Quarterly report pursuant to Section 13 or 15(d)

Concentrations and Credit Risk

v3.21.1
Concentrations and Credit Risk
3 Months Ended
Mar. 31, 2021
Risks and Uncertainties [Abstract]  
Concentrations and Credit Risk

NOTE 11. CONCENTRATIONS AND CREDIT RISK

 

Revenues

 

In March 2019, the Company entered into a five-year Master Procurement Agreement, or the MPA, with Club Car for the sale of AYRO’s four-wheeled vehicle. The MPA grants Club Car the exclusive right to sell AYRO’s four-wheeled vehicle in North America, provided that Club Car orders at least 500 vehicles per year. The MPA has an initial term of five (5) years commencing January 1, 2019 and may be renewed by Club Car for successive one-year periods upon 60 days’ prior written notice. For the period ended March 31, 2021 and 2020, two customers accounted for the Company’s revenues, one for 72% and 94% and the second for 24% and 2%, respectively.

 

Accounts Receivable

 

As of March 31, 2021 and December 31, 2020, multiple customers accounted for more than 10% of the Company’s accounts receivable. One customer accounted for approximately 72% and 74% as of March 31, 2021 and December 31, 2020, respectively. A second and third customer accounted for approximately 17% and 10% as of March 31, 2021.

 

Purchasing

 

The Company places orders with various suppliers. During the three months ended March 31, 2021 and 2020, multiple suppliers provided more than 10% of the Company’s raw materials purchases. During the three months ended March 31, 2021, one supplier accounted for approximately 30%, another supplier accounted for 22%, and a third supplier accounted for 16%. During the three months ended March 31, 2020, the Company’s purchases of raw materials from one supplier accounted for approximately 38%, another supplier accounted for 16% and a third supplier accounted for approximately 12%. The Company’s top supplier accounted for approximately 58% and 77% of its bill of materials as included in costs of goods sold for the three months ended March 31, 2021 and 2020, respectively. Any disruption in the operation of this supplier could adversely affect the Company’s operations.

 

Manufacturing

 

Cenntro Automotive Group (“Cenntro”), a related party owns the design of the AYRO 411 model and has granted the Company an exclusive license to manufacture the AYRO 411 model for sale in North America. The Company’s business is dependent on such license, and if it fails to comply with its obligations to maintain that license, the Company’s business will be substantially harmed. Under the Manufacturing License Agreement, dated April 27, 2017, between Cenntro and the Company, the Company is granted an exclusive license to manufacture and sell AYRO 411 in the United States, and the Company required to purchase the minimum volume of product units from Cenntro, among other obligations.