding, and 500 and 800 in each of the following respective twelve-month periods. On July 9, 2020, in exchange for certain percentage discounts for raw materials, the Company made a $1.2 million prepayment for inventory. During the nine months ended September 30, 2021, the Company made an additional deposit of $100,000, as prepayment for additional inventory for 2021. As of September 30, 2021 and December 31, 2020, the prepayment deposits were $1,698,915 and $976,512, respectively.
The Company had received short-term expense advances from its founders. As of September 30, 2021 and December 31, 2020, the amounts outstanding were $15,000 for each year and recorded as a component of accounts payable on the accompanying unaudited condensed consolidated balance sheets.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef