10-Q: StableX Q3 Loss Amid Full Pivot to Stablecoin Digital Asset Strategy

StableX Technologies, formerly AYRO, Inc., reported a substantial net loss for the third quarter of 2025 as it fully transitions its business model to focus on stablecoin-related digital asset investments.

Summary

• StableX Technologies, formerly AYRO, Inc., has fully transitioned its business model from electric vehicle manufacturing to acquiring and developing stablecoin assets and related technologies.
• The company reported a net loss of $16,056,245 for the nine months ended September 30, 2025, compared to a net income of $3,826,425 for the same period in 2024.
• For the three months ended September 30, 2025, the net loss was $2,758,238, a significant decline from a net income of $550,557 in the prior year's comparable quarter.
• Revenue for both the three and nine months ended September 30, 2025, was $0, down from $5,426 and $63,777 respectively in 2024, reflecting the pause in EV manufacturing.
• Cash and cash equivalents decreased to $7,260,657 as of September 30, 2025, from $16,035,475 at December 31, 2024.
• Management concluded that substantial doubt about the company's ability to continue as a going concern no longer exists, citing recent financing and improved cash flows.
• The company acquired digital assets, including Fluid, Injective, and ChainLink tokens, totaling $1,800,000 in cost, with a fair market value of $1,571,028 as of September 30, 2025, recognizing an unrealized loss of $228,972.
• A 1-for-16 reverse stock split was effected on June 25, 2025.
• The company settled a breach of contract claim with Lithion Battery Inc. for $540,000.
• General Motors LLC cancelled its development projects with the company effective August 8, 2025.

Sentiment

Score: 3

Explanation: The company is undergoing a high-risk, high-reward strategic pivot with significant financial losses and liquidity concerns, offset by a clear new direction and some operational cost reductions. The future is highly dependent on the success of the unproven digital asset strategy and further capital raises.

Positives

• Management has concluded that substantial doubt about the company's ability to continue as a going concern no longer exists, attributed to recent financing and improved cash flows.
• Net cash used in operating activities significantly decreased to $6,045,637 for the nine months ended September 30, 2025, from $10,334,014 in the prior year.
• Operating expenses decreased by $2,282,119, or 26%, for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to cost reduction initiatives.
• The company successfully raised $7,000,000 in gross proceeds from the issuance of Series I Convertible Preferred Stock and warrants.
• A legal dispute with Lithion Battery Inc. was settled for $540,000, resolving a breach of contract claim.
• The company has a clear new strategic direction focused on the rapidly growing stablecoin industry.

Negatives

• The company reported a significant net loss of $16,056,245 for the nine months ended September 30, 2025, a substantial decline from a net income of $3,826,425 in the prior year.
• Revenue was $0 for both the three and nine months ended September 30, 2025, reflecting the complete halt of electric vehicle product sales.
• Cash and cash equivalents decreased by $8,774,818 from December 31, 2024, to September 30, 2025.
• Working capital decreased to $11,922,435 as of September 30, 2025, from $17,100,605 at December 31, 2024.
• The company recognized an unrealized loss of $228,972 on its digital asset holdings for the nine months ended September 30, 2025.
• The GM partnership was terminated, indicating a loss of a significant development project.
• Existing cash and marketable securities are not sufficient to fund operations for at least the next twelve months.
• The company continues to have a material weakness in internal control over financial reporting.

Risks

• Exposure to significant market volatility, regulatory uncertainty, and technological vulnerabilities associated with the multi-token investment strategy targeting the stablecoin industry.
• Volatility risks related to stablecoins, including potential for issuers to fail to honor redemption obligations, which could undermine public confidence in digital assets.
• Unclear U.S. federal income tax treatment of digital asset transactions, with potential for adverse tax consequences and changes in IRS positions.
• Unclear state, local, and non-U.S. tax treatment of digital assets.
• Exposure to token-specific risks (e.g., FLUID, ETHFI, SYRUP) that may not correlate with the broader stablecoin market and can suffer material losses.
• Regulatory and compliance uncertainty in the U.S. and abroad could limit or delay the ability to execute the digital asset strategy.
• Technological, operational, and liquidity risks inherent in decentralized finance protocols, including smart-contract vulnerabilities, cybersecurity incidents, and limited trading liquidity.
• Obligations to make cash payments for Series I Preferred Stock redemptions and dividends, which may require substantial cash resources and potential additional capital raises.
• Anti-dilution provisions in Series I Preferred Stock and Private Placement Warrants could dilute common stockholders and depress stock price.
• Restrictive covenants in the Series I Certificate of Designations and Series I Purchase Agreement may limit flexibility in raising capital or incurring indebtedness.

Future Outlook

The company plans to fund operations over the next twelve months by accumulating and managing tokens, aiming to diversify holdings across six to ten types of tokens in the stablecoin infrastructure industry. It intends to allocate cash proceeds from securities issuance to operational expenses and token purchases, targeting up to $100 million in crypto assets. The company is evaluating potential opportunities to stake a portion of its FLUID Tokens or other crypto assets beginning in Q4 2025, subject to market and regulatory conditions, and plans to reinvest any earned staking rewards. Future capital raising activities, including private placements and registered securities, are anticipated to expand token holdings and compound treasury growth.

Management Comments

• We view the stablecoin ecosystem as a rapidly growing segment of the global financial infrastructure and believe that the entry into this market can provide a complementary revenue stream and enhance stockholder value.
• Our 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.
• Our investment strategy centers on acquiring digital assets (tokens) that provide essential infrastructure and enabling technologies for the stablecoin sector, often referred to as the picks and shovels approach.
• Management believes that the existing cash and cash equivalents and marketable securities at September 30, 2025 will not be sufficient to fund operations for at least the next twelve months following the date of this report.

Industry Context

The company's strategic pivot aligns with the robust growth observed in the stablecoin market, which has surpassed $280 billion in market capitalization and $10 trillion in annual transaction volumes by mid-2025. By adopting a 'picks and shovels' approach, investing in infrastructure tokens (e.g., FLUID, INJ, LINK) rather than directly in stablecoins, StableX aims to capture value from increased network usage and transaction fees without direct exposure to stablecoin redemption risks. This strategy leverages the maturation of the stablecoin industry as a foundational pillar of global digital finance.

Management Changes

Corporate Governance

Legal Proceedings

• Settled a breach of contract claim with Lithion Battery Inc. for $540,000 on July 30, 2025, resolving all related causes of action.

Related Party Transactions

• Gilbert Villarreal, president of the subsidiary Ayro Operating Company, Inc., through GLV Ventures and Electric Power, provides consulting services for the reengineering of the Vanish at a rate of $30,000 per month.
• Related-party incurred expenses for Electric Power Energy were $421,137 for the three months ended September 30, 2025, and $1,286,634 for the nine months ended September 30, 2025.
• Related-party liabilities to Electric Power Energy for accounts payable and accrued expenses totaled $83,617 as of September 30, 2025.

Stakeholder Impact

• Shareholders face significant dilution risk from past and future capital raises (preferred stock, warrants, stock options) and anti-dilution provisions. Potential for high returns if the digital asset strategy succeeds, but also high risk of capital loss due to market volatility and regulatory uncertainty.
• Employees underwent internal restructuring and headcount reduction, impacting personnel expenses. New CEO appointment and increased incentive plan shares may affect morale and compensation.
• Customers (former EV business) will experience a complete cessation of product availability and support for the previous business model due to the pause in EV manufacturing and termination of the GM partnership.
• Suppliers to the former EV business, such as Lithion Battery Inc., will likely see reduced future business, although the past dispute with Lithion was settled.
• Creditors, particularly holders of Series H-7 and Series I Preferred Stock, have specific redemption and dividend rights, with restrictive covenants designed to protect their interests, potentially limiting the company's financial flexibility.

Next Steps

• Diversify digital asset holdings with six to ten types of tokens representing different segments in the stablecoin infrastructure industry.
• Implement strategic initiatives to fund additional token purchases, potentially through private placement offerings.
• Expand treasury operations and consider additional capital raising activities, including equity and equity-linked instruments.
• Continuously monitor the market for strategic capital raise opportunities.
• Evaluate potential opportunities to stake a portion of FLUID Tokens or other crypto assets, potentially beginning in Q4 2025.
• Reinvest any staking rewards earned.
• Form alliances with stablecoin issuers or co-investment funds.
• Continuously scan the landscape for opportunistic acquisition opportunities to increase treasury scale or income generation.

Key Dates

Recommendation

StableX Technologies is in a highly transitional and speculative phase, having completely pivoted from electric vehicles to a digital asset investment strategy focused on stablecoin infrastructure. While the new strategy targets a high-growth sector and management has addressed going concern doubts through recent financing, the company faces substantial risks including significant net losses, zero revenue from its former business, ongoing liquidity challenges requiring further capital raises, and the inherent volatility and regulatory uncertainty of the crypto market. A 'hold' recommendation is appropriate for investors who are already exposed and wish to monitor the execution of the new strategy and its ability to generate sustainable returns, given the high risk-reward profile and the unproven nature of the new business model.

Keywords

Stablecoin, Digital Assets, Cryptocurrency, Blockchain, DeFi, SBLX, AYRO Inc., Financial Report, SEC Filing, Q3 2025, Investment Strategy, Tokenomics, FLUID, INJ, LINK, AAVE, SYRUP, QNT, ETHFI, Market Volatility, Regulatory Risk, Corporate Governance, Capital Raise