UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
———————
FORM 10-Q
———————
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: Juneended September 30, 20162023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from:from to
Commission File Number:333-193386000-55689
THE LUXURIOUS TRAVEL CORP.US Lighting Group, Inc.
(Exact name of registrant as specified in its charter)
| Florida | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |
Identification No.) | ||
Registrant's1148 East 222nd Street Euclid, Ohio 44117
(Address of principal executive offices)(Zip Code)
(216) 896-7000
(Registrant’s telephone number, including area code:440-896-7000code)
Securities registered pursuant to Section 12(b) of the Act:
Former name or address if changed since last report)
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark ifwhether the issuerregistrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 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. ☒Yesx☐Noo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).☒ Yes ☐ No
YesxNoo
Indicate by check mark if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitiondefinitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer,” “smaller reporting company,” and "smaller reporting company“emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer☐ | Accelerated filer | ||
| Non-accelerated filer☐ | Smaller reporting 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 checkmarkcheck mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yeso☒Nox
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. There were 102,786,188 shares of common stock outstanding on November 17, 2023.
| ||
Table of Contents
i
EXPLANATORY NOTE
As used in this Quarterly Report on Form 10-Q (the “Form 10-Q”), unless the context requires otherwise, “we,” “our,” “us” or “the Company” refers to The Luxurious Travel Corp. Pursuant to Item 10(f) of Regulation S-K promulgated under the Securities Act of 1933, as amended (the “Securities Act”), we have elected to comply with the scaled disclosure requirements applicable to “smaller reporting companies” throughout this Form 10-Q. Except as specifically included in this Form 10-Q, items not required by the scaled disclosure requirements have been omitted.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
All statements contained in this Form 10-Q, other than statements that relate to present or historical conditions, are forward-looking statements, including, but not limited to, statements containing the words “believe,” “anticipate,” “expect” and words of similar import and are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on certain assumptions and analyses made by us in light of our assessment of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved, or whether such performance or results will be achieved at all. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause our actual performance or results to differ materially from those expressed in the statements. Important factors that could cause such differences include, but are not limited to: (i) our ability to continue as a going concern; (ii) our ability to raise additional financing on acceptable terms, or at all; (iii) industry competition, conditions, performance and consolidation; (iv) the effects of adverse general economic conditions, both within the United States and globally and the availability of debt and equity financing in view of the current economy; (v) any adverse economic or operational repercussions from terrorist activities, war or other armed conflicts; (vi) new product development and introduction in light of our lack of adequate financing; (vii) changes in business strategy or development plans; (viii) the ability to attract and retain qualified personnel; and (ix) the ability to protect our technology, among others.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations.
Forward-looking statements speak only as of the date the statements are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect thereto or with respect to other forward-looking statements.
PART I –— FINANCIAL INFORMATION
ITEMItem 1. FINANCIAL STATEMENTS
(Unaudited)
Financial Statements.
| JUNE 30 | DECEMBER 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| ASSETS OF DISCONTINUED OPERATIONS | $ | 0 | $ | 38,144 | ||||
| TOTAL ASSETS | $ | 0 | $ | 38,144 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| LIABILITIES OF DISCONTINUED OPERATIONS | 59,000 | 83,500 | ||||||
| TOTAL LIABILITIES | 59,000 | 83,500 | ||||||
| Preferred stock, par value $.0001, authorized 10,000,000, , a | ||||||||
| Zero shares issued and outstanding at December 31, 2016 and 2015 | $ | - | $ | - | ||||
| Common stock - par value $.0001, authorized 100,000,000, | ||||||||
| 30,100,000 shares issued and outstanding | ||||||||
| at June 30, 2016 and December 31, 2015 respectively | 3,010 | 3,010 | ||||||
| Additional paid-in capital | 19,740 | 19,740 | ||||||
| Accumulated deficit | (81,750 | ) | (68,106 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (59,000 | ) | (45,356 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 0 | $ | 38,144 | ||||
US LIGHTING GROUP, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2023 | December 31, 2022 | |||||||
| ASSETS | (Unaudited) | |||||||
| Current Assets: | ||||||||
| Cash | $ | 4,116 | $ | 124,529 | ||||
| Accounts receivable | 116,017 | 5,950 | ||||||
| Prepaid expenses and other current assets | 87,602 | 87,174 | ||||||
| Inventory | $ | 118,574 | $ | 200,162 | ||||
| Total Current Assets | 326,309 | 417,815 | ||||||
| Property and equipment, net | 2,677,255 | 2,298,107 | ||||||
| Total Assets | $ | 3,003,564 | $ | 2,715,922 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 903,082 | $ | 607,647 | ||||
| Accrued expenses | 183,854 | 111,223 | ||||||
| Accrued payroll to a former officer | 125,167 | 125,167 | ||||||
| Deferred revenue | 79,498 | — | ||||||
| Loan payable– current portion | 41,428 | 140,905 | ||||||
| Loans payable, related party | 412,086 | 176,000 | ||||||
| Total Current Liabilities | 1,745,115 | 1,160,942 | ||||||
| Loans payable, net of current portion | 300,231 | 300,351 | ||||||
| Loans Payable, related party | 7,171,904 | 7,004,629 | ||||||
| Total Liabilities | $ | 9,217,250 | $ | 8,465,922 | ||||
| Commitments and Contingencies | ||||||||
| Shareholders’ Equity: | ||||||||
| Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued and outstanding | — | — | ||||||
| Common stock, $0.0001 par value, 500,000,000 shares authorized; 102,786,188 shares issued and outstanding | 10,494 | 10,209 | ||||||
| Additional paid-in-capital | 20,098,247 | 19,771,111 | ||||||
| Accumulated deficit | (26,322,427 | ) | (25,531,320 | ) | ||||
| Total Shareholders’ Equity | (6,213,686 | ) | (5,750,000 | ) | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 3,003,564 | $ | 2,715,922 | ||||
SeeThe accompanying notes toare an integral part of these unaudited condensed consolidated financial statementsstatements.
THE LUXURIOUS TRAVEL CORP.US LIGHTING GROUP, INC. AND SUBSIDIARIES
STATEMENTCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| 3 months | 3 months | 6 months | 6 months | |||||||||||||
| June 2016 | June 2015 | June 2016 | June 2015 | |||||||||||||
| REVENUE | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
| SELLING GENERAL AND ADMINISTRATIVE EXPENSES: | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
| NET INCOME(LOSS) FROM | ||||||||||||||||
| CONTINUING OPERATIONS, NET OF TAXES | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
| NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES | 21,869 | 12,871 | (13,644 | ) | 589 | |||||||||||
| NET INCOME (LOSS) | 21,869 | 12,871 | (13,644 | ) | 589 | |||||||||||
| NET INCOME (LOSS) PER SHARE | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | 30,100,000 | 30,100,000 | 30,100,000 | 30,100,000 | ||||||||||||
| For the Three Months ended September 30, | For the Nine Months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Sales | $ | 755,152 | $ | 516,000 | $ | 3,092,722 | $ | 641,000 | ||||||||
| Cost of goods sold | 688,585 | 528,000 | 2,210,820 | 754,000 | ||||||||||||
| Gross profit (loss) | 66,567 | (12,000 | ) | 881,902 | (113,000 | ) | ||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses | 652,467 | 526,000 | 1,602,009 | 1,134,000 | ||||||||||||
| Product development | 78,000 | 123,000 | ||||||||||||||
| Total operating expenses | 652,467 | 604,000 | 1,602,009 | 1,257,000 | ||||||||||||
| Loss from operations | (585,900 | ) | (616,000 | ) | (720,107 | ) | (1,370,000 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Other income (expense), net | — | (4,000 | ) | — | 60,000 | |||||||||||
| Unrealized gain (loss) | — | (32,000 | ) | — | (288,000 | ) | ||||||||||
| Realized Gain (loss) | — | 18,000 | — | (18,000 | ) | |||||||||||
| Interest income | 301 | 1,000 | 1,099 | 4,000 | ||||||||||||
| Interest expense | (55,236 | ) | (40,000 | ) | (72,100 | ) | (56,000 | ) | ||||||||
| Gain on disposal of fixed assets | — | 10,000 | — | 23,000 | ||||||||||||
| Total other income (expense) | (54,935 | ) | (47,000 | ) | (71,001 | ) | (275,000 | ) | ||||||||
| Net income (loss) | $ | (640,835 | ) | $ | (663,000 | ) | $ | (791,108 | ) | $ | (1,645,000 | ) | ||||
| Basic income (loss) per share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
| Diluted income (loss) per share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
| Weighted average common shares outstanding, basic | 99,063,716 | 97,848,735 | 99,063,716 | 97,982,618 | ||||||||||||
| Weighted average common shares outstanding, diluted | 99,063,716 | 97,848,735 | 99,063,716 | 97,982,618 | ||||||||||||
SeeThe accompanying notes toare an integral part of these unaudited condensed consolidated financial statementsstatements.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
FOR THE LUXURIOUS TRAVEL CORP.THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(Unaudited)
| Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, December 31, 2022 | — | $ | — | 97,934,825 | $ | 10,209 | $ | 19,771,111 | $ | (25,531,320 | ) | $ | (5,750,000 | ) | ||||||||||||||
| Sale of Common Stocks | — | — | 1,675,000 | 167 | 167,332 | — | 167,500 | |||||||||||||||||||||
| Net Income (Loss) | — | — | — | — | — | (154,729 | ) | (154,729 | ) | |||||||||||||||||||
| Balance, March 31, 2023 | — | — | 99,609,825 | 10,376 | 19,938,443 | (25,686,049 | ) | (5,737,230 | ) | |||||||||||||||||||
| Sales of Common Stocks | — | — | — | — | — | — | — | |||||||||||||||||||||
| Stock issued for services & compensations | — | — | 56,250 | 6 | 5,619 | — | 5,625 | |||||||||||||||||||||
| Net Loss | — | — | — | — | — | 4,456 | 4,456 | |||||||||||||||||||||
| Balance, June 30, 2023 | — | $ | — | 99,666,075 | $ | 10,382 | $ | 19,944,062 | $ | (25,681,593 | ) | $ | (5,727,149 | ) | ||||||||||||||
| Sales of Common Stocks | — | — | 1,120,113 | 112 | 15,890 | — | 16,002 | |||||||||||||||||||||
| Stock issued for services & compensation | — | — | — | — | 12,000 | — | 12,000 | |||||||||||||||||||||
| Forgiveness of accrued interest on shareholder loan | — | — | — | — | 126,296 | — | 126,296 | |||||||||||||||||||||
| Net Income (Loss) | — | — | — | — | — | (640,835 | ) | (640,835 | ) | |||||||||||||||||||
| Balance, September 30, 2023 | 102,786,188 | 10,494 | 20,098,247 | (26,322,428 | ) | (6,213,686 | ) | |||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, December 31, 2021 | — | $ | — | 97,848,735 | $ | 10,000 | $ | 17,678,000 | $ | (16,423,000 | ) | $ | 1,265,000 | |||||||||||||||
| Net Loss | — | — | — | — | — | (582,000 | ) | (582,000 | ) | |||||||||||||||||||
| Balance, March 31, 2022 | — | — | 97,848,735 | 10,000 | 17,678,000 | (17,005,000 | ) | 683,000 | ||||||||||||||||||||
| Net Loss | — | — | — | — | — | (400,000 | ) | (400,000 | ) | |||||||||||||||||||
| Balance, June 30, 2022 | — | $ | — | 97,848,735 | $ | 10,000 | $ | 17,678,000 | $ | (17,405,000 | ) | $ | 283,000 | |||||||||||||||
| Sale of Common Stocks | — | — | 800,000 | — | 80,000 | — | 80,000 | |||||||||||||||||||||
| Forgiveness of related party debt | — | — | — | — | 1,761,000 | — | 1,761,000 | |||||||||||||||||||||
| Acquisition of Mig Marine | — | — | — | — | — | (6,878,000 | ) | (6,878,000 | ) | |||||||||||||||||||
| Net Loss | — | — | — | — | — | (663,000 | ) | (663,000 | ) | |||||||||||||||||||
| Balance September 30, 2022 | $ | — | 98,648,735 | $ | 10,000 | $ | 19,519,000 | $ | (24,946,000 | ) | $ | 5,417,000 | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
US LIGHTING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| JUNE 30, | ||||||||
| 2016 | 2015 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net Income (Loss) | $ | 0 | $ | 0 | ||||
| Net Income (Loss) from Discontinued Operations | (13,644 | ) | 589 | |||||
| Changes in operating assets and liabilities | (7,160 | ) | 16,248 | |||||
| NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | (20,804 | ) | 16,837 | |||||
| INCREASE (DECREASE) IN CASH | (20,804 | ) | 16,837 | |||||
| CASH - BEGINNING OF PERIOD | 20,804 | 31,479 | ||||||
| CASH - END OF PERIOD | $ | 0 | $ | 48,316 | ||||
| For the Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Income (Loss) | $ | (791,108 | ) | $ | (1,645,000 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation | 142,319 | 139,000 | ||||||
| Stock issued for services & compensation | 17,625 | — | ||||||
| Realized Gain (loss) from investments | — | 18,000 | ||||||
| Unrealized Gain (loss) from investments | — | 288,000 | ||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts receivable | (110,067 | ) | (32,000 | ) | ||||
| Inventory | 81,588 | (112,000 | ) | |||||
| Prepaid expenses and other assets | 15,572 | 84,000 | ||||||
| Accounts payable | 295,435 | 264,000 | ||||||
| Accrued expenses | 72,633 | — | ||||||
| Customer advanced payments | (10,000 | ) | ||||||
| Deferred revenue | 79,498 | — | ||||||
| Accrued payroll to a former officer | — | (411,000 | ) | |||||
| Net cash used in (provided by) operating activities | (196,505 | ) | (1,417,000 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property and equipment | (521,467 | ) | (308,000 | ) | ||||
| Sale of Fixed Assets | — | 35,000 | ||||||
| Proceeds from investments | — | 1,341,000 | ||||||
| Net cash used in investing activities | (521,467 | ) | 1,068,000 | |||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sale of common stock | 167,500 | 80,000 | ||||||
| Proceeds from loans payable | 18,296 | — | ||||||
| Proceeds from notes payable, related party | 548,670 | 561,000 | ||||||
| Payment of loans payable | (117,893 | ) | (105,000 | ) | ||||
| Payments on notes payable related party | (19,014 | ) | (411,000 | ) | ||||
| Net cash provided by (used in) financing activities | 597,559 | 125,000 | ||||||
| Net change in cash | (120,413 | ) | (224,000 | ) | ||||
| Cash beginning of period | 124,529 | 289,000 | ||||||
| Cash end of period | $ | 4,116 | $ | 65,000 | ||||
| Supplemental Cash Flow Information: | ||||||||
| Interest paid | $ | 72,100 | $ | 430,000 | ||||
| Taxes paid | $ | — | $ | — | ||||
| Non-cash Financing Activities: | ||||||||
| Proceeds from sale of common stock receivable | $ | 16,000 | $ | — | ||||
| Forgiveness of accrued interest on shareholder loan | $ | 126,295 | $ | — | ||||
SeeThe accompanying notes toare an integral part of these unaudited condensed consolidated financial statements
statements.
US LIGHTING GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
NOTE 1 – ORGANIZATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
The Luxurious Travel Corporation (the“Company”) was formed in 2003 and was inactive until 2008. Until July 2016, the Company created and developed proprietary software that allows users to sell and market travel for groups and individuals, including special event, conference, executive meeting and other travel.
Recent developments
On July 13, 2016 (“Closing”), pursuant to a previously reported Share Exchange Agreement dated May 26, 2016 (the “Exchange Agreement”), the Company acquired all of the issued and outstanding capital stock of US Lighting Group, Inc. (“US Lighting Group”(the "Company"), an Eastlake, Ohio based independent 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 manufacturer of patent-pending, transformer less, LED lighting technologies. At Closing, the Company issued 24,500,000 shares of its common stock to the shareholders of US Lighting Group and Todd Delmay,MIG Marine Corporation, a composite manufacturing company that produces proprietary molded fiberglass products for our then Chief Executive Officer, Chief Financial Officer and principal shareholder, contributed a like number of shares of our common stock held by him to the capital of the Company. Thereupon, US Lighting Group became a wholly-owned subsidiary of the Company, Paul Spivak, the principal shareholder of US Lighting Group, became the principal shareholder of the Company and a “Change in Control” of the Company was deemed to have taken place (the “Change in Control Transaction”). In addition, at Closing, Todd Delmay resigned as the Company’s sole executive officer and as a director of the Company, Jeff Delmay resigned as a director of the Company and Mr. Spivak was appointed our sole director and Chief Executive Officer.other business lines.
PriorOn January 11, 2021, we formed Cortes Campers to Closing,operate our new brand of innovative travel trailers. During the Company declaredsecond part of 2021, we invested heavily in research and paid a cash dividend of $0.00575 per share to shareholders of record prior to Closing, other than Todd Delmay, who waiveddevelopment as well as production planning for the right to receive the dividend on 11,750,000 of the 25,000,000 shares held by him prior to Closing. Accordingly, the aggregate amount dividend to the Company’s shareholders was $105,512 (the “Dividend”).
Contemporaneously with Closing, the Company consummated a private offering pursuant to the exemptions from registration afforded by Section 4(a)(2)17-foot camper and Rule 506 of Regulation D under the Securities Act, of 406,730 shares of our common stock at a price of $0.50 per share (the “Offering”). The net proceeds from the Offering were used to pay the Dividend, certain pre-Closing liabilities of the Company, expenses related to the Changebegan selling campers in Control Transaction and the Offering and for working capital and other general corporate purposes.early 2022.
The Company intendscreated a new wholly owned subsidiary called Fusion X Marine, LLC on April 12, 2021, domiciled in Wyoming, to focus its ongoing business efforts onsell boats and other related products to the expansionrecreational marine market. The subsidiary has had no sales as of US Lighting Group’s LED lighting business. Accordingly, at Closing, the Company granted Todd Delmay an exclusive, perpetual, royalty-free licensedate of this report.
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 “travel shopper” hotel and travel booking software, whichfirst "UFO" themed home model inspired by the Company had sought to commercialize in its prior operations. The Company also plans to take the necessary corporate and regulatory action to change the Company’s name to “US Lighting Group, Inc.” and secure a new trading symbol to better reflect its new corporate name and business focus.original Futuro house designed by Finnish architect Matti Suuronen.
FoundedOn August 5, 2022, we acquired MIG Marine Corporation, a fiberglass manufacturing company founded in 2011, US Lighting Group is an independent designer2003. With the acquisition of Mig Marine, we were able to streamline our manufacturing processes, improve production cycles and manufacturerscale to meet the demand of high quality patent-pending, transformer less, “green” LED lighting tubes for saleCortes Campers generated order back-log.
We plan to expand our manufacturing footprint, enhance production techniques, and distribution into the commercial and industrial 4’ tube lighting sectorsdevelop more products in the United StatesRV, marine, and abroad. Every US Lighting Group LED bulb is made incomposite housing sectors. Current R&D efforts are directed towards future tow-behind camper models under the USA at US Lighting Group’s own manufacturing facility located near Cleveland, Ohio. US Lighting Groups LED lighting tubes are distributedthroughout the United States to various commercial and industrial end-users and resellers, and also available at several online retailers, including The Home Depot.Cortes Campers brand as well as prefabricated housing segment.
BASIS OF PRESENTATIONAs of September 30, 2023, our revenue was driven by shipments of fiberglass campers marketed under Cortes Campers.
The accompanyingCompany is a Florida corporation founded in 2003. We are headquartered in Euclid, Ohio.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared byin accordance with generally accepted accounting principles in the CompanyUnited States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission. Certain informationCommission (the “SEC”) and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim consolidated financial statements includesreflect all adjustments, consisting of normal recurring adjustments, and reflects all adjustments, which in the opinion of management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of and for a fair presentationthe nine month period ending September 30, 2023 and not necessarily indicative of such financial statements. Although management believes the disclosures and information presented are adequateresults to makebe expected for the information not misleading, it is suggested that these interim consolidatedfull year ending December 31, 2023. These unaudited financial statements should be read in conjunction with the Company’s most recent audited consolidated financial statements and related notes hereto as of December 31, 2015. Operating results forincluded in the six months ended June 30, 2016 are not necessarily indicative of the results that may be expectedCompany’s Annual Report on Form 10-K for the year endingended December 31, 2016.2022.
Uses
Use of estimates in the preparation of financial statementsEstimates
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 net revenuerevenues and expenses during eachthe reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
CashConcentrations of Credit Risk
The Company maintainsWe maintain our cash in bank deposit accounts, the balances at a financial institution where accounts are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company's accounts at this institution may,of which at times may exceed the federally insured limits. The Company hasWe continually monitor our banking relationships and consequently have not experienced any losses in suchour 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 $0 and $0 of cash equivalents as of the nine months ended September 30, 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, Fusion X Marine, LLC, Futuro Houses, LLC and Mig Marine Corp. All intercompany transactions and balances have been eliminated in consolidation.
Revenue recognitionRecognition
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 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 when itover the remaining estimated term. As these fees are typically received in cash at or near the execution of the arrangement, the cash received is earned and realizable, when persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or determinable, and collectability is reasonably assured.initially recorded as a contract liability in deferred revenue until recognized as revenue over time.
The Company recognizes net revenue when it has no further obligation to the customer. For air transactions, this is at the time of booking due to non-cancellation of the reservation. For hotel and car transactions, net revenue is recognized at the time of check-in or customer pick up, respectively. The timing of revenue recognition is different for air travel because the Company’s primary service to the customer is fulfilled at the time of booking. For cruise transactions, revenue is recognized at the time payment is made to the supplier.Recently Accounting Pronouncements
The Company passes reservations booked by its customer tohas implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the travel supplier for a commission. In addition,financial statements unless otherwise disclosed, and the Company does not take on credit risk with the customer, it is not the primary obligor with the customer, it has no latitude in determining pricing, it takes no inventory risk, it has no ability to determine or change the product or services delivered, and the customer chooses the supplier.
Recent accounting pronouncements
From time to time,believe that there are any other new accounting pronouncements arethat have been issued by the Financial Accounting Standards Board or other standard setting bodies that maymight have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have ana material impact on its accounting or reporting or that such impact will not be material to its financial position or results of operations, and cash flows when implemented.operations.
Income taxesNOTE 3 – LIQUIDITY
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters thataccompanying financial statements have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented.
Earnings per Share
Basic earnings per common share are computed using the weighted-average number of common shares outstanding during the year. Diluted earnings per common share are computed using the weighted-average number of common shares outstanding during the year plus the incremental shares outstanding assuming the exercise of dilutive stock options, restricted stock and convertible instruments. The Company had no dilutive instruments outstanding at June 30, 2016 or 2015.
The Company’s financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfactionsettlement of obligationsliabilities and commitments in the normal course of business. As of June
During the nine months ended September 30, 20162023, the Company has an accumulated deficitrecognized a net loss of $81,750$791,108 and current cash flow will not fund 12 monthsused in operating activities was $192,505. As the Company further develops its products and markets, the Company may need to raise additional capital or borrow additional funds to support increasing levels of expenses. The Company believes it will not have enough cash to meet its various cash needs unlessworking capital until it is able to obtaingenerate sufficient revenues.
Management plans to generate increasing revenues and as needed raise additional cash from the issuancecapital or borrow additional funds in order to provide liquidity and fund increasing levels of debt or equity securities. The Company intendsworking capital to raise funds from the issuance of equity and/or debt securities, butcontinue operations as a going concern. However, there is no assurance that additional funds from the issuance of equityCompany will be available for the Company to financesuccessful in accomplishing its operations on acceptable terms, or at all. If adequate funds are not available, the Company may have to delay development or commercialization of products or technologies that the Company would otherwise seek to commercialize, or cease operations.plans. These conditions, among others,factors raise substantial doubt about the Company’s ability to continue as a going concern. TheThese financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that maymight result from the outcome of this uncertainty.
NOTE 4 – SALE OF ASSETS
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 $288,000 and $18,000, respectively, for the nine months ended September 30, 2022.
As a result of the transactions describedCompany’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 “Recent Developments”the business of investing, reinvesting, owning, holding or trading in Footnote 1 above,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 September 30, 2023, the Company did not own any securities.
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment for continuing operations consists of the following on September 30, 2023, and December 31, 2022:
| September 30, 2023 | December 31, 2022 | |||||||
| Building and improvements | $ | 676,025 | $ | 664,183 | ||||
| Land | 96,000 | 96,000 | ||||||
| Vehicles | 146,893 | 146,893 | ||||||
| Office equipment | 18,421 | 18,421 | ||||||
| Production molds and fixtures | 1,408,160 | 1,095,758 | ||||||
| Tooling and fixtures | 686,553 | 462,570 | ||||||
| Other equipment | 22,322 | 72,059 | ||||||
| Furniture and fixtures | 5,628 | 4,746 | ||||||
| Construction in progress | 21,475 | — | ||||||
| Total property and equipment cost | 3,081,478 | 2,560,630 | ||||||
| Less: accumulated depreciation and amortization | (404,223 | ) | (262,523 | ) | ||||
| Property and equipment, net | $ | 2,677,255 | $ | 2,298,107 | ||||
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 JuneSeptember 30, 2016 have been reclassified as discontinued.2023, and December 31, 2022. Deferral of wages ended on August 9, 2021, when the Company’s former CEO resigned from that position.
NOTE 7 – LOANS PAYABLE TO RELATED PARTIES
Loans payable to related parties consists of the following at September 30, 2023 and December 31, 2022:
| 3 months | 3 months | 6 months | 6 months | |||||||||||||
| June 2016 | June 2015 | June 2016 | June 2015 | |||||||||||||
| REVENUE | $ | 0 | $ | 39,431 | $ | 22,695 | $ | 43,654 | ||||||||
| SELLING GENERAL AND ADMINISTRATIVE EXPENSES: | $ | 21,869 | $ | 26,560 | $ | 36,339 | $ | 43,065 | ||||||||
| INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES | $ | (21,869 | ) | $ | 12,871 | $ | (13,644 | ) | $ | 589 | ||||||
| 2023 | 2022 | |||||||
| Loan payable to officers/shareholders (a) | $ | 7,583,989 | $ | 7,054,333 | ||||
| Loan Payable to related party - past due (b) | — | 126,296 | ||||||
| Total loans payable to related parties | 7,583,989 | 7,180,629 | ||||||
| Loan payable to related party, current portion | (412,086 | ) | (176,000 | ) | ||||
| Total loans payable to related parties, long-term | 7,171,904 | 7,004,629 | ||||||
| a. | On August 5, 2022, the Company acquired Mig Marine and issued a 6.25% interest bearing note in the amount of $6,878,333; the note is payable to its majority shareholder, Paul Spivak. During the fourth quarter of 2022, there was a loan for $100,000 from Mr. Spivak and another for $76,000 from the Company’s current President & CEO; both these loans are non-interest-bearing loans. To help address the Company’s capital needs to expand Cortes Campers production, Anthony R. Corpora, our chief executive officer, and Michal A. Coates, corporate controller, generously volunteered to take out personal loans and make those funds available to the Company. The Company entered into promissory notes with each of Messrs. Corpora and Coates reflecting these loans as follows: On July 17, 2023, executed an unsecured promissory note with Anthony R. Corpora for $97,920 terms were for 84 months at 14.49%. On July 17, 2023, executed an unsecured promissory note with Michael A. Coates for $50,000 terms were for 60 months at 11.42%. On August 17, 2023, executed an unsecured promissory note with Anthony R. Corpora for $89,000 terms were for 48 months at 18.36%. On August 29, 2023, executed an unsecured promissory note with Michael A. Coates for $75,000 terms were for 60 months at 13.35%. On September 29, 2023, executed an unsecured promissory note with Michael A. Coates for $77,250 terms were for 84 months at 19.49%. |
| b. |
One customer represented 97%Loan payments to related parties were made through a combination of revenue indirect payments to the six months ended June 30, 2016. Which is included in net lossnoteholder and instructions from discontinued operations.the noteholder to pay obligations to others on their behalf.
NOTE 8 – LOANS PAYABLE
Loans payable consisted of the following:
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Real Estate loan (a) | $ | 257,062 | $ | 259,450 | ||||
| Vehicle loans (b) | 48,826 | 59,671 | ||||||
| Working capital (c) | 35,771 | 122,135 | ||||||
| Total loans payable | 341,659 | 441,256 | ||||||
| Loans payable, current portion | (41,428 | ) | (140,905 | ) | ||||
| Loans payable, net of current portion | $ | 300,231 | $ | 300,351 | ||||
| a. |
The Company has evaluated subsequent events through the date that these financial statements were issued. See “Recent Developments” in Footnote 1 above for information with respect to the Change in Control Transaction. the Dividend, the Offering and related matters.
| b. | The Company purchases vehicles for employees and research and development activities. Generally, vehicles are sold or traded in at the end of the vehicle loan period. The aggregate vehicle loan balance on two vehicles was $59,671 on December 31, 2022, with an original loan period of 72 to 144 months, and interest rates of zero percent to 10.99%. The loan balance on September 30, 2023, was $48,826. |
| c. | On November 7, 2022, the Company entered into a $150,000 term loan with Fresh Funding related to the working capital for the production of campers. The loan requires weekly payments of $3,981 over the term of 12 months, has an interest rate of 38% per annum, and is guaranteed by both the Company’s former CEO and the current CEO. The loan balance on December 31, 2022, was $122,135. And as of September 30, 2023 the balance was $19,379. On May 26, 2023, the Company entered into a $17,200 term loan with North Star Leasing Company for the purchase of a router. The loan requires monthly payment of $475 over the term of 60 months and has an interest rate of 14.58%. The loan balance as of September 30, 2023, was $16,392. Additional loan was made as follows: On May 19, 2023, a loan was made with Lending Point in the amount of $30,000 proceeds used for working capital, terms were for 60 months at the rate of 13.49% per annum. |
NOTE 9 – SHAREHOLDERS’ EQUITY
Common Shares Issued
During the quarter ended September 30, 2023, the Company 120,113 shares of common stock for professional services received, at an average price of $0.10 per share and of 1,000,000 share of common stock at an average price of $0.02 per share.
Summary of Warrants
There were no warrants granted or exercised during the quarter ended September 30, 2023. Warrants for the period ended September 30, 2023, are $0.
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 September 30, 2023, and December 31, 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 September 30, 2023, and December 31, 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 during the quarter ended September 30, 2023.
NOTE 12 – SUBSEQUENT EVENTS
On November 3, 2023, the Company secured a $120,750 note from 1800 Diagonal Lending LLC, to use for inventory purchasing. The note bears a one-time interest charge and ongoing interest rate of twelve (12%). Nine monthly payments of $15,027 commence on December 15, 2023, with eight (8) subsequent payments each month thereafter.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
The following discussionThis 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 analysis of ourprojections 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 of operationsto differ materially from those expressed. You should be read in conjunction with our consolidated financialnot rely solely on these forward-looking statements and related notesshould 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 appear elsewherethe 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 statement, 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 4 of our prospectus dated September 18, 2023 and filed with the Securities and Exchange Commission on that date.
Overview
Unless the context otherwise requires, references in this report to “USLG,” the “company,” “we,” “us” and “our” refer to US Lighting Group, Inc. and its wholly-owned subsidiaries.
We are an innovative composite manufacturer utilizing advanced fiberglass technologies in growth sectors such as high-end recreational vehicles (RVs), prefabricated off-grid houses, and high-performance powerboats. We derive expertise and inspiration from the marine industry, where the harshest conditions are expected and met with superior engineering and the latest in composite technology. Molded fiberglass products are exceptionally strong, lightweight and durable. Composite materials are also corrosion resistant and provide efficient insulation, making them attractive for both outdoor enthusiasts and residential housing needs. Molded construction allows for the creation of irregular, unusual or circular objects, which permits the innovative shapes and features of our products. As of September 30, 2023, our revenue was driven by shipments of fiberglass campers marketed under the Cortes Campers brand.
Cortes Campers designs and manufactures high-end molded fiberglass RV travel trailers and campers designed for comfort, style and durability. We utilize superior quality materials and fiberglass construction resulting in significantly stronger, more durable and lighter weight products. Cortes Campers’ first product is the Cortes 17, a 17-foot long single axle tow-behind molded fiberglass camper. In the second quarter of 2023, we introduced a new floorplan, Cortes 16, which has expanded sleeping capacity with a king size bed. We are currently developing additional models, including a larger, family-oriented all composite 22-foot travel trailer. Cortes Campers has established a network of professional RV dealerships to market and distribute its products. As of September 30, 2023, Cortes Campers are available through 38 dealer locations in US and Canada.
Recognizing that we could utilize many of the same technologies and manufacturing processes we have perfected for the Cortes Campers line of RVs to make small, prefabricated homes, we began exploring the market in early 2022. The international tiny-house movement has gained new relevance in the recent years as the quest for off-grid, rugged, prefabricated homes has entered the mainstream and was further fueled by the COVID-19 pandemic. We named our modular housing line Futuro Houses after the Futuro Pod, the iconic “UFO house” designed by Finnish architect Matti Suuronen, of which fewer than one hundred were built during the late 1960s and early 1970s. Our first home design is an update of the original Futuro utilizing modular construction and fiberglass for structural integrity and energy efficiency and designed to address modern residential requirements in a 600-square-foot living space. The Futuro can also serve as a commercial structure as it is currently available as a “shell kit” to be outfitted by consumers to meet their needs. We exhibited the Futuro house at the Cleveland Home & Remodeling Expo in March 2023, signed our first distributor in New York, and sold our first home in May 2023. During the third quarter, we developed and built the first prototype of our FH-200 model, a fiberglass tiny home with 200 square feet of living space. We are currently exploring market opportunities for the FH-200 with various municipal governments seeking to provide housing for disadvantaged communities.
In early 2021, we formed Fusion X Marine to design, manufacture and distribute high-performance speed boats utilizing advanced fiberglass composites. Our first boat model is the X-15, a miniature speed boat designed for rental sites and excursions, as well as to serve as an entry-level boat for first time buyers. Tooling and molds have been developed for this model and the X-15 is expected to go into production in the fourth quarter of 2023. The similarly styled X-27 is a 27-foot fiberglass V-hull speedboat and is designed for speed and superior maneuverability. The tooling and molds for the X-27 are currently under development and the model is not yet available for pre-orders. As of September 30, 2023, Fusion X Marine has not generated revenue for us.
We plan to expand our manufacturing footprint, enhance production techniques, and develop more products in the RV, marine and composite housing sectors. Our current R&D efforts are focused on future tow-behind camper models under Cortes Campers brand as well as prefabricated housing segment.
Our headquarters, manufacturing and research and development facilities are located at 1148 East 222nd Street, Euclid, Ohio, 44117. Our website is www.USLightingGroup.com.
Recent Events
Cortes Campers participated in the 2023 RV Show in Hershey, Pennsylvania in partnership with its dealer, Liberty RV of Gettysburg, Pennsylvania. The event, aptly titled “America’s Largest RV Show,” included nearly 1,500 vehicles from approximately 35 manufacturers and ran from September 13-17, 2023 at the Giant Center in Hershey; thousands of customers, dealers, and interested parties visited the show. We then exhibited products at the Elkhart RV Dealer Open House from September 25-27 in Elkhart, Indiana. This event, dubbed the “Largest RV Dealer Show on Earth,” showcased our Cortes Campers RVs for distributors from across North America.
Company History
The company was originally incorporated in the State of Florida on October 17, 2003, under the name Luxurious Travel Corp. Initially the company developed hotel booking software, but subsequently exited that business. On July 13, 2016, we acquired a company named US Lighting Group, Inc. (founded in 2013) and changed our corporate name to US Lighting Group, Inc. on August 9, 2016. At the time, the company designed and manufactured commercial LED lighting. Ultimately, we decided to exit the LED lighting market, which was being negatively impacted by inexpensive import products, and enter new business lines focused on recreational products manufactured from advanced composite materials.
Results of Operations for the Three Months Ended September 30, 2023, Compared to the Three Months Ended September 30, 2022
Sales
Total unit sales from operations for the quarter ended September 30, 2023 were $705,152, compared to 516,000 in the third quarter of 2022, an increase of $189,122. We believe that the decrease in expected sales is the result of the overall general decline for the RV industry as a whole. Results for the RV Industry Association’s September 2023 survey of manufacturers found that total RV shipments ended the month with 24,700 units, a decrease of 12.9% compared to the 28,363 units shipped in September 2022. Year to date, RV shipments are down 42.8% with 238,121 units. The introduction of our latest model, the Cortes 16, in July, required general production adjustments that also impacted our unit production rate. Our R&D focus is currently on the next Cortes model, the Cortes 22, which has an anticipated release date of late 2023.
Cost of Goods Sold
Cost of goods sold from for the quarter ended September 30, 2023, were $688,585, compared to $528,000 for the third quarter of 2022. The increased cost of goods sold relates to the year over year increases in camper sales by Cortes Campers.
Operating Expenses
Selling, general and administrative expenses were $652,467 for the quarter ended September 30, 2023, compared to $526,000 for the third quarter of 2022, an increase of $126,467, or 24%. The increase over the prior year can be attributed to increased personnel costs associated with Cortes Campers and the cost of being a public company.
We had no product development costs for the quarters ended September 30, 2023, compared to $78,000 as of September 30, 2022.
Other Income/Expense
During the quarter ended September 30, 2023, we had total other expense of $54,936, compared to $47,000 for the third quarter of 2022.
Net Loss
As a result of the factors discussed above, we had a net loss of $640,835 for the quarter ended September 30, 2023, compared to a net loss of $663,000 for the third quarter of 2022.
Results of Operations for the Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022
Sales
Total unit sales from operations for the nine months ended September 30, 2023, were $2,972,220, compared to $641,000 for the nine months ended September 30, 2022, an increase of $2,331,220. The increase in sales is attributed to new Cortes Campers sales. For year-to-date, sales also includes $120,502 from Futuro dealer licensing fees.
Cost of Goods Sold
Cost of goods sold for the nine months ended the September 30, 2023, were $2,210,820, compared to $754,000 for the nine months ended the September 30, 2022. The cost of goods sold for 2023 relates to increased camper sales by Cortes Campers.
Operating Expenses
Selling, general and administrative expenses (“SG&A”) from continuing operations were $1,602,009 for the nine months ended September 30, 2023, compared to $1,134,000 for the first nine months of 2022, an increase of $468,009, or 41%. The increase over the prior year can be attributed to increased personnel costs associated with expanded Cortes Campers and higher professional fees related to reporting as a public company.
We had product development costs of $123,000 for the nine months ended September 30, 2022.
Other Income/Expense
During the nine months ended September 30, 2023, we had total other expense of $71,002, all relating to interest expense. This compares to $275,000 for the first nine months of 2022, which included, unrealized loss of $288,000, realized loss from investments of $18,000, interest income of $4,000, interest expenses of $56,000 and gain on disposal of fixed assets of $23,000.
Net Loss
As a result of the factors discussed above, we had a net loss of $791,108 for the nine months ended September 30, 2023, compared to a net loss of $1,645,000 for the first nine months of 2022. Our overall net loss decreased mainly due to increased revenues.
Liquidity and Capital Resources
Net cash used in operating activities for the nine months ended September 30, 2023, was $196,505, compared to net cash used in operating activities of $1,417,000 for the nine months of 2022.
Net cash used in investing activities was $521,467 for the nine months ended September 30, 2023, compared to $1,068,000 provided by investing activities for the nine months of 2022. The difference is primarily due to the sale of fixed assets of $35,000 for the nine months of 2022 and proceeds of $1,341,000 received from trading securities.
Net cash provided by financing activities for the nine months ended September 30, 2023, was $597,559, which included proceeds of $167,500 received from the sale of common stock and proceeds of $566,966 from loans payable and related party loans. Total loan payments were $136,907. Net cash provided by financing activities for the third quarter of 2022 was $125,000, which included proceeds of $80,000 from the sale of common stock, $561,000 from proceeds of notes payable to related parties, $105,000 as payment of loans payable and $411,000 for payments on notes payable to related parties.
Critical Accounting Policies and Estimates
Please refer to our Annual Report on Form 10-K for the year ended December 31, 2015.2022 for a full discussion of our critical accounting policies. The Company has amended and replaced its previously disclosed accounting policy for revenue recognition with that in Note 1 to the accompanying footnotes to the financial statements.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q
Item 3. Quantitative and other reports filedQualitative Disclosures About Market Risk.
Because USLG is a “smaller reporting company” as defined by our Company from time to time with the U.S. Securities and Exchange Commission (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, our management as well as estimates and assumptions made by our management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to us or our management identify forward-looking statements. Such statements reflect our current view with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including those set forth in “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.
Recent Developments
On July 13, 2016 (“Closing”), pursuant to a previously reported Share Exchange Agreement dated May 26, 2016 (the “Exchange Agreement”), the Company acquired all of the issued and outstanding capital stock of US Lighting Group, Inc. (“US LightingGroup”), an Eastlake, Ohio based independent designer and manufacturer of patent-pending, transformer less, LED lighting technologies. At Closing, the Company issued 24,500,000 shares of its common stock to the shareholders of US Lighting Group and Todd Delmay, our then Chief Executive Officer, Chief Financial Officer and principal shareholder, contributed a like number of shares of our common stock held by him to the capital of the Company. Thereupon, US Lighting Group became a wholly-owned subsidiary of the Company, Paul Spivak, the principal shareholder of US Lighting Group, became the principal shareholder of the Company and a “Change in Control” of the Company was deemed to have taken place (the “Change in Control Transaction”). In addition, at Closing, Todd Delmay resigned as the Company’s sole executive officer and as a director of the Company, Jeff Delmay resigned as a director of the Company and Mr. Spivak was appointed our sole director and Chief Executive Officer.
Prior to Closing, the Company declared and paid a cash dividend of $0.00575 per share to shareholders of record prior to Closing, other than Todd Delmay, who waived the right to receive the dividend on 11,750,000 of the 25,000,000 shares held by him prior to Closing. Accordingly, the aggregate amount dividend to the Company’s shareholders was $105,512.50 (the “Dividend”).
Contemporaneously with Closing, the Company consummated a private offering pursuant to the exemptions from registration afforded by Section 4(a)(2) and Rule 506 of Regulation D under the Securities Act, of 406,730 shares of our common stock at a price of $0.50 per share (the “Offering”). The net proceeds from the Offering were used to pay the Dividend, certain pre-Closing liabilities of the Company, expenses related to the Change in Control Transaction and the Offering and for working capital and other general corporate purposes.
The Company intends to focus its ongoing business efforts on the expansion of US Lighting Group’s LED lighting business. Accordingly, at Closing, the Company we granted Todd Delmay an exclusive, perpetual, royalty-free license of our “travel shopper” hotel and travel booking software, which the Company had sought to commercialize in its prior operations. The Company also plans to take the necessary corporate and regulatory action to change the Company’s name to “US Lighting Group, Inc.” and secure a new trading symbol to better reflect its new corporate name and business focus.
Founded in 2011, US Lighting Group is an independent designer and manufacturer of high quality patent-pending, transformer less, “green” LED lighting tubes for sale and distribution into the commercial and industrial 4’ tube lighting sectors in the United States and abroad. Every US Lighting Group LED bulb is made in the USA at US Lighting Group’s own manufacturing facility located near Cleveland, Ohio. US Lighting Groups LED lighting tubes are distributed throughout the United States to various commercial and industrial end-users and resellers, and also available at several online retailers, includingThe Home Depot.
As a result of the Change in Control Transaction, the Dividend, the Offering and the related developments set forth above, the Company’s operations as of June 30, 2016 have been reclassified as discontinued and the discussion contained herein relates solely to those discontinued operations.
Results of Operations
Three months ended June 30, 2016 as compared to three months ended June 30, 2015
During the three months ended June 30, 2016 we generated $ 0 in revenue, as compared to $39,431 during the three months ended June 30, 2015. Our costs and expenses during the quarter ended June 30, 2016 were $21,869, as compared to $28,310 in the prior year’s period. The decreases in revenue and expenses were due to the discontinued operations of The Luxurious Travel Corp. in contemplation of completion of the Change in Control Transaction, which closed in July 2016. For the quarter ended June 30, 2016, we incurred a net loss of $21,869, as compared to net income of $11,121 for the quarter ended June 30, 2015.
Six months ended June 30, 2016 as compared to six months ended June 30, 2015
During the six months ended June 30, 2016 we generated $22,695 in revenue, as compared to $43,654 during the six months ended June 30, 2015. Our costs and expenses during the six months ended June 30, 2016 were $36,339, as compared to $43,065 for the prior year’s period. The decrease of revenue and expenses were due to the discontinued operations of The Luxurious Travel Corp. in contemplation of completion of the Change in Control Transaction, which closed in July 2016. For the six months ended June 30, 2016 we incurred a net loss of $13,644, as compared to net income of $589 in the six months ended June 30, 2015.
Liquidity and Capital Resources
At June 30, 2016, there was a cash balance of $ 0.
In addition to the proceeds from the Offering, as described under “Recent Developments” and revenues from the operations of US Lighting, we believe that we will require additional financing to fund our new business over the next twelve months. We anticipate that such financing will be secured through additional private offerings of our equity and/or debt securities, which may, if successfully completed result in additional dilution to existing securities. There can be no assurance that we will be successful in securing needed additional financing on commercially reasonable terms or otherwise. The absence of such financing, when needed, could significantly harm our business and results of operations.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
As a “smaller reporting company,” we are not required to provide the information required by this Item.additional market risk disclosure.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this quarterly report on Form 10-Q, an evaluation was carried out by our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosureDisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of June 30, 2016. Disclosureare 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 SECSEC's rules and formsforms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including theour Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.disclosure.
Based on that evaluation,As required by Rules 13(a)-15(e) and 15(d)-15(e) under the Exchange Act, at the time the Original Quarterly Report was filed, our management concluded,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 the end of the period covered by this report,March 31, 2023, and concluded that our disclosure controls and procedures were effective. After filing the March 31, 2023 Form 10-Q, while preparing this report, 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 in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the SEC's rules and form,as of September 30, 2023, due to among other matters, a lack of segregation of duties.the material weakness in internal control over financial reporting as described below.
ChangesMaterial Weakness in Internal Control over Financial Reporting
ThereA 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 September 30, 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 (as defined in Exchange Act Rule 13a-15(f)) during the quarter ended JuneSeptember 30, 20162023 that have materially affected, or are reasonably likely to materially affect, our internal controlcontrols over financial reporting.reporting.
PART II. -II — OTHER INFORMATION
Item 1. Legal Proceedings.
ITEM 1. LEGAL PROCEEDINGSThere were no reportable legal proceedings initiated, or material events in previously reported legal proceedings, during the third quarter.
We are not aware of any pending or threatened litigation against us that we expect will, individually or in the aggregate, have a material adverse effect on our business, financial condition, liquidity, or operating results. We cannot assure you that we will not be adversely affected in the future by legal proceedings.
Item 1A. Risk Factors.
ITEM 1A. RISK FACTORSPlease refer to the risk factors listed under Risk Factors beginning on page 4 of our prospectus dated September 18, 2023 and filed with the Securities and Exchange Commission on that date for information relating to certain risk factors applicable to USLG.
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSIn July 2023, we issued 120,113 unregistered shares of our common stock valued at an average of approximately $0.10 a share to our corporate law firm for legal services provided to USLG during the first half of the year. The issuance of shares to our law firm was exempt from registration under Section 4(a)(2) of the Securities Act.
None.On July 14, 2023, we entered into a common stock purchase agreement with Alumni Capital LP establishing an equity line pursuant to which Alumni agreed to purchase up to $1.0 million of our common stock. As required by the purchase agreement, on September 1, 2023 we filed a registration statement to register the resale of any shares we sell to Alumni. The registration statement was declared effective on September 15, and on September 28 we sold Alumni 1.0 million shares of common stock for $0.016 a share, or $16,000 in the aggregate. We used the sale proceeds for general working capital purposes. The per share purchase price that Alumni paid for our shares pursuant to the purchase agreement is based on the trading price of our shares and is equal to 80% of the lowest traded price of our stock during the six business days prior to the date the sale of the shares closes. Because we were required to deliver the shares to Alumni before Alumni paid for them, Alumni sold shares in the market during the pricing period, driving down the price that they were then required to pay for the shares. Based on Alumni’s handling of the first closing, we do not currently plan to draw on the equity line again and sell any additional shares to Alumni. The issuances of shares to Alumni was exempt from registration under Section 4(a)(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIESDuring the quarter ended September 30, 2023, USLG was not in material default with respect to any of its material indebtedness.
None.
Item 4. Mine Safety Disclosures.
ITEM 4. MINE SAFETY DISCLOSURESWe are not engaged in mining operations.
Not applicable.
Item 5. Other Information.
ITEM 5. OTHER INFORMATIONWe have disclosed on Form 8-K all reportable events that occurred in the quarter ended September 30, 2023.
None.
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 | |
| 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 | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrantUS Lighting Group, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| November 21, 2023 | /s/ Anthony Corpora | |
(Principal Executive Officer) | ||
| /s/ Donald O. Retreage, Jr. | ||
| By Donald O. Retreage, Jr., Chief (Principal Financial Officer) | ||
| November 21, 2023 | /s/ Michael A. Coates | |
| By Michael A. Coates, Corporate Controller (Principal |
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