EZGO ANNOUNCES FINANCIAL RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 2023

CHANGZHOU, China, Aug. 7, 2023 /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, 2023.

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

• Revenues were $5.2 million, a decrease of 14.4%
• Units sold of e-bicycle reached 20,479, a decrease of 21.1%
• Units sold of batteries and battery packs reached 8,964, a decrease of 24.2%
• Gross margin was 3.5%, compared with 4.7%
• Net loss was $5.0 million, compared with $2.7 million
• The Company has cash and cash equivalents of approximately $2.3 million at March 31, 2023, compared to approximately $4.4 million at September 30, 2022

Management Commentary

For the six months ended March 31, 2023, mainland China experienced a transition from strict control of the COVID-19 pandemic to a full deregulation. Right after the full deregulation, most of the population was infected with the COVID-19 virus. Most industries nearly came to a halt in operations from late November 2022 to early January 2023, gradually returning to normal operations during China's 2023 Spring Festival in late January 2023. During this period, the production and business activities in all departments of the Company were severely impacted, resulting in a decline in our semi-annual revenue compared to the same period last year and an increase in losses.

In addition to macroeconomic factors, increased competition in the e-bicycles industry, after business constraints were eased in China also led to a significant decline in sales of our products and gross profit in February and March 2023. Two of our major competitors also initiated a new round of price cuts resulting in even greater downward pressure on our product sales.

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 certain equity investment in some of the high-quality suppliers in the electric motorcycles and lithium battery industry.

Financial Review for the Six Months Ended March 31, 2023

Net Revenues

Net revenues from continuing operations for the six months ended March 31, 2023 were approximately $5.2 million, a 14.4% decrease from approximately $6.0 million for the six months ended March 31, 2022. The decrease in revenues was mainly driven by the decrease of sales of e-bicycles, and partially offset by the increase of sales of battery and battery packs.

The following table identifies revenue from continuing operations and discontinued operations, as well as reportable segments for the six months ended March 31, 2023 and 2022:

The e-bicycles sales segment engaged in online and offline sales of e-bicycles. The revenue of sales of e-bicycles decreased to approximately $1.1 million, or 26.0%, for the six months ended March 31, 2023 as compared to the same period in 2022, mainly due to the repeated outbreaks of COVID-19 in the fourth quarter of 2022 and adjustments made to selling policies.

Revenue generated from the battery cells and packs segment for the six months ended March 31, 2023 and 2022 was approximately $1.7 million and $1.6 million, respectively, a 9.6% increase derived from new customers and continuing relationships with long-term customers, as a mitigated measure to reduce the impact of COVID-19 and increased market competition on sales of e-bicycles.

Cost of Revenue

The cost of revenue s attributable the e-bicycles sales segment decreased by approximately $1.1 million, or approximately 27.0%, for the six months ended March 31, 2023 as compared to the same period in 2022, which was primarily due to a reduction in sales of e-bicycles as a result of the impact of the COVID-19 outbreak in the fourth quarter of 2022. This decrease directly corresponded with the decrease in revenue from sales of e-bicycles.

The cost of revenue attributable to the battery cells and packs segment increased by approximately $155,000, or approximately 10.3%, for the six months ended March 31, 2023 as compared to the same period in 2022, which was primarily due to the increased sales of battery cells and packs as a result of customer growth. The increase directly corresponded with the increase in revenue from the sales of batteries and battery packs segment.

Gross Profit

The gross profit attributable to the e-bicycles sales segment for the six months ended March 31, 2023 and 2022 was approximately $76,000 and $46,000, respectively, representing 2.5% and 1.7% of e-bicycles sales revenue. The increase of gross profit during the six months ended March 31, 2023 is primarily due to capacity reduction on e-bicycles sales as a result of a lower gross profit margin rate on sales by Tianjin Dilang Technologies Co., Ltd. and Tianjin Jiahao Bicycle Co., Ltd. ("Tianjin Jiahao").

The gross profit attributable to the battery cells and packs segment for the six months ended March 31, 2023 and 2022 was approximately $67,000 and $71,000, respectively, representing 3.9% and 4.5% of battery cells and packs sales revenue. The increase of gross profit during the six months ended March 31, 2023 is primarily due to the increase in the sales price of battery cells and packs in 2023.

Selling and Marketing Expenses

Our selling and marketing expenses primarily consist of salaries and benefits expense, advertising expense, and freight expense. Our selling and marketing expenses decreased by approximately $281,000, or approximately 49.6%, to approximately $286,000 for the six months ended March 31, 2023 from approximately $567,000 for the six months ended March 31, 2022. Such decrease was attributable to a reduction in salaries and benefits expense and advertising expense, which was a result of a reduction in the amount of salespersons and a reduction in expenditures on exhibition promotion in direct relation to the Company's reduction of sales of e-bicycles.

General and Administrative Expenses

Our general and administrative expenses increased by approximately $268,000, or approximately 12.8%, to approximately $2.4 million for the six months ended March 31, 2023 from approximately $2.1 million for the six months ended March 31, 2022. The increase was primarily due to the addition of share-based compensation expenses as a result of the restricted shares granted to employees and external consultants in August 2022 and January 2023.

Other expense/(income), net

We recorded other expense, net of $2.6 million for the six months ended March 31, 2023 and other income of $352,000 for the six months ended March 31, 2022. The significant increase in other expense, net is primarily attributable to the loss from disposal of Tianjin Jiahao on March 31, 2022, which was approximately $2.6 million.

Income Tax Expense/(Benefits)

Income tax benefits was approximately $15,000 for the six months ended March 31, 2023 and income tax expense was approximately $519,000 for the six months ended March 31, 2022. The change from income tax expense to income tax benefits is primarily due to the tax loss carrying forwards of the newly established wholly-owned subsidiaries in 2022 covered the change in valuation allowance accrued for deferred tax assets.

Net Loss

Net loss for the six months ended March 31, 2023 was approximately $5.0 million, compared to approximately $2.7 million for the same period in 2022, as a result of the explanations provided above.

About EZGO Technologies Ltd.

Leveraging an Internet of Things (IoT) product and service platform and two e-bicycle brands, "Cenbird" and "Dilang," EZGO has established a business model centered on the manufacturing and sale of e-bicycles and e-bicycle rentals, complemented by the e-bicycle charging pile business. 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 RMB6.8676 to US$1.00 for the items in balance sheets and at the rate of RMB6.9761 to US$1.00 for the items in statements of operations and comprehensive loss, the exchange rate in effect as of March 31, 2023, as set forth in the H.10 Statistical release of the Board of Governors of the Federal Reserve System. The Company makes no representation that the RMB or US$ 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.

EZGO TECHNOLOGIES LTD.

CONSOLIDATED BALANCE SHEETS

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

EZGO TECHNOLOGIES LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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