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Share Name | Share Symbol | Market | Type |
---|---|---|---|
US Lighting Group Inc (PK) | USOTC:USLG | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.0025 | 9.09% | 0.03 | 0.0275 | 0.04 | 0.03 | 0.029 | 0.029 | 60,000 | 19:57:44 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)(Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). ☐ Yes ☒
Indicate the number of shares outstanding of each of the issuer’s
classes of common stock, as of the latest practicable date. There were
EXPLANATORY NOTE
US Lighting Group, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment No. 1”) to amend its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (the “Original Form 10-Q”) filed with the Securities and Exchange Commission (the “SEC”) on May 15, 2023.
Background of Restatement
On November 15, 2023, the Company filed a Current Report on Form 8-K disclosing that the March 31, 2023 and June 30, 2023 financial statements included in the Company’s Quarterly Reports on Form 10-Q (the “Original Financial Statements”) should no longer be relied upon.
While preparing the financial statements as of and for the quarter ended September 30, 2023, the Company determined that it was necessary to reassess its revenue recognition policy with respect to the accounting treatment for $200,000 in fees the Company recognized as revenue in March 2023 related to Futuro Houses dealer territory agreements. In its reassessment, the Company concluded that such fees represent a symbolic intellectual license and pursuant to ASC 606, Revenue from Contracts with Customers, should be recognized over the expected term of the dealer agreements instead of at the time of receipt in the first quarter. As a result of the misapplication of ACS 606, our previously issued financial statements for the first quarter of 2023 contained an error, overstating revenue by $179,498 in the statement of operations and understating deferred revenue in the balance sheet by the same amount. Our previously issued financial statements as of and for the six months ended June 30, 2023 continued this error, overstating revenue by $129,498 in the statement of operations and understating deferred revenue in the balance sheet by the same amount. These dealer territory agreements were only first entered into by the Company in 2023 and as a result there is no effect on the Company’s financial statements in 2022 or earlier periods.
Internal Control Considerations
The Company has also concluded that because the controls surrounding the financial reporting process did not operate effectively and resulted in the failure to detect the misstatement, the deficiency is a material weakness in the Company’s internal control over financial reporting, resulting in a material error in the Original Financial Statements.
Items Amended in this Amended Quarterly Report
For the convenience of the reader, this Amendment No. 1 sets forth the information in the Original Form 10-Q in its entirety, as such information is modified and superseded where necessary to reflect the restatement and related revisions. The following sections in the Original Form 10-Q are revised in this Amendment No. 1 to reflect this restatement:
● | Part I, Item 1. Financial Information |
● | Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
● | Part I, Item 4. Controls and Procedures |
Additionally, in accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the Company is including with this Amendment No. 1 currently dated certifications from its Chief Executive Officer and its Chief Financial Officer.
Except as described above, this Amendment No. 1 does not amend, update or change any other disclosures in the Original Form 10-Q. In addition, the information contained in this Amendment No. 1 does not reflect events occurring after the Original Form 10-Q and does modify or update the disclosures therein, except to reflect matters related to the restatement noted above.
Table of Contents
i
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
US LIGHTING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2023 | December 31, 2022 | |||||||
As Restated (Unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | $ | ||||||
Accounts receivable | ||||||||
Prepaid expenses and other current assets | ||||||||
Inventory | ||||||||
Total Current Assets | ||||||||
Property and equipment, net | ||||||||
Total Assets | $ | $ | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Accrued expenses | ||||||||
Accrued payroll to a former officer | ||||||||
Deferred revenue | — | |||||||
Loan payable– current portion | ||||||||
Loans payable, related party | ||||||||
Total Current Liabilities | ||||||||
Loans payable, net of current portion | ||||||||
Loans Payable, related party | ||||||||
Total Liabilities | $ | $ | ||||||
Commitments and Contingencies | ||||||||
Shareholders’ Equity: | ||||||||
Preferred stock, $ | ||||||||
Common stock, $ | ||||||||
Additional paid-in-capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total Shareholders’ Equity | ( | ) | ( | ) | ||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
US LIGHTING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months ended March 31, | ||||||||
2023 Restated | 2022 | |||||||
Sales | $ | $ | ||||||
Cost of goods sold | ||||||||
Gross profit | ||||||||
Operating expenses: | ||||||||
Selling, general and administrative expenses | ||||||||
Product development costs | ||||||||
Total operating expenses | ||||||||
Income (loss) from operations | ( | ) | ( | ) | ||||
Other income (expense): | ||||||||
Other income, net | ||||||||
Unrealized loss | ( | ) | ||||||
Realized gain | ||||||||
Interest income | ||||||||
Interest expense | ( | ) | ( | ) | ||||
Interest expense, related party | ( | ) | ||||||
Total other expense | ( | ) | ( | ) | ||||
Net income (loss) | $ | ( | ) | $ | ( | ) | ||
Basic income (loss) per share | $ | $ | ( | ) | ||||
Diluted income (loss) per share | $ | $ | ( | ) | ||||
Weighted average common shares outstanding, basic | ||||||||
Weighted average common shares outstanding, diluted |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
US LIGHTING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2023, AND 2022
(Unaudited)
Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
As Restated | ||||||||||||||||||||||||||||
Balance, December 31, 2022 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
Proceeds from sale of common stock | — | |||||||||||||||||||||||||||
Net Profit | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
Balance, March 31, 2023 | — | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
Balance, December 31, 2021 | — | $ | — | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
Net Loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
Balance, March 31, 2022 | — | $ | — | $ | $ | $ | ( | ) | $ |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
US LIGHTING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended March 31, | ||||||||
2023 As Restated | 2022 | |||||||
Cash Flows from Operating Activities | ||||||||
Net Loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation | ||||||||
Realized Gain from investments | ( | ) | ||||||
Unrealized Gain from investments | ||||||||
Changes in Assets and Liabilities: | ||||||||
Accounts receivable | ( | ) | ||||||
Inventory | ||||||||
Prepaid expenses and other | ||||||||
Accounts payable | ( | ) | ||||||
Customer advanced payments | ( | ) | ||||||
Deferred revenue | ||||||||
Accruals | ( | ) | ||||||
Accrued interest on related party loans | ( | ) | ||||||
Accrued interest on loans | ( | ) | ||||||
Net cash (used in) operating activities | ( | ) | ( | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Purchase of property and equipment | ( | ) | ( | ) | ||||
Proceeds trading securities | ||||||||
Net cash (used in) provided by investing activities | ( | ) | ||||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from sale of common stock | ||||||||
Proceeds from loans payable | ||||||||
Payment of loans payable | ( | ) | ||||||
Payments on notes payable related party | ( | ) | ||||||
Net cash provided by (used in) financing activities | ( | ) | ||||||
Net change in cash | ( | ) | ||||||
Cash beginning of period | ||||||||
Cash end of period | $ | $ | ||||||
Supplemental Cash Flow Information: | ||||||||
Interest paid | $ | $ | ||||||
Non-cash Financing Activities: | ||||||||
Offset accounts receivable, related party with notes payable, related party | $ | $ |
The accompanying notes are integral part of these unaudited condensed consolidated financial statements.
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US LIGHTING GROUP, INC.
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2023
NOTE 1 – ORGANIZATION
US Lighting Group, Inc. (the “Company”) is a parent company comprised of four subsidiaries — Cortes Campers, LLC, a brand of high-end molded fiberglass campers, Futuro Houses, LLC, which is focused on design and sales of molded fiberglass homes, Fusion X Marine, LLC, a high-performance boat designer, and MIG Marine Corporation, a composite manufacturing company that produces proprietary molded fiberglass products for our other business lines.
On January 11, 2021, we formed Cortes Campers to operate our new brand of innovative travel trailers. During the second part of 2021, we invested heavily in research and development as well as production planning for the 17-foot camper and began selling campers in early 2022.
On January 12, 2022, we formed Futuro Houses, LLC, a Wyoming company, to design, market and distribute molded fiberglass homes. Throughout 2022, Futuro Houses engaged in engineering and development of our first “UFO” themed home model inspired by the original Futuro house designed by Finnish architect Matti Suuronen.
On August 5, 2022, we acquired MIG Marine Corporation, a fiberglass manufacturing company founded in 2003. With the acquisition of Mig Marine, we were able to streamline our manufacturing processes, improve production cycles and scale to meet the demand of Cortes Campers generated order back-log.
We plan to expand our manufacturing footprint, enhance production techniques, and develop more products in the RV, marine, and composite housing sectors. Current R&D efforts are directed towards future tow-behind camper models under the Cortes Campers brand as well as prefabricated housing segment.
As of March 31, 2023, our revenue was driven by shipments of fiberglass campers marketed under the Cortes Campers brand and to a lesser extent from dealerships for the Futuro Housing brand.
The Company is a Florida corporation founded in 2003. We are located in Euclid, Ohio.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of and for the three month period ending March 31, 2023 and are not necessarily indicative of the results to be expected for the full year ending December 31, 2023. These unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
5
The Company’s previously issued financial
statements as of and for the three months ended March 31, 2023, contained an error in the Balance Sheet and Statement of Operations related
to the revenue recognition for Dealer Territory arrangements. In the previously issued financial statements, $
As Previously Reported | Adjustments | As Restated | ||||||||||
Balance Sheet: | ||||||||||||
Deferred revenue | $ | $ | $ | |||||||||
Current liabilities | ||||||||||||
Total liabilities | ||||||||||||
Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
Total Shareholders’ Equity (Deficit) | ( | ) | ( | ) | ( | ) | ||||||
Statement of Operations | ||||||||||||
Sales | $ | $ | ( | ) | $ | |||||||
Gross profit | ( | ) | ||||||||||
Income (loss) from operations | ( | ) | ( | ) | ||||||||
Net income (loss) | ( | ) | ( | ) | ||||||||
Statement of Cash Flows | ||||||||||||
Net Income (Loss) | $ | $ | ( | ) | $ | ( | ) | |||||
Deferred revenue | ||||||||||||
Net cash used in operating activities | ( | ) | ( | ) |
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Cash Equivalents
The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents. There was $
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Cortes Campers, LLC, Futuro Houses, LLC, Fusion X Marine, LLC, and Mig Marine, LLC. All intercompany transactions and balances have been eliminated in consolidation.
Revenue Recognition
Revenue is recognized as performance obligations under the terms of contracts with customers are satisfied.
6
Unit Sales
The Company’s primary source of revenue is generated through the sale of molded fiberglass campers and homes (units). Unit sales are recognized at a point- in-time when the performance obligation is satisfied and control of the promised goods or services is transferred to the customer, which generally occurs when the unit is shipped to or picked-up from our facility by the customer. Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits from the goods or services. Unit payment terms include deposits payable prior to delivery or on terms of 60 days or less post-delivery.
Net sales include shipping and handling charges billed directly to customers. Any shipping and handling costs that occur after the transfer of control are treated as fulfillment cost that are accrued when control is transferred. We also have made an accounting policy election to exclude from revenue sales and usage-based taxes collected.
Warranty obligations associated with the sale of a unit are assurance-type warranties that are a guarantee of the unit’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract.
Dealer Arrangement Fees
Beginning in 2023, the Company began to enter into certain arrangements with dealers providing exclusive selling rights for Futuro Houses geographic territories. The arrangements typically include provisions that in exchange for the territory rights, dealers pay an initial up-front one-time only fee. Subject to meeting minimum unit sale levels on an annual basis, the arrangement automatically renews for an additional year with no additional fee.
The intellectual property subject to the exclusive territory rights is symbolic intellectual property as it does not have significant standalone functionality, and substantially all of the utility is derived from its association with the Company’s past or ongoing activities. The dealer arrangements are highly interrelated with the Company’s performance obligations to produce future units, further develop the brand and provide training and support to dealers and as such are considered to represent a single performance obligation.
The Company recognizes dealer territory fees over the expected term of the arrangement which includes estimated annual renewal periods. Changes in the estimate of renewal periods are accounted for prospectively from the period of the change in estimate by adjusting the remaining unrecognized revenue over the remaining estimated term. As these fees are typically received in cash at or near the execution of the arrangement, the cash received is initially recorded as a contract liability in deferred revenue until recognized as revenue over time.
Other
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Unit sale (point in time) | $ | $ | ||||||
Dealer Territory fees (over time) | — | |||||||
Net sales | $ | $ |
Recent Accounting Pronouncements
The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
7
NOTE 3 – LIQUIDITY
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
During the three months ended March 31, 2023, the
Company realized a net loss of $
At March 31, 2023, the Company had cash on hand in
the amount of $
NOTE 4 – INVESTMENT IN TRADING SECURITIES
On May 17, 2020, the Company purchased $
As a result of the Company’s purchase of mutual
fund assets, the Company could have been deemed to be an “investment company” under the Investment Company Act of 1940 (the
“Investment Company Act”). However, the Company did not intend to be an investment company and never intended to be engaged
in the business of investing, reinvesting, owning, holding or trading in securities. Based on these facts, the Company relied on Rule
3a-2 under the Investment Company Act, which provides an exclusion from the definition of “investment company” for issuers
meeting certain criteria. The Company endeavored to ensure that it was compliant with the conditions for relying on this rule within
the time period permitted by Rule 3a-2. To comply with this exclusion, the Company has liquidated all of the mutual fund assets and no
longer owns securities having a value exceeding
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment for continuing operations consist of the following on March 31, 2023 and December 31, 2022:
March 31, 2023 | December 31, 2022 | |||||||
Building and improvements | $ | $ | ||||||
Land | ||||||||
Vehicles | ||||||||
Office equipment | ||||||||
Production molds and fixtures | ||||||||
Tooling and fixtures | ||||||||
Other equipment | ||||||||
Furniture and fixtures | ||||||||
Total property and equipment cost | ||||||||
Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||||
Property and equipment, net | $ | $ |
Depreciation expense for the three months ended March
31, 2023, and 2022 was $
8
NOTE 6 – ACCRUED PAYROLL TO OFFICER
Beginning in January 2018, the Company’s former
CEO voluntarily elected to defer payment of his employment compensation. The balance of the compensation owed to the Company’s
former CEO was $
NOTE 7 – LOANS PAYABLE TO RELATED PARTIES
Loans payable to related parties consists of the following on March 31, 2023 and December 31, 2022:
2023 | 2022 | |||||||
Loan payable to officers/shareholders (a) | $ | $ | ||||||
Loan Payable to related party - past due (b) | ||||||||
Total loans payable to related parties | ||||||||
Loan payable to related party, current portion | ( | ) | ( | ) | ||||
Total loans payable to related parties |
a. |
Loan payments to related parties were made through a combination of direct payments to the noteholder and instructions from the noteholder to pay obligations to others on their behalf.
NOTE 8 – LOANS PAYABLE
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Real Estate loan (a) | $ | $ | ||||||
Vehicle loans (b) | ||||||||
Working capital (c) | ||||||||
Total loans payable | ||||||||
Loans payable, current portion | ( | ) | ( | ) | ||||
Loans payable, net of current portion | $ | $ |
a. |
9
b. |
c. |
NOTE 9 – SHAREHOLDERS’ EQUITY
Common Shares Issued for Cash
During the quarter ended March 31, 2023, the Company
received proceeds of $
Summary of Warrants
There were no warrants granted or exercised during
the quarter ended March 31, 2023. Warrants for the period ended March 31, 2023, are $
NOTE 10 – INCOME TAXES
At December 31, 2021, the Company had available Federal and state net operating
loss carryforwards to reduce future taxable income. The amounts available were approximately$
Effective January 1, 2007, the Company adopted FASB
guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded
in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit
that has a greater than
10
The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of March 31, 2023, and 2022, the Company has not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2018 through 2022 remain open to examination by the major taxing jurisdictions to which the Company is subject.
Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize the appropriate deferred tax asset at that time.
NOTE 11 – LEGAL PROCEEDINGS
There were no reportable legal proceedings initiated, or material developments in previously reported legal proceedings for the quarter ended March 31, 2023.
NOTE 12 – SUBSEQUENT EVENTS
On August 5, 2022, the Company acquired Mig Marine
from Paul Spivak, our former CEO and a significant shareholder, for $
On April 18, 2023, the Company secured a $
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This quarterly report contains statements that are forward-looking within the meaning of Section 21E of the Exchange Act. Forward-looking statements are statements other than historical facts, including, without limitation, statements that are identified by words like “may,” “could,” “would,” “should,” “will,” “believe,” “expect,” “anticipate,” “plan,” “predict,” “estimate,” “target,” “project,” “intend,” or similar expressions. These statements include, among others, statements regarding our current expectations, estimates and projections about future events and financial trends affecting the financial condition and operations of our business. These statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. You should not rely solely on these forward-looking statements and should consider all uncertainties and risks throughout this document. Forward-looking statements are only predictions and not guarantees of performance and speak only as of the date they are made. We do not undertake to update any forward-looking statement in light of new information or future events.
Although we believe that the expectations, estimates and projections reflected in the forward-looking statements in this report are based on reasonable assumptions when they were made, we cannot assure you that these expectations, estimates and projections will be achieved. We believe the forward-looking statements in this report are reasonable; however, you should not place undue reliance on any forward-looking statements, as they are based on current expectations. Future events and actual results may differ materially from those discussed in the forward-looking statements. Some of the factors that could cause actual results to differ materially from our expectations are discussed Risk Factors beginning on page 6 of our Annual Report on Form 10-K for the year ended December 31, 2022.
Restatement of Previously Issued Financial Statements
As discussed in the Explanatory Note to this Amendment No. 1, included in the interim condensed consolidated financial statements, the Company has restated certain information contained in its previously issued unaudited interim condensed financial statements as of and for the period ended March 31, 2023, related to an error in the recognition of revenue related to Futuro Houses dealer territory agreements.
In this Amendment No. 1, the Company has restated the related financial statement line items impacted. In addition, for further information regarding the matters leading to the restatement and related findings with respect to the Company’s disclosure controls and procedures and internal control over financial reporting, refer to Item 4. Controls and Procedures in Part I of this Amendment No. 1.
General Overview
US Lighting Group, Inc. is a holding company with four operating subsidiaries — Cortes Campers, LLC, a brand of high-end molded fiberglass recreational campers, Futuro Houses, LLC, focused on design and sales of molded fiberglass homes, Fusion X Marine, LLC, a high-performance boat designer, and MIG Marine Corporation, a composite manufacturing company that produces proprietary molded fiberglass products for our other business lines.
We derive expertise and inspiration from the marine industry, where the harshest conditions are expected and must be met with superior engineering and the latest in composite technology. We apply these standards to the products we manufacture and supply to the recreational vehicle (RV) market and, more recently, to the prefabricated housing segment.
Molded fiberglass products are exceptionally strong, lightweight and durable. Composite materials are corrosion resistant and provide efficient insulation, making them attractive for both outdoor enthusiasts and residential housing needs. Molded construction also allows for creation of irregular, unusual or circular objects, which permits the innovative shapes and features of our products.
Our vision is to promote innovation and challenge manufacturing practices in industries that rely on labor-intensive, outdated and wasteful processes, while providing consumers with superior products designed to last for generations.
On January 11, 2021, we formed Cortes Campers to operate our new brand of innovative travel trailers. During the second part of 2021, we invested heavily in research and development as well as production planning for the 17-foot camper and began selling campers in early 2022. As of March 31, 2023, our revenue was driven by shipments of fiberglass campers marketed under Cortes Campers brand and financial results for the first quarter of 2023 reflect revenue of $905,235 generated by Cortes Campers.
12
Cortes Campers currently builds one molded fiberglass 17-foot travel trailer model, which is unique to the industry due to innovative construction techniques such as an axle-less suspension, floor plan that allows for an eight cubic foot refrigerator and full-size wet bath, marine grade materials, and rugged construction unmatched in the industry. We use marine grade exterior gel coats, which provide our campers with bright and fade-resistant colors, also unmatched in the industry.
Our campers are distributed through a chain of regional distributors and are currently available for purchase in US and Canada. Other molded fiberglass RV manufacturers don’t have a dealer network, which provides Cortes Campers with competitive advantage when approaching dealers.
On January 12, 2022, we formed Futuro Houses, LLC to design, marketing and distribute prefabricated molded fiberglass homes. Throughout 2022, Futuro Houses engaged in engineering and development of our first “UFO” themed home model inspired by the original Futuro house designed by Finnish architect Matti Suuronen. The prototype was finished in January of 2023, and as of March 31, 2023 Futuro had reported revenues of $120,502.
We plan to expand our manufacturing footprint, enhance production techniques, and develop more products in the RV, marine, and composite housing sectors. Current R&D efforts are directed towards future tow-behind camper models under Cortes Campers brand as well as prefabricated housing segment.
In 2022 Cortes Campers obtained RVIA industry certification (RVIA is a voluntary association of recreational vehicle manufacturers which promulgates recreational vehicle safety standards in the U.S.) and was listed on J.D. Power registry, which allowed end-consumers simplified access to financing as well as provided dealers with confidence in our manufacturing techniques and product values. Throughout 2022, and continuing in 2023, we developed relationships with several financial institutions to provide credit to our dealers under floor planning programs. Those arrangements significantly improved dealer acceptance of Cortes Campers as a new manufacturer, which has resulted in increased sales and revenue.
On August 5, 2022, we acquired MIG Marine Corporation (“Mig Marine”) from Paul Spivak, our former CEO and a significant shareholder. The Mig Marine acquisition has been determined to be a combination of entities under common control that resulted in a change in the reporting entity. Accordingly, our financial results have been recast to include the financial results of Mig Marine in the current and prior periods as if Mig Marine had always been consolidated with USLG. The assets and liabilities of Mig Marine have been recorded in our consolidated statements of financial condition at the seller’s historical carrying value.
Subsequent Events
On August 5, 2022, we acquired Mig Marine from Paul Spivak, our former CEO and a significant shareholder, for $6,833,333 pursuant to a stock purchase agreement between Mr. Spivak and USLG. The Mig Marine purchase price was completely financed by Mr. Spivak: pursuant to the purchase agreement a 10% deposit of $638,333 was deferred for one year interest free and was due August 5, 2023; and USLG issued Mr. Spivak a promissory note in the amount of $6,195,000 for the remainder. The note bears interest at the rate of 6.25% per year and had a five-year term with monthly installments of principal and interest due beginning on September 5, 2022, with the final payment on August 5, 2027. As we ramped up our camper business and reinvested revenues in the company, we failed to make any payments under the note, and as a result were in default. Reflecting his faith in USLG and in order to support the operations and continued growth of the company, Mr. Spivak waived the default, waived all interest due on the note for 2022 and 2023, and agreed to defer all payments of the deposit and under the note to January 2024, with the final note payment due December 1, 2028. Mr. Spivak provided the waiver and payment deferral on May 1, 2023, effective retroactively.
Results of Operations for the Three Months Ended March 31, 2023, Compared to the Three Months Ended March 31, 2022
Sales
Net total sales from continuing operations for the quarter ended March 31, 2023 were $1,025,737, compared to $76,000 the first quarter of 2022, an increase of $949,737. The increase in sales is attributed to $1,005,235 of recreational vehicles (RV) and related components sales through our Cortes Campers subsidiary and $20,502 of revenue from Futuro dealership fees.
Cost of Goods Sold
Cost of goods sold from continuing operations for the quarter ended March 31, 2023 were $701,319, compared to $68,000 for the first quarter of 2022. The cost of goods sold relates to camper sales from the Company’s Cortes Campers subsidiary.
Operating Expenses
Selling, general and administrative expenses (“SG&A”) from continuing operations were $472,349 for the quarter ended March 31, 2023, compared to $266,000 for the first quarter of 2022, an increase of $206,349. The increase over the prior year can be attributed to increased personnel costs associated with the Company’s Cortes Campers Subsidiary.
13
We had no product development costs for the quarters ended March 31, 2023, and 2022. The Company continues its focus to the RV, marine, composite housing, and electronics sectors.
Other Income/Expense
During the quarter ended March 31, 2023, we had total other expense of $6,797. Total other expense from interest expense for the first quarter of 2022 was $118,000.
Net Loss
We had a net loss of $154,728 for the quarter ended March 31, 2023, compared to a net loss of $376,000 for the first quarter of 2022. Our overall net loss decreased mainly due to the sales of Cortes Campers RVs and related components.
Liquidity and Capital Resources
Changes in Cash Flows
Net cash used in operating activities for the quarter ended March 31, 2023 was $292,156, compared to net cash used in operating activities of $257,000 for the first quarter of 2022.
Net cash used in investing activities was $190,221 for the quarter ended March 31, 2023, compared to $703,000 of cash provided by investing activities for the first quarter of 2022. The difference is primarily due to a very small investment in fixed assets for the first quarter of 2022 and proceeds of $704,000 received from the sale of trading securities as compared with a much larger investment in fixed assets for the first quarter of 2023.
Net cash provided by financing activities for the quarter ended March 31, 2023 was $403,691, which included proceeds of $167,500 received from the sale of common stock and proceeds of $236,191 of loans payable and related party loans. Net cash used in financing activities for the first quarter of 2022 was $328,000, which was mostly for the repayment of loans to related parties.
Critical Accounting Policies and Estimates
Please refer to our Annual Report on Form 10-K for the year ended December 31, 2022, for a full discussion of our critical accounting policies. In this Amendment No. 1, the Company is amending and replacing its previously disclosed accounting for revenue recognition to the following:
Unit Sales
The Company’s primary source of revenue is generated through the sale of molded fiberglass campers and homes (units). Unit sales are recognized at a point- in-time when the performance obligation is satisfied and control of the promised goods or services is transferred to the customer, which generally occurs when the unit is shipped to or picked-up from our facility by the customer. Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits from the goods or services. Unit payment terms include deposits payable prior to delivery or on terms of 60 days or less post-delivery.
Net sales include shipping and handling charges billed directly to customers. Any shipping and handling costs that occur after the transfer of control are treated as fulfillment cost that are accrued when control is transferred. We also have made an accounting policy election to exclude from revenue sales and usage-based taxes collected.
Warranty obligations associated with the sale of a unit are assurance-type warranties that are a guarantee of the unit’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract.
Dealer Arrangement Fees
Beginning in 2023, the Company began to enter into certain arrangements with dealers providing exclusive selling rights for Futuro Homes geographic territories. The arrangements typically include provisions that in exchange for the territory rights, dealers pay an initial up-front one-time only fee. Subject to meeting minimum unit sale levels on an annual basis, the arrangement automatically renews for an additional year with no additional fee.
14
The intellectual property subject to the exclusive territory rights is symbolic intellectual property as it does not have significant standalone functionality, and substantially all of the utility is derived from its association with the Company’s past or ongoing activities. The dealer arrangements are highly interrelated with the Company’s performance obligations to produce future units, further develop the brand and provide training and support to dealers and as such are considered to represent a single performance obligation.
The Company recognizes dealer territory fees over the expected term of the arrangement which includes estimated annual renewal periods. Changes in the estimate of renewal periods are accounted for prospectively from the period of the change in estimate by adjusting the remaining unrecognized revenue over the remaining estimated term. As these fees are typically received in cash at or near the execution of the arrangement, the cash received is initially recorded as a contract liability in deferred revenue until recognized as revenue over time.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Because USLG is a “smaller reporting company” as defined by the Securities and Exchange Commission we are not required to provide additional market risk disclosure.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules 13(a)-15(e) and 15(d)-15(e) under the Exchange Act, at the time the Original Form 10-Q was filed, our Chief Executive Officer and Chief Financial Officer carried out evaluations of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2023 and concluded that our disclosure controls and procedures were effective. After filing the Original Form 10-Q, the Company identified a material weakness in internal control over financial reporting as described below. As a result, our Chief Executive Officer and Chief Financial Officer have re-evaluated the disclosure controls and procedures and concluded that our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Exchange Act) were not effective as of March 31, 2023 due to the material weakness in internal control over financial reporting as described below.
Material Weakness in Internal Control over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management identified a material weakness in our internal control over financial reporting as of March 31, 2023 that prevented us appropriately determining the required revenue recognition accounting treatment for fees received from Futuro Houses dealer territory agreements, which was a new type of transaction for the Company beginning in 2023.
Remediation Plan
With oversight from the board of directors and input from management, the Company has begun designing and implementing changes in processes and controls to remediate the material weakness described above and to enhance our internal control over financial reporting, including a control to review types of transactions we are encountering for the first time and more extensively evaluating the applicable accounting guidance including where applicable seeking outside advisory services to assist us in that evaluation.
Changes in Internal Control over Financial Reporting
Other than described above, there have been no changes in our internal control over financial reporting during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
15
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
There were no reportable legal proceedings initiated, or material developments in previously reported legal proceedings, during the first quarter.
Item 1A. Risk Factors.
Please refer to the risk factors listed under “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, for information relating to certain risk factors applicable to USLG.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the quarter end of March 31, 2023, we offered unregistered shares of our common stock in a private placement to investors to fund our working capital needs. During the quarter we sold to four investors 1,675,000 shares for an aggregate amount of $167,500. The issuance of shares in the private placement was exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506(b) under the Securities Act. We discontinued the Rule 506(b) private placement at the end of March.
Item 3. Defaults Upon Senior Securities.
On August 5, 2022, we acquired Mig Marine for $6,833,333 from Paul Spivak, our former CEO and a significant shareholder. We paid for Mig Marine with a deferred deposit and $6,195,000 promissory note. As we ramped up our camper business and reinvested revenues in the company, we failed to make any payments under the note in 2022 or the first quarter of 2023, and as a result were in default. Reflecting his faith in USLG and in order to support the operations and continued growth of the company, Mr. Spivak waived the default, waived all interest due on the note for 2022 and 2023, and agreed to defer all payments of the deposit and under the note to January 2024, with the final note payment due December 1, 2028. Mr. Spivak provided the waiver and payment deferral on May 1, 2023, effective retroactively. For more information, please turn to Subsequent Events on page 13.
Item 4. Mine Safety Disclosures.
We are not engaged in mining operations.
Item 5. Other Information.
We have disclosed on Form 8-K all reportable events that occurred in the quarter ended March 31, 2023.
16
Item 6. Exhibits.
Exhibit Number | Description of Exhibit | |
31.1 | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | Inline XBRL Instance Document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, US Lighting Group, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
US Lighting Group, Inc. | |
November 28, 2023 | /s/ Anthony Corpora |
By Anthony Corpora, Chief Executive Officer (Principal Executive Officer) | |
November 28, 2023 | /s/ Donald O. Retreage, Jr. |
By Donald O. Retreage, Jr., Chief Financial Officer (Principal Financial Officer) | |
November 28, 2023 | /s/ Michael A. Coates |
By Michael A. Coates, Corporate Controller (Principal Accounting Officer) |
18
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
17 CFR SECTION 240.13a-14(a)
I, Anthony Corpora, certify that:
1. I have reviewed this Amended Quarterly Report on Form 10-Q of US Lighting Group, Inc. for the period ending March 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 28, 2023
/s/ Anthony Corpora | |
Anthony Corpora, Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
17 CFR SECTION 240.13a-14(a)
I, Donald O. Retreage Jr., certify that:
1. I have reviewed this Amended Quarterly Report on Form 10-Q of US Lighting Group, Inc. for the period ending March 31, 2023;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 28, 2023
/s/ Donald O. Retreage Jr. | |
Donald O. Retreage Jr., Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of the Amended Quarterly Report of US Lighting Group, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2023 (the “Report”) with the Securities and Exchange Commission, I, Anthony Corpora, Chief Executive Officer of the Company, and I, Donald O. Retreage Jr., Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Company for such period.
Dated: November 28, 2023
/s/ Anthony Corpora | |
Anthony Corpora, Chief Executive Officer |
/s/ Donald O. Retreage Jr. | |
Donald O. Retreage Jr., Chief Financial Officer |
Document And Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
May 01, 2023 |
|
Document Information Line Items | ||
Entity Registrant Name | U.S. Lighting Group, Inc. | |
Trading Symbol | N/A | |
Document Type | 10-Q/A | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 101,609,825 | |
Amendment Flag | true | |
Amendment Description | US Lighting Group, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment No. 1”) to amend its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (the “Original Form 10-Q”) filed with the Securities and Exchange Commission (the “SEC”) on May 15, 2023.Background of RestatementOn November 15, 2023, the Company filed a Current Report on Form 8-K disclosing that the March 31, 2023 and June 30, 2023 financial statements included in the Company’s Quarterly Reports on Form 10-Q (the “Original Financial Statements”) should no longer be relied upon.While preparing the financial statements as of and for the quarter ended September 30, 2023, the Company determined that it was necessary to reassess its revenue recognition policy with respect to the accounting treatment for $200,000 in fees the Company recognized as revenue in March 2023 related to Futuro Houses dealer territory agreements. In its reassessment, the Company concluded that such fees represent a symbolic intellectual license and pursuant to ASC 606, Revenue from Contracts with Customers, should be recognized over the expected term of the dealer agreements instead of at the time of receipt in the first quarter. As a result of the misapplication of ACS 606, our previously issued financial statements for the first quarter of 2023 contained an error, overstating revenue by $179,498 in the statement of operations and understating deferred revenue in the balance sheet by the same amount. Our previously issued financial statements as of and for the six months ended June 30, 2023 continued this error, overstating revenue by $129,498 in the statement of operations and understating deferred revenue in the balance sheet by the same amount. These dealer territory agreements were only first entered into by the Company in 2023 and as a result there is no effect on the Company’s financial statements in 2022 or earlier periods.Internal Control ConsiderationsThe Company has also concluded that because the controls surrounding the financial reporting process did not operate effectively and resulted in the failure to detect the misstatement, the deficiency is a material weakness in the Company’s internal control over financial reporting, resulting in a material error in the Original Financial Statements.Items Amended in this Amended Quarterly ReportFor the convenience of the reader, this Amendment No. 1 sets forth the information in the Original Form 10-Q in its entirety, as such information is modified and superseded where necessary to reflect the restatement and related revisions. The following sections in the Original Form 10-Q are revised in this Amendment No. 1 to reflect this restatement: ●Part I, Item 1. Financial Information ●Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ●Part I, Item 4. Controls and Procedures Additionally, in accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the Company is including with this Amendment No. 1 currently dated certifications from its Chief Executive Officer and its Chief Financial Officer.Except as described above, this Amendment No. 1 does not amend, update or change any other disclosures in the Original Form 10-Q. In addition, the information contained in this Amendment No. 1 does not reflect events occurring after the Original Form 10-Q and does modify or update the disclosures therein, except to reflect matters related to the restatement noted above. | |
Entity Central Index Key | 0001536394 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-55689 | |
Entity Incorporation, State or Country Code | FL | |
Entity Tax Identification Number | 46-3556776 | |
Entity Address, Address Line One | 1148 East 222nd Street | |
Entity Address, City or Town | Euclid | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 44117 | |
City Area Code | (216) | |
Local Phone Number | 896-7000 | |
Title of 12(b) Security | N/A | |
Security Exchange Name | NONE | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 101,609,825 | 101,609,825 |
Common stock, shares outstanding | 101,609,825 | 101,609,825 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Statement [Abstract] | ||
Sales | $ 1,025,737 | $ 76,000 |
Cost of goods sold | 701,319 | 68,000 |
Gross profit | 324,418 | 8,000 |
Operating expenses: | ||
Selling, general and administrative expenses | 472,349 | 266,000 |
Product development costs | ||
Total operating expenses | 472,349 | 266,000 |
Income (loss) from operations | (147,931) | (258,000) |
Other income (expense): | ||
Other income, net | 15,000 | |
Unrealized loss | (157,000) | |
Realized gain | 31,000 | |
Interest income | 249 | 2,000 |
Interest expense | (7,046) | (5,000) |
Interest expense, related party | (4,000) | |
Total other expense | (6,797) | (118,000) |
Net income (loss) | $ (154,728) | $ (376,000) |
Basic income (loss) per share (in Dollars per share) | $ 0 | $ 0 |
Diluted income (loss) per share (in Dollars per share) | $ 0 | $ 0 |
Weighted average common shares outstanding, basic (in Shares) | 98,947,384 | 97,848,735 |
Weighted average common shares outstanding, diluted (in Shares) | 98,947,384 | 97,848,735 |
Condensed Consolidated Statements of Shareholders’ Equity (Deficit) (Unaudited) - USD ($) |
Preferred Stock |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total |
---|---|---|---|---|---|
Balance at Dec. 31, 2021 | $ 10,000 | $ 17,791,000 | $ (16,256,000) | $ 1,545,000 | |
Balance (in Shares) at Dec. 31, 2021 | 98,798,735 | ||||
Net income (loss) | (376,000) | (376,000) | |||
Balance at Mar. 31, 2022 | $ 10,000 | 17,791,000 | (69,632,000) | 1,169,000 | |
Balance (in Shares) at Mar. 31, 2022 | 97,848,735 | ||||
Balance at Dec. 31, 2022 | $ 10,209 | 19,771,111 | (25,531,321) | (5,750,000) | |
Balance (in Shares) at Dec. 31, 2022 | 99,934,825 | ||||
Proceeds from sale of common stock | $ 167 | 167,332 | 167,500 | ||
Proceeds from sale of common stock (in Shares) | 1,675,000 | ||||
Net income (loss) | (154,728) | (154,728) | |||
Balance at Mar. 31, 2023 | $ 10,376 | $ 19,938,443 | $ (25,686,049) | $ (5,737,229) | |
Balance (in Shares) at Mar. 31, 2023 | 101,609,825 |
Organization |
3 Months Ended |
---|---|
Mar. 31, 2023 | |
Organization [Abstract] | |
ORGANIZATION | NOTE 1 – ORGANIZATION
US Lighting Group, Inc. (the “Company”) is a parent company comprised of four subsidiaries — Cortes Campers, LLC, a brand of high-end molded fiberglass campers, Futuro Houses, LLC, which is focused on design and sales of molded fiberglass homes, Fusion X Marine, LLC, a high-performance boat designer, and MIG Marine Corporation, a composite manufacturing company that produces proprietary molded fiberglass products for our other business lines.
On January 11, 2021, we formed Cortes Campers to operate our new brand of innovative travel trailers. During the second part of 2021, we invested heavily in research and development as well as production planning for the 17-foot camper and began selling campers in early 2022.
On January 12, 2022, we formed Futuro Houses, LLC, a Wyoming company, to design, market and distribute molded fiberglass homes. Throughout 2022, Futuro Houses engaged in engineering and development of our first “UFO” themed home model inspired by the original Futuro house designed by Finnish architect Matti Suuronen.
On August 5, 2022, we acquired MIG Marine Corporation, a fiberglass manufacturing company founded in 2003. With the acquisition of Mig Marine, we were able to streamline our manufacturing processes, improve production cycles and scale to meet the demand of Cortes Campers generated order back-log.
We plan to expand our manufacturing footprint, enhance production techniques, and develop more products in the RV, marine, and composite housing sectors. Current R&D efforts are directed towards future tow-behind camper models under the Cortes Campers brand as well as prefabricated housing segment.
As of March 31, 2023, our revenue was driven by shipments of fiberglass campers marketed under the Cortes Campers brand and to a lesser extent from dealerships for the Futuro Housing brand.
The Company is a Florida corporation founded in 2003. We are located in Euclid, Ohio. |
Summary of Significant Accounting Policies |
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Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of and for the three month period ending March 31, 2023 and are not necessarily indicative of the results to be expected for the full year ending December 31, 2023. These unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The Company’s previously issued financial statements as of and for the three months ended March 31, 2023, contained an error in the Balance Sheet and Statement of Operations related to the revenue recognition for Dealer Territory arrangements. In the previously issued financial statements, $200,000 of fees from Dealer Territory arrangements were recognized as revenue at a point in time for the three months ended March 31, 2023. Pursuant to ASC 606, Revenue from Contracts with Customers, those fees should have been recognized over the expected term of the arrangement. As a result, revenue was overstated by $179,498 in the Statement of Operations and deferred revenue understated by a corresponding amount in the Balance Sheet as of March 31, 2023. The effects of the correction of the prior period misstatement to the specific line items previously presented in the condensed consolidated financial statement are reflected in the tables below:
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There was $45,843 and $124,529 of cash equivalents as of the three months ended March 31, 2023 and the year ended December 31, 2022, respectively, held in the Company’s investment account.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Cortes Campers, LLC, Futuro Houses, LLC, Fusion X Marine, LLC, and Mig Marine, LLC. All intercompany transactions and balances have been eliminated in consolidation.
Revenue Recognition
Revenue is recognized as performance obligations under the terms of contracts with customers are satisfied.
Unit Sales
The Company’s primary source of revenue is generated through the sale of molded fiberglass campers and homes (units). Unit sales are recognized at a point- in-time when the performance obligation is satisfied and control of the promised goods or services is transferred to the customer, which generally occurs when the unit is shipped to or picked-up from our facility by the customer. Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits from the goods or services. Unit payment terms include deposits payable prior to delivery or on terms of 60 days or less post-delivery.
Net sales include shipping and handling charges billed directly to customers. Any shipping and handling costs that occur after the transfer of control are treated as fulfillment cost that are accrued when control is transferred. We also have made an accounting policy election to exclude from revenue sales and usage-based taxes collected.
Warranty obligations associated with the sale of a unit are assurance-type warranties that are a guarantee of the unit’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract.
Dealer Arrangement Fees
Beginning in 2023, the Company began to enter into certain arrangements with dealers providing exclusive selling rights for Futuro Houses geographic territories. The arrangements typically include provisions that in exchange for the territory rights, dealers pay an initial up-front one-time only fee. Subject to meeting minimum unit sale levels on an annual basis, the arrangement automatically renews for an additional year with no additional fee.
The intellectual property subject to the exclusive territory rights is symbolic intellectual property as it does not have significant standalone functionality, and substantially all of the utility is derived from its association with the Company’s past or ongoing activities. The dealer arrangements are highly interrelated with the Company’s performance obligations to produce future units, further develop the brand and provide training and support to dealers and as such are considered to represent a single performance obligation.
The Company recognizes dealer territory fees over the expected term of the arrangement which includes estimated annual renewal periods. Changes in the estimate of renewal periods are accounted for prospectively from the period of the change in estimate by adjusting the remaining unrecognized revenue over the remaining estimated term. As these fees are typically received in cash at or near the execution of the arrangement, the cash received is initially recorded as a contract liability in deferred revenue until recognized as revenue over time.
Other
The table below provides the break-out of net sales from unit sales and dealer territory fees recognized in the respective periods:
Recent Accounting Pronouncements
The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
Liquidity |
3 Months Ended |
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Mar. 31, 2023 | |
Liquidity [Abstract] | |
LIQUIDITY | NOTE 3 – LIQUIDITY
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
During the three months ended March 31, 2023, the Company realized a net loss of $154,728 and cash used for operating activities was $292,156, compared to cash used for operating activities of $257,000 in the prior period. Based on current projections, we believe our available cash on-hand, our current efforts to market and sell our products, and our ability to significantly reduce expenses, will provide sufficient cash resources to satisfy our operational needs, for at least one year from the date these financial statements are issued.
At March 31, 2023, the Company had cash on hand in the amount of $45,843. Management estimates that the current cash funds and the continued increase in revenues, will be sufficient to continue operations through March 31, 2024. |
Investment in Trading Securities |
3 Months Ended |
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Mar. 31, 2023 | |
Investment in Trading Securities [Abstract] | |
INVESTMENT IN TRADING SECURITIES | NOTE 4 – INVESTMENT IN TRADING SECURITIES
On May 17, 2020, the Company purchased $3,800,000 of various mutual fund assets from a broker. This investment meets the criteria of level one inputs for which quoted market prices are available in active markets for identical assets or liabilities as of the reporting date. As of September 30, 2022, these assets had all been sold. The Company has adjusted the reported amounts for these investments to market value resulting in a realized loss and unrealized loss of $288,281 and $18,000, respectively, as of the year ended December 31, 2022.
As a result of the Company’s purchase of mutual fund assets, the Company could have been deemed to be an “investment company” under the Investment Company Act of 1940 (the “Investment Company Act”). However, the Company did not intend to be an investment company and never intended to be engaged in the business of investing, reinvesting, owning, holding or trading in securities. Based on these facts, the Company relied on Rule 3a-2 under the Investment Company Act, which provides an exclusion from the definition of “investment company” for issuers meeting certain criteria. The Company endeavored to ensure that it was compliant with the conditions for relying on this rule within the time period permitted by Rule 3a-2. To comply with this exclusion, the Company has liquidated all of the mutual fund assets and no longer owns securities having a value exceeding 40% of the value of the Company’s total assets on an unconsolidated basis. This course of action was approved and authorized by the Company’s board of directors by unanimous written consent on August 17, 2021. As of December 31, 2022 and March 31, 2023, the Company did not own any securities. |
Property and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment for continuing operations consist of the following on March 31, 2023 and December 31, 2022:
Depreciation expense for the three months ended March 31, 2023, and 2022 was $44,822 and $19,000, respectively. |
Accrued Payroll to Officer |
3 Months Ended |
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Mar. 31, 2023 | |
Accrued Payroll to Officer [Abstract] | |
ACCRUED PAYROLL TO OFFICER | NOTE 6 – ACCRUED PAYROLL TO OFFICER
Beginning in January 2018, the Company’s former CEO voluntarily elected to defer payment of his employment compensation. The balance of the compensation owed to the Company’s former CEO was $125,167 as of March 31, 2023 and December 31, 2022. Deferral of wages ended on August 9, 2021, when the Company’s former CEO resigned from that position. |
Loans Payable to Related Parties |
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Loans Payable to Related Parties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS PAYABLE TO RELATED PARTIES | NOTE 7 – LOANS PAYABLE TO RELATED PARTIES
Loans payable to related parties consists of the following on March 31, 2023 and December 31, 2022:
Loan payments to related parties were made through a combination of direct payments to the noteholder and instructions from the noteholder to pay obligations to others on their behalf. |
Loans Payable |
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Loans Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS PAYABLE | NOTE 8 – LOANS PAYABLE
Loans payable for continuing operations consisted of the following as of March 31, 2023 and December 31, 2022:
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Shareholders’ Equity |
3 Months Ended |
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Mar. 31, 2023 | |
Shareholders’ Equity [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 9 – SHAREHOLDERS’ EQUITY
Common Shares Issued for Cash
During the quarter ended March 31, 2023, the Company received proceeds of $167,500 on the private placement of 1,675,000 shares of common stock, at an average price of $0.10.
Summary of Warrants
There were no warrants granted or exercised during the quarter ended March 31, 2023. Warrants for the period ended March 31, 2023, are $0. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2023 | |
Income taxes [Abstract] | |
INCOME TAXES | NOTE 10 – INCOME TAXES
At December 31, 2021, the Company had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately$1,500,000 for Federal and state purposes. The carryforwards expire in various amounts through 2041. Given the Company’s history of net operating losses, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the carryforwards. Accordingly, the Company has not recognized a deferred tax assets for this benefit. Section 382 generally limits the use of NOLs and credits following an ownership change, which occurs when one or more 5 percent shareholders increase their ownership, in aggregate, by more than 50 percentage points over the lowest percentage of stock owned by such shareholders at any time during the “testing period” (generally three years).
Effective January 1, 2007, the Company adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of March 31, 2023, and 2022, the Company did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption.
The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of March 31, 2023, and 2022, the Company has not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2018 through 2022 remain open to examination by the major taxing jurisdictions to which the Company is subject.
Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize the appropriate deferred tax asset at that time. |
Legal Proceedings |
3 Months Ended |
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Mar. 31, 2023 | |
Legal Proceedings [Abstract] | |
LEGAL PROCEEDINGS | NOTE 11 – LEGAL PROCEEDINGS
There were no reportable legal proceedings initiated, or material developments in previously reported legal proceedings for the quarter ended March 31, 2023. |
Subsequent Events |
3 Months Ended |
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Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS
On August 5, 2022, the Company acquired Mig Marine from Paul Spivak, our former CEO and a significant shareholder, for $6,833,333 pursuant to a stock purchase agreement between Mr. Spivak and USLG. The Mig Marine purchase price was completely financed by Mr. Spivak: pursuant to the purchase agreement a 10% deposit of $638,333 was deferred for one year interest free and was due August 5, 2023; and USLG issued Mr. Spivak a promissory note in the amount of $6,195,000 for the remainder. The note bears interest at the rate of 6.25% per year and had a five-year term with monthly installments of principal and interest due beginning on September 5, 2022, with the final payment on August 5, 2027. As we ramped up our camper business and reinvested revenues in the company, we failed to make any payments under the note, and as a result were in default. Reflecting his faith in USLG and in order to support the operations and continued growth of the company, Mr. Spivak waived the default, waived all interest due on the note for 2022 and 2023, and agreed to defer all payments of the deposit and under the note to January 2024, with the final note payment due December 1, 2028. Mr. Spivak provided the waiver and payment deferral on May 1, 2023, effective retroactively.
On April 18, 2023, the Company secured a $30,000 loan from Lending Point to use for inventory purchasing. The loan bears an interest rate of 13.49% and requires monthly payments of $690 with no pre-payment penalty. |
Accounting Policies, by Policy (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation | Basis of Presentation The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of and for the three month period ending March 31, 2023 and are not necessarily indicative of the results to be expected for the full year ending December 31, 2023. These unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The Company’s previously issued financial statements as of and for the three months ended March 31, 2023, contained an error in the Balance Sheet and Statement of Operations related to the revenue recognition for Dealer Territory arrangements. In the previously issued financial statements, $200,000 of fees from Dealer Territory arrangements were recognized as revenue at a point in time for the three months ended March 31, 2023. Pursuant to ASC 606, Revenue from Contracts with Customers, those fees should have been recognized over the expected term of the arrangement. As a result, revenue was overstated by $179,498 in the Statement of Operations and deferred revenue understated by a corresponding amount in the Balance Sheet as of March 31, 2023. The effects of the correction of the prior period misstatement to the specific line items previously presented in the condensed consolidated financial statement are reflected in the tables below:
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Use of estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates. |
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Concentrations of Credit Risk | Concentrations of Credit Risk We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash. |
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Cash equivalents | Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There was $45,843 and $124,529 of cash equivalents as of the three months ended March 31, 2023 and the year ended December 31, 2022, respectively, held in the Company’s investment account. |
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Basis of Consolidation | Basis of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Cortes Campers, LLC, Futuro Houses, LLC, Fusion X Marine, LLC, and Mig Marine, LLC. All intercompany transactions and balances have been eliminated in consolidation. |
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Revenue Recognition | Revenue Recognition Revenue is recognized as performance obligations under the terms of contracts with customers are satisfied.
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Recently Accounting Pronouncements | Recent Accounting Pronouncements The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
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Unit Sales | Unit Sales The Company’s primary source of revenue is generated through the sale of molded fiberglass campers and homes (units). Unit sales are recognized at a point- in-time when the performance obligation is satisfied and control of the promised goods or services is transferred to the customer, which generally occurs when the unit is shipped to or picked-up from our facility by the customer. Control refers to the ability of the customer to direct the use of, and obtain substantially all of, the remaining benefits from the goods or services. Unit payment terms include deposits payable prior to delivery or on terms of 60 days or less post-delivery. Net sales include shipping and handling charges billed directly to customers. Any shipping and handling costs that occur after the transfer of control are treated as fulfillment cost that are accrued when control is transferred. We also have made an accounting policy election to exclude from revenue sales and usage-based taxes collected. Warranty obligations associated with the sale of a unit are assurance-type warranties that are a guarantee of the unit’s intended functionality and, therefore, do not represent a distinct performance obligation within the context of the contract. |
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Dealer Arrangement Fees | Dealer Arrangement Fees Beginning in 2023, the Company began to enter into certain arrangements with dealers providing exclusive selling rights for Futuro Houses geographic territories. The arrangements typically include provisions that in exchange for the territory rights, dealers pay an initial up-front one-time only fee. Subject to meeting minimum unit sale levels on an annual basis, the arrangement automatically renews for an additional year with no additional fee. The intellectual property subject to the exclusive territory rights is symbolic intellectual property as it does not have significant standalone functionality, and substantially all of the utility is derived from its association with the Company’s past or ongoing activities. The dealer arrangements are highly interrelated with the Company’s performance obligations to produce future units, further develop the brand and provide training and support to dealers and as such are considered to represent a single performance obligation. The Company recognizes dealer territory fees over the expected term of the arrangement which includes estimated annual renewal periods. Changes in the estimate of renewal periods are accounted for prospectively from the period of the change in estimate by adjusting the remaining unrecognized revenue over the remaining estimated term. As these fees are typically received in cash at or near the execution of the arrangement, the cash received is initially recorded as a contract liability in deferred revenue until recognized as revenue over time. |
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Other | Other The table below provides the break-out of net sales from unit sales and dealer territory fees recognized in the respective periods:
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Summary of Significant Accounting Policies (Tables) |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equipment estimated useful lives [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Consolidated Financial Statement | The effects of the correction of the prior period misstatement to the specific line items
previously presented in the condensed consolidated financial statement are reflected in the tables below:
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Schedule of Break-Out of Net Sales From Unit Sales and Dealer Territory Fees | The table below provides the break-out of net sales
from unit sales and dealer territory fees recognized in the respective periods:
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Property and Equipment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment |
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Loans Payable to Related Parties (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Payable to Related Parties Table [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of loans payable to related parties |
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Loans Payable (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Payable for Outstanding Loan | Loans payable for continuing operations consisted
of the following as of March 31, 2023 and December 31, 2022:
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Summary of Significant Accounting Policies (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
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Accounting Policies [Abstract] | ||
Fees from dealer territory recognized | $ 200,000 | |
Deferred revenue | 179,498 | |
Cash equivalents | $ 45,843 | $ 124,529 |
Summary of Significant Accounting Policies (Details) - Schedule of Break-Out of Net Sales From Unit Sales and Dealer Territory Fees - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
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Schedule Of Break Out Of Net Sales From Unit Sales And Dealer Territory Fees Abstract | ||
Unit sale (point in time) | $ 1,005,235 | $ 76,000 |
Dealer Territory fees (over time) | 20,502 | |
Net sales | $ 1,025,737 | $ 76,000 |
Liquidity (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
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Liquidity [Abstract] | ||
Realized a net loss | $ 154,728 | |
Cash provided by operating activities | 292,156 | |
Cash used in operating activities | 292,156 | |
Cash on hand | $ 45,843 | $ 124,529 |
Investment in Trading Securities (Details) - USD ($) |
1 Months Ended | 3 Months Ended |
---|---|---|
May 17, 2020 |
Mar. 31, 2023 |
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Investments [Member] | ||
Investment in Trading Securities (Details) [Line Items] | ||
Purchased of mutual fund assets | $ 3,800,000 | |
Realized loss | $ 288,281 | |
Unrealized loss | $ 18,000 | |
Company Owned Securities [Member] | ||
Investment in Trading Securities (Details) [Line Items] | ||
Securities owned, percentage | 40.00% |
Property and Equipment (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
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Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 44,822 | $ 19,000 |
Accrued Payroll to Officer (Details) - USD ($) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
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Accrued Payroll to Officer [Abstract] | ||
Compensation owed to officer | $ 125,167 | $ 125,167 |
Loans Payable to Related Parties (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
Aug. 05, 2022 |
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Loans Payable to Related Parties (Details) [Line Items] | |||
Interest rate | 6.25% | ||
Interest bearing amount | $ 6,878,333 | ||
Accrued interest | $ 100,000 | ||
Loan amount | $ 400,483 | 426,000 | |
Loans payable to related parties description | b.On August 5, 2022, we acquired Mig Marine from Paul Spivak, our former CEO and a significant shareholder. We paid for Mig Marine with a deferred deposit and a $6,195,000 promissory note. We failed to make required payments under the note in 2022 and the first quarter of 2023, and as a result were in default. However, Mr. Spivak waived the default, waived all interest due on the note for 2022 and 2023, and agreed to defer all payments of the deposit and under the note to January 2024. For more information, please see Note 12 — Subsequent Events. | ||
Mr. Spivak [Member] | |||
Loans Payable to Related Parties (Details) [Line Items] | |||
Loan amount | $ 76,000 |
Loans Payable to Related Parties (Details) - Schedule of loans payable to related parties - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
||||
---|---|---|---|---|---|---|
Debt Instrument [Line Items] | ||||||
Total loans payable to related parties, gross | $ 7,230,629 | $ 7,180,629 | ||||
Total loans payable to related parties | 6,878,333 | 6,878,333 | ||||
Loan payable to officers/shareholders [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Total loans payable to related parties, gross | [1] | 7,230,629 | 7,054,333 | |||
Loan Payable to related party - past due [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Total loans payable to related parties, gross | [2] | |||||
Loan payable to related party, current portion [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Loan payable to related party, current portion | $ (352,296) | $ (302,296) | ||||
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Loans Payable (Details) - Schedule of Loans Payable for Outstanding Loan - USD ($) |
Mar. 31, 2023 |
Dec. 31, 2022 |
||||||
---|---|---|---|---|---|---|---|---|
Schedule of Loans Payable for Outstanding Loan [Abstract] | ||||||||
Total loans payable | $ 400,483 | $ 426,000 | ||||||
Loans payable, current portion | (104,499) | (140,905) | ||||||
Loans payable, net of current portion | 295,984 | 280,000 | ||||||
Real Estate loan [Member] | ||||||||
Schedule of Loans Payable for Outstanding Loan [Abstract] | ||||||||
Total loans payable | [1] | 258,657 | 259,450 | |||||
Vehicle loans [Member] | ||||||||
Schedule of Loans Payable for Outstanding Loan [Abstract] | ||||||||
Total loans payable | [2] | 56,097 | 59,671 | |||||
Working capital [Member] | ||||||||
Schedule of Loans Payable for Outstanding Loan [Abstract] | ||||||||
Total loans payable | [3] | $ 85,728 | $ 122,135 | |||||
|
Shareholders’ Equity (Details) |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
$ / shares
| |
Shareholders’ Equity (Details) [Line Items] | |
Proceed amount | $ 167,500 |
Received proceeds | 1,675,000 |
Warrants granted | $ 0 |
Private Placement [Member] | |
Shareholders’ Equity (Details) [Line Items] | |
Average price per share (in Dollars per share) | $ / shares | $ 0.1 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2021 |
|
Income Taxes (Details) [Line Items] | ||
Federal and state purposes amount (in Dollars) | $ 1,500,000 | |
Testing period | 3 years | |
Tax benefits settlement percentage | 50.00% | |
Ownership change [Member] | Minimum [Member] | ||
Income Taxes (Details) [Line Items] | ||
Shareholders ownership percentage | 5.00% | |
Ownership change [Member] | Maximum [Member] | ||
Income Taxes (Details) [Line Items] | ||
Shareholders ownership percentage | 50.00% |
Subsequent Events (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Aug. 05, 2022 |
Mar. 31, 2023 |
Apr. 18, 2023 |
|
Subsequent Events (Details) [Line Items] | |||
Stock purchase agreement | $ 6,833,333 | ||
Purchase agreement percentage | 10.00% | ||
Deposit amount | $ 638,333 | ||
Deferred term | 1 year | ||
Promissory note | $ 6,195,000 | ||
Interest rate, percentage | 6.25% | ||
Loan bears an interest rate | 13.49% | ||
Pre-payment | $ 690 | ||
Subsequent Event [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Secured loan | $ 30,000 |
1 Year US Lighting (PK) Chart |
1 Month US Lighting (PK) Chart |
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