Fabric.AI, Inc. Q2 FY2022 earnings call

• Tom discusses the company's progress in the low-speed electric vehicle market, noting applications in various sectors. They're selling the first-generation Current vehicle with partnerships. The next-gen Ayro Z platform is planned with tech/ergonomic upgrades, to be built in Texas with 92% of supply chain defined (85% from NA). Plan to unveil Ayro Z prototype and open preorders by year-end, expect GSA approval by year-end. - Dave summarizes financial results: revenue increase due to unit sales/deliveries of Club Car Current, operating expenses decrease, adjusted EBITDA loss, net loss improvement, cash and securities position, and shares outstanding.

In the second quarter of 2022, Ayro recognized $980,000 in revenue, an 88% increase year-over-year. Cost of goods sold was impacted by defective battery parts from Cenntro. Cash and marketable securities at June 30, 2022, were $57.9 million. Revenue for the first quarter ended June 30, 2022, was $981,560, a 4% sequential decline. Total operating expenses in Q2 2022 were ~$4.1 million. Adjusted EBITDA loss in Q2 2022 was ~$4.2 million. Net loss in Q2 2022 was ~$6 million, an improvement from Q2 2021 but a sequential increase from Q1 2022 due to write-off charges related to defective components.

• Expect to unveil the Ayro Z prototype and open preorders by year-end. - Anticipate approval for sales on the Federal Government's GSA schedule by year-end 2022. - Plan to transition from legacy vehicles to the Ayro Z platform, with manufacturing in Round Rock, Texas, using North American/European sourced components. - Intend to maximize monetization of legacy Current vehicle inventory while developing the Ayro Z.

• Supply chain issues with Cenntro leading to defective components and write-offs. - Need to renegotiate partnerships with various entities (e.g., Karma Automotive, Club Car) as the company transitions to in-house manufacturing and new platforms. - Potential challenges in homologation testing and scaling production of the Ayro Z platform.

Q: On the Ayro Z, details on prototypes, preorders, and revenue shipments?

A: Ayro has 92% of supply chain defined for Ayro Z, no production-level Zs yet. Intend to unveil at year-end, commence low rate initial production after homologation testing, expecting transitions to full production in Q1 next year.

Q: About partner renegotiations and contracts, any specifics?

A: There are ongoing negotiations with partners, strategy shifting to onshoring and in-sourcing, but specific details couldn't be disclosed yet as negotiations are ongoing.

Q: Visibility for rest of 2022 and revenue profile?

A: There will be a transition from legacy inventory to new Ayro Z inventory, with disposition of existing inventory and introduction of new, expecting no revenue falling to 0.

Q: Balance sheet and cash sufficiency?

A: Cash at June 30, 2022, was $57.9 million, with ~$4.2 million EBITDA loss in Q2 2022; ratio suggests enough cash for transition, expecting Z to be a positive gross margin vehicle.

Q: Expectation of EV incentives from new bill?

A: Difficult to determine extent of incentives, company doesn't think it'll need them as platform is priced appropriately, but exact impact is unclear.