EZGO ANNOUNCES FINANCIAL RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 2024

CHANGZHOU, China, Sept. 10, 2024 /PRNewswire/ — EZGO Technologies Ltd. (Nasdaq: EZGO) (“EZGO” or “we”, “our”, or the “Company”), a leading short-distance transportation solutions provider in China, today announced its unaudited financial results for the six months ended March 31, 2024.

Financial Highlights (all results compared to the prior fiscal year period unless otherwise noted)

Revenues were $8.6 million, an increase of 66.1% Units sold of e-bicycle reached 4,766, a decrease of 76.7% Units sold of batteries and battery packs reached 243,336, an increase of 2614.6% Gross margin was 5.7%, compared with 3.5% Net loss was $4.7 million, compared with $5.0 million The Company has cash and cash equivalents of approximately $0.7 million at March 31, 2024, compared to approximately $17.3 million at September 30, 2023

Management Commentary

During the six months ending on March 31, 2024, due to the continuous decline in upstream raw materials price of lithium batteries, the penetration rate of lithium batteries in the e-bicycle industry gradually increased, and the sales volume of lithium batteries through various channels expanded significantly. The Company’s management promptly seized this opportunity to expand its business, including increasing the models of e-bicycle batteries and expanding energy storage lithium battery products, appropriately shortening the supplier payment terms, and extending customer payment terms. The additional of ordinary shares and accompanying warrants issuance completed in September 2023 also provided a solid financial foundation for the Company’s lithium battery business expansion. However, during the same period, the Company’s production and sales volume of e-bicycles experienced a significant decline due to intensified market competition, hindered new product launches, and the sales of Tianjin Jiahao Bicycles Co., Ltd. (“Tianjin Jiahao”).

Although the downward trend in e-bicycles production and sales has significantly slowed down, and sales are expected to rebound in the second half-year with the introduction of new products, in the medium term, the competition in the e-bicycles market in mainland China remains fierce, industry capacity clearance is still accelerating, and going overseas remains the main direction for breakthroughs. In addition, the smart electronic control subsidiary, Changzhou Higgs Intelligent Technology Co., Ltd. (“Changzhou Higgs”), acquired at the beginning of 2023 has partially increased the Company’s sales volume and product gross margin through its production of smart electronic control modules. Moreover, with the advancement of the government-led industrial equipment upgrade plan, the sales revenue and profits of the subsidiary’s main products are expected to experience considerable growth.

Based on management’s assessment of macroeconomics and industrial competition, along with our own resource endowment, management has adjusted our business strategies as follows: (i) we halted the production of low and middle-end products and focused on the design, development, and production of mid-to-high-speed electric motorcycles through joint ventures or partnerships; (ii) we further enhanced the development and market promotion of lithium battery products for low-speed vehicles (including e-bicycle, e-tricycle and low-speed four-wheeled scooters ); (iii) we have actively expanded overseas sales channels for our products, in the hope of alleviating our dependency on current domestic sales channels; and (iv) we also made equity investments in some of the high-quality suppliers in the electric motorcycles and lithium battery industry.

Financial Review for the Six Months Ended March 31, 2024

Net Revenues

Net revenues from continuing operations for the six months ended March 31, 2024 were approximately $8.6 million, a 66.1% increase from approximately $5.2 million for the six months ended March 31, 2023. The increase in revenues was mainly driven by the increase in sales of batteries and battery packs and sales of electronic control system, and partially offset by the decrease of sales of e-bicycles.

The following table identifies revenue from continuing operations and discontinued operations, as well as reportable segments for the six months ended March 31, 2024 and 2023:

For the six months ended March 31,

Change

Segment

2023

%

2024

%

Amount

%

Sales of batteries
   and battery packs

Battery cells and
packs segment

$

1,732,871

33.6

5,847,751

68.2

$

4,114,880

237.5

Sales of e-
   bicycles

E-bicycle sales
segment

3,001,709

58.2

1,755,485

20.5

(1,246,224)

(41.5)

Sales of
   electronic
   control system
   and intelligent
   robots

Electronic control
system and
intelligent robot
sales segment

739,390

8.6

739,390

N/A

Others

427,118

8.2

232,667

2.7

(194,451)

(45.5)

Subtotal

Net revenue
from continuing
operations

5,161,698

100.0

8,575,293

100.0

3,413,595

66.1

Rental of lithium
   batteries and e-
   bicycles

Rental segment

120

0.0

8

0.0

(112)

(93.3)

Subtotal

Net revenue
from
discontinued
operation

120

0.0

8

0.0

(112)

(93.3)

Total

Net revenues

$

5,161,818

100.0

8,575,301

100.0

$

3,413,483

66.1

 

The revenue from sales of batteries and battery packs for six months ended March 31, 2024 was $5,847,751, compared to $1,732,871 for six months ended March 31, 2023, representing an increase of 237.5%, which was mainly due to the increase in sales volume supported by several new large orders of major customers. Such increase resulted from the increased acceptance of our lithium battery packs in the market and the development of the lead-acid battery market in Sichuan. Overall, our sales volume of lithium battery packs increased by 719.1% for the six months ended March 31, 2024 compared with the same period in the fiscal year ended September 30, 2023. The revenue generated from the sales of the lead-acid battery packs was $931,801 for the six months ended March 31,2024 compared $162,552 for the six months ended March 31, 2023.

The sales of e-bicycles decreased by 41.5% or $1,246,224 to $1,755,485 for six months ended March 31, 2024 from $3,001,709 for six months ended March 31, 2023 due to the decreased sales volume of the e-bicycles resulted from the fierce competition of the e-bicycle industry. The leading companies were forced to penetrate into the middle and low-end e-bicycles market due to the performance pressure and the small and middle companies had to reduced sales price in response to the competition. Overall, our sales volume decreased by 76.7% for the six months ended March 31, 2024 compared with the same period in the fiscal year ended September 30, 2023. Furthermore, the increase in the unit price of e-bicycles can be attributed to a shift in our product offerings. Initially, our sales focused on naked e-bicycles without batteries, whereas our current sales encompass complete e-bicycle packages, inclusive of batteries. For the six months ended March 31, 2024, we acquired a major customer, a shared travel service provider, and 93.6% of our revenue in sales of e-bicycle was attributable to the customer.

The revenue from sales of electronic control system and intelligent robots for six months ended March 31, 2024 was $739,390, a new business segment established during the fiscal year ended September 30, 2023.

Cost of Revenue

Cost of revenues consists primarily of manufacturing and purchase cost of e-bicycles, purchase cost of battery packs, purchase of components of the electronic control system, commission processing expenses for intelligent robots, depreciation, maintenance, and other overhead expenses.

Our cost of revenues increased by $3,107,809, or 62.4%, to $8,087,494 for six months ended March 31,2024 from $4,979,685 for six months ended March 31, 2023, which was primarily due to the increased sales of batteries and battery packs and partially offset by the decrease of manufacturing and purchase cost for sales of e-bicycles. The change in cost of revenue directly corresponded with the change in revenue from the sales of batteries and battery packs segment and e-bicycle sales segment.

Gross Profit

Gross profit for the six months ended March 31, 2023 and 2024 was $182,013 and $487,799, or 3.5% and 5.7% of net revenues, respectively.

Gross profit margin for six months ended March 31, 2024 increased from 3.5% to 5.7%, primarily due to the higher margin of sales of electronic control system and sales of batteries and battery packs. The electronic control system developed and manufactured by Changzhou Higgs was embedded with highly complex software and the limited competition in the market results in a relatively high gross profit margin of 43.7% for electronic control system sales, which accounts for 8.6% of our total revenue. The gross profit margin from sales of batteries and battery packs was increased from 3.9% to 4.4% for six months ended March 31, 2024, which was primarily due to the decrease in purchase cost of battery packs resulted from the management’s wise decision to purchase more lithium batteries during the prices decline.

Selling and Marketing Expenses

Our selling and marketing expenses increased by $21,481, or approximately 7.5%, to $307,127 for the six months ended March 31, 2024 from $285,646 for the six months ended March 31, 2023, which was attributable to an increase in employee benefits expense. 

General and Administrative Expenses

Our general and administrative expenses increased by $952,142, or approximately 45.1%, to $3,064,960 for the six months ended March 31, 2024 from $2,112,818 for the six months ended March 31, 2023. The increase was primarily due to the addition of credit losses for accounts receivable of $934,146, which mainly resulted from the operational difficulties of several e-bicycle customers, especially individual dealers. 

Research and Development Expenses

Our research and development expenses increased by $130,089, or 48.1%, to $400,596 for the six months ended March 31, 2024 from $270,507 for the six months ended March 31, 2023, which was primarily attributed to the increased amortization expenses of patents and software copyright which were considered as important underlying assets in the business acquisition of Changzhou Sixun Technology Co., Ltd. (“Changzhou Sixun”), which was acquired on January 25, 2023.

Other Expense/(income), Net

We recorded other expense, net of $2,549,807 and $1,459,048 for the six months ended March 31, 2023 and 2024, respectively, representing a decrease of 42.8%. The significant decrease in other expense, net is primarily attributable to the loss from disposal of Tianjin Jiahao for the six months ended March 31, 2023, which was approximately $2.6 million. For the six months ended March 31, 2024, the impairment loss of goodwill was recognized of US$1.4 million, compared to nil for the six months ended March 31, 2023.

Income Tax Benefits, Net

Income tax benefits, net was $41,276 and $79,488 for the six months ended March 31, 2023 and 2024, respectively. The reason is the increased deferred tax assets for six months ended March 31, 2024, due to the increase in temporary deductible difference.

Net Loss

Net loss for the six months ended March 31, 2024 was approximately $4.7 million, compared to approximately $5.0 million for the same period in 2023, as a result of the explanations provided above.

About EZGO Technologies Ltd.

EZGO’s vision is to build a leading short-distance transportation solution provider and intelligent manufacturer in China. Leveraging an Internet of Things (IoT) management platform, EZGO has established a business model centered on the sale of battery packs, e-bicycles, electronic control system and intelligent robots. EZGO also conducts the design and manufacturing of e-bicycles, electronic control system and intelligent robots to deliver tailored products in accordance with customer requirements. For additional information, please visit EZGO’s website at www.ezgotech.com.cn. Investors can visit the “Investor Relations” section of EZGO’s website at www.ezgotech.com.cn/Investor

Exchange Rate

This press release contains translations of certain Chinese Renminbi (“RMB”) amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the readers. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB7.2203 to US$1.00 for the items in balance sheets, the exchange rate in effect as of March 29, 2024, as set forth in the H.10 Statistical release of the Board of Governors of the Federal Reserve System. All translations from RMB to US$ were made at the rate of RMB7.2064 to US$1.00 for the items in statements of operations and comprehensive loss, which is the average exchange rate for the six months ended March 31, 2024, according to the H.10 Statistical release of the Board of Governors of the Federal Reserve System. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as “may,” “will,” “intend,” “should,” “believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company’s expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company’s goals and strategies; the Company’s future business development; product and service demand and acceptance; changes in technology; economic conditions; the growth of the short-distance transportation solutions market in China and the other international markets the Company plans to serve; reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and business conditions in China and the international markets the Company plans to serve and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission (“SEC”). For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company’s filings with the SEC, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

For more information, please contact:
Ascent Investor Relations LLC
Tina Xiao
Email: [email protected]
Phone: +1 646-932-7242

 

 

EZGO TECHNOLOGIES LTD.

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

(In U.S. dollars except for number of shares)

As of
September 30,
2023

As of
March 31,
2024

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

17,253,120

$

656,468

Restricted cash

875

851

Short-term investments

685,307

1,500,000

Accounts receivable, net

3,780,073

4,259,933

Notes receivable

10,965

55,830

Inventories, net

828,878

4,217,946

Advances to suppliers, net

18,756,368

23,836,085

Amount due from related parties, current

8,257,211

11,471,188

Prepaid expenses and other current assets

3,322,302

6,216,085

Total current assets

52,895,099

52,214,386

Non-current assets:

Property, plant and equipment, net

3,839,943

6,704,839

Intangible assets, net

2,572,844

2,299,840

Land use right, net

1,646,446

1,646,818

Right-of-use assets, net

46,652

63,342

Goodwill

3,057,943

1,730,582

Deferred tax assets, net

160,825

241,846

Long-term investments

12,190,534

14,988,167

Other non-current assets

5,497,233

2,704,198

Total non-current assets

29,012,420

30,379,632

Total assets

$

81,907,519

$

82,594,018

LIABILITIES

Current liabilities:

Short-term borrowings

$

1,000,548

$

2,853,067

Accounts payable

898,685

432,402

Advances from customers

1,039,310

813,268

Income tax payable

395,433

390,935

Lease liabilities, current

41,570

29,218

Amount due to related parties

850,213

1,972,352

Accrued expenses and other payables

6,119,355

5,796,090

Current liabilities of discontinued operation

693,843

708,773

Total current liabilities

11,038,957

12,996,105

Non-current liabilities:

Long-term borrowings

4,385,965

6,911,070

Lease liabilities, non-current

32,356

Total non-current liabilities

4,385,965

6,943,426

Total liabilities

15,424,922

19,939,531

Commitments and contingencies (Note 21)

EQUITY

Ordinary shares (par value of $0.04 per share; 12,510,000 shares
   authorized as of September 30, 2023 and March 31, 2024; 2,552,576
   and 2,553,514 shares issued and outstanding as of September 30,
   2023 and March 31, 2024, respectively)*

102,103

102,141

Subscription receivable

(7,800)

(7,800)

Additional paid-in capital

81,801,967

82,162,666

Statutory reserve

335,477

335,477

Accumulated deficits

(14,772,562)

(18,825,119)

Accumulated other comprehensive loss

(4,066,713)

(3,650,601)

Total EZGO Technologies Ltd.’s shareholders’ equity

63,392,472

60,116,764

Non-controlling interests

3,090,125

2,537,723

Total equity

66,482,597

62,654,487

Total liabilities and equity

$

81,907,519

$

82,594,018

 

*

The shares data are presented on a retroactive basis to reflect the 40 to 1 reverse share split.

 

 

EZGO TECHNOLOGIES LTD. AND SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In U.S. dollars except for number of shares)

Six Months Ended March 31,

2023

2024

Net revenues

$

5,161,698

$

8,575,293

Cost of revenues

(4,979,685)

(8,087,494)

Gross profit

182,013

487,799

Operating expenses:

Selling and marketing

(285,646)

(307,127)

General and administrative

(2,112,818)

(3,064,960)

Research and development

(270,507)

(400,596)

Total operating expenses

(2,668,971)

(3,772,683)

Loss from operations

(2,486,958)

(3,284,884)

Other income (expenses):

Financial (expense) income, net

(26,338)

248,802

Non-operating income (expenses), net

38,387

(35,139)

Fair value changes in contingent asset

(310,667)

Impairment loss of goodwill

(1,362,044)

Loss from disposal of a subsidiary

(2,561,856)

Total other expenses, net

(2,549,807)

(1,459,048)

Loss from continuing operations before income taxes

(5,036,765)

(4,743,932)

Income tax benefit, net

41,276

79,488

Net loss from continuing operations

(4,995,489)

(4,664,444)

Income from discontinued operation, net of tax

131

30

Net loss

$

(4,995,358)

$

(4,664,414)

Net loss from continuing operations

$

(4,995,489)

$

(4,664,444)

Less: Net loss attributable to non-controlling interests from continuing
   operations

(201,048)

(611,857)

Net loss attributable to EZGO Technologies Ltd.’s shareholders from
   continuing operations

(4,794,441)

(4,052,587)

Income from discontinued operation, net of tax

131

30

Net income attributable to EZGO Technologies Ltd.’s shareholders from
   discontinued operation

131

30

Net loss attributable to EZGO Technologies Ltd.’s shareholders

$

(4,794,310)

$

(4,052,557)

Net loss from continuing operations per ordinary share:

Basic and diluted

$

(6.54)

$

(1.59)

Net loss from discontinued operation per ordinary share:

Basic and diluted

$

$

Net loss per ordinary share:

Basic and diluted

$

(6.54)

$

(1.59)

Weighted average shares outstanding

Basic and diluted*

733,386

2,552,576

 

*

The shares data are presented on a retroactive basis to reflect the 40 to 1 reverse share split.

 

 

EZGO TECHNOLOGIES LTD.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS

(In U.S. dollars except for number of shares)

Six Months Ended March 31,

2023

2024

Loss from continuing operations before non-controlling interests

$

(4,995,489)

$

(4,664,444)

Income from discontinued operation, net of tax

131

30

Net loss

(4,995,358)

(4,664,414)

Other comprehensive income

Foreign currency translation adjustment

1,067,488

475,567

Comprehensive loss

(3,927,870)

(4,188,847)

Less: Comprehensive loss attributable to non-controlling interests

(295,168)

(552,402)

Comprehensive loss attributable to EZGO Technologies Ltd.’s
shareholders

$

(3,632,702)

$

(3,636,445)

 

 

EZGO TECHNOLOGIES LTD.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In U.S. dollars)

Six Months Ended March 31,

2023

2024

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss from continuing operation

$

(4,995,489)

$

(4,664,444)

Net income from discontinued operation, net of tax

131

30

Adjustments to reconcile net loss to net cash used in operating activities:

Allowance for credit losses

300,266

1,025,366

Provision for inventories

(39,711)

42,971

Depreciation and amortization

555,918

532,950

Share-based compensation

151,875

360,737

Fair value changes in contingent asset

310,667

Loss from disposal of a subsidiary

2,561,856

Loss from long-term investment

110,789

102,419

Impairment loss of goodwill

1,362,044

Deferred tax benefits

(49,375)

(79,488)

Changes in operating assets and liabilities:

Accounts receivable

1,954,599

(1,466,444)

Notes receivable

(18,635)

(44,837)

Advances to suppliers

(5,137,730)

(3,562,143)

Inventories

(3,258,216)

(3,429,869)

Amount due from related parties, current

(1,717,313)

606,011

Prepaid expenses and other current assets

(180,560)

(616,233)

Accounts payable

(168,069)

(476,623)

Advances from customers

1,035,271

(237,395)

Income tax payable

5,587

(8,660)

Lease liabilities

(51,081)

Accrued expenses and other payables

701,730

(416,184)

Net cash used in operating activities from continuing operations

(8,187,076)

(10,710,206)

Net cash used in operating activities

(8,187,076)

(10,710,206)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property, plant and equipment

(26,808)

(3,342,151)

Purchase of land use right

(1,748,169)

Purchase of short-term investments

(1,500,000)

Purchase of long-term investments

(7,174,496)

(29,104)

Prepayment for intent long-term investment

(1,318,788)

(3,219,361)

Loans to related parties

(1,569,072)

(2,778,965)

Collection of loans to related parties

1,540,976

Net cash inflow from disposal of subsidiaries

2,579,717

457,094

Net cash outflow due to acquisition of Changzhou Sixun

(578,629)

Net cash used in investing activities from continuing operations

(8,295,269)

(10,412,487)

Net cash used in investing activities

(8,295,269)

(10,412,487)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term borrowings

759,737

2,581,039

Repayments of short-term borrowings

(2,580,238)

(735,457)

Proceeds from long-term borrowings

2,483,903

Loans from related parties

1,053,057

653,962

Repayments of loans from related parties

(130,176)

(460,702)

Collection of receivable from a shareholder

100,737

Cash receipts from equity issuance, net of issuance cost

14,400,000

Net cash provided by financing activities from continuing operations

13,603,117

4,522,745

Net cash provided by financing activities

13,603,117

4,522,745

Effect of exchange rate changes

749,738

3,272

Net decrease in cash, cash equivalents and restricted cash

(2,129,490)

(16,596,676)

Cash, cash equivalents and restricted cash, at beginning of the period

4,413,218

17,253,995

Cash, cash equivalents and restricted cash, at end of the period

$

2,283,728

$

657,319

Reconciliation of cash, cash equivalents, and restricted cash to the
   Consolidated Balance Sheets

Cash and cash equivalents

$

2,280,198

$

656,468

Restricted cash

3,530

851

Total cash, cash equivalents, and restricted cash

$

2,283,728

$

657,319

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

Income tax paid

$

2,512

$

12,450

Interest paid

$

40,450

$

35,663

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
   ACTIVITIES:

Shares issued for acquisition of Changzhou Sixun

$

8,080,448

$

Increase of non-controlling interests from acquisition of Changzhou Sixun

$

273,698

$

Recognition of right-of use assets and lease liabilities

$

$

70,688