Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 27, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity File Number | 001-40454 | ||
Entity Registrant Name | KULR TECHNOLOGY GROUP, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 81-1004273 | ||
Entity Address, Address Line One | 4863 Shawline Street | ||
Entity Address, City or Town | San Diego | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92111 | ||
City Area Code | 408 | ||
Local Phone Number | 663-5247 | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Trading Symbol | KULR | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Auditor Firm ID | 688 | ||
Auditor Name | Marcum LLP | ||
Auditor Location | Los Angeles, California | ||
Entity Public Float | $ 106,573,196 | ||
Entity Common Stock, Shares Outstanding | 116,230,123 | ||
Entity Central Index Key | 0001662684 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash | $ 10,333,563 | $ 14,863,301 |
Accounts receivable | 1,542,118 | 136,326 |
Inventory | 1,962,035 | 191,311 |
Inventory deposits | 285,260 | 309,688 |
Prepaid expenses and other current assets | 1,613,008 | 260,672 |
Total Current Assets | 15,735,984 | 15,761,298 |
Property and equipment, net | 3,193,041 | 374,475 |
Equipment deposits | 3,514,937 | 2,153,950 |
Security deposits | 60,441 | 58,941 |
Intangible assets, net | 720,768 | 216,952 |
Right of use asset | 328,941 | 665,687 |
Deferred financing costs | 71,818 | |
Total Assets | 23,625,930 | 19,231,303 |
Current Liabilities: | ||
Accounts payable | 1,408,017 | 454,507 |
Accrued expenses and other current liabilities | 2,142,277 | 1,163,227 |
Accrued issuable equity | 227,956 | 290,721 |
Lease liability, current portion | 223,645 | 262,379 |
Loan payable | 155,226 | |
Prepaid advance liability, net of discount, current portion | 5,655,612 | |
Deferred revenue | 23,000 | 132,303 |
Total Current Liabilities | 9,680,507 | 2,458,363 |
Lease liability, non-current portion | 97,958 | 407,898 |
Prepaid advance liability, net of discount, non-current portion | 3,196,678 | |
Accrued interest, non-current | 157,054 | |
Total Liabilities | 13,132,197 | 2,866,261 |
Commitments and contingencies | ||
Stockholders' Equity | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized; 113,202,749 and 113,071,587 shares issued and outstanding at December 31, 2022, respectively; 104,792,072 shares issued and outstanding at December 31, 2021 | 11,320 | 10,479 |
Treasury stock, at cost; 131,162 and 0 shares held at December 31, 2022 and December 31, 2021, respectively | (296,222) | |
Additional paid-in capital | 53,372,673 | 39,512,122 |
Accumulated deficit | (42,594,038) | (23,157,559) |
Total Stockholders' Equity | 10,493,733 | 16,365,042 |
Total Liabilities and Stockholders' Equity | 23,625,930 | 19,231,303 |
Series A Preferred Stock | ||
Stockholders' Equity | ||
Preferred stock | ||
Series B Convertible Preferred Stock | ||
Stockholders' Equity | ||
Preferred stock | ||
Series C Preferred Stock | ||
Stockholders' Equity | ||
Preferred stock | ||
Series D Preferred Stock | ||
Stockholders' Equity | ||
Preferred stock |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 109,850 | |
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 | 113,202,749 | 104,792,072 |
Common stock, shares outstanding | 113,071,587 | 104,792,072 |
Treasury stock, shares held | 131,162 | 0 |
Series A Preferred Stock | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Convertible Preferred Stock | ||
Preferred stock, shares authorized | 31,000 | 31,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series C Preferred Stock | ||
Preferred stock, shares authorized | 400 | 400 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series D Preferred Stock | ||
Preferred stock, shares authorized | 650 | 650 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue | $ 3,994,634 | $ 2,412,868 |
Cost of revenue | 1,630,527 | 1,102,038 |
Gross Profit | 2,364,107 | 1,310,830 |
Operating Expenses | ||
Research and development | 3,977,563 | 1,662,183 |
Selling, general, and administrative | 16,672,526 | 11,162,062 |
Total Operating Expenses | 20,650,089 | 12,824,245 |
Loss From Operations | (18,285,982) | (11,513,415) |
Other (Expense) Income | ||
Interest expense | (935,874) | (3,336) |
Gain on forgiveness of PPP loan and interest | 158,675 | |
Debt redemption costs | (140,000) | |
Amortization of debt discount | (511,825) | (128,198) |
Loss on debt extinguishment | (8,508) | |
Change in fair value of accrued issuable equity | 147,035 | (125,821) |
Loss on foreign currency transactions | (381) | |
Total Other Expense, net | (1,150,497) | (397,736) |
Net Loss | (19,436,479) | (11,911,151) |
Net Loss Attributable to Common Stockholders | $ (19,436,479) | $ (14,535,477) |
Net Loss Per Share - Basic (in dollars per share) | $ (0.18) | $ (0.15) |
Net Loss Per Share - Diluted (In dollars per share) | $ (0.18) | $ (0.15) |
Weighted Average Number of Common Shares Outstanding - Basic (In Shares) | 105,655,773 | 95,749,620 |
Weighted Average Number of Common Shares Outstanding - Diluted (In Shares) | 105,655,773 | 95,749,620 |
Series D Preferred Stock | ||
Other (Expense) Income | ||
Deemed dividend to Series D preferred stockholders | $ (2,624,326) |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Series B Convertible Preferred Stock Convertible Preferred Stock | Series B Convertible Preferred Stock Common Stock | Series B Convertible Preferred Stock Additional Paid-In Capital | Series D Convertible Preferred Stock Convertible Preferred Stock | Series D Convertible Preferred Stock Common Stock | Series D Convertible Preferred Stock Additional Paid-In Capital | Common Stock | Additional Paid-In Capital Amortization of restricted stock units | Additional Paid-In Capital Stock options | Additional Paid-In Capital Amortization of market-based awards | Additional Paid-In Capital | Treasury Stock | Accumulated Deficit | Amortization of restricted stock units | Stock options | Amortization of market-based awards | Total | |
Balance at Dec. 31, 2020 | $ 1 | $ 0 | $ 8,991 | $ 17,355,968 | $ 0 | $ (11,246,408) | $ 6,118,552 | |||||||||||
Balance (shares) at Dec. 31, 2020 | 13,972 | 0 | 89,908,600 | 0 | ||||||||||||||
Treasury stock issued upon the exercise of options (in shares) | 184,784 | |||||||||||||||||
Issuance of Series D Convertible Preferred Stock, Common Stock, and warrants for cash | $ 130 | 6,134,870 | 6,135,000 | |||||||||||||||
Issuance of Series D Convertible Preferred Stock, Common Stock, and warrants for cash (in shares) | 650 | 1,300,000 | ||||||||||||||||
Common stock issued upon the exercise of warrants | $ 679 | 11,718,525 | 11,719,204 | |||||||||||||||
Common stock issued upon the exercise of warrants (in shares) | 6,793,358 | |||||||||||||||||
Common stock issued upon the exercise of options | $ 18 | 121,848 | 121,866 | |||||||||||||||
Common stock issued upon the exercise of options (in shares) | 184,784 | |||||||||||||||||
Common stock issued for services | $ 17 | 376,892 | 376,909 | |||||||||||||||
Common stock issued for services (in shares) | 170,000 | |||||||||||||||||
Common stock issued upon the conversion of Preferred Stock | $ (1) | $ 70 | $ (69) | $ 317 | $ (317) | |||||||||||||
Stock issued conversion of notes payable | (13,972) | 698,600 | (650) | 3,170,730 | ||||||||||||||
Restricted common stock issued | $ 268 | (268) | ||||||||||||||||
Restricted common stock issued (in shares) | 2,677,744 | |||||||||||||||||
Restricted common stock cancelled | $ (12) | 12 | ||||||||||||||||
Restricted common stock cancelled (in shares) | (117,744) | |||||||||||||||||
Common Stock Shares Issued As Partial Consideration For Intangible Asset Shares | 6,000 | |||||||||||||||||
Common stock issued as partial consideration for intangible asset | $ 1 | 17,999 | 18,000 | |||||||||||||||
Amortization | $ 1,606,578 | $ 68,239 | $ 2,111,845 | $ 1,606,578 | $ 68,239 | $ 2,111,845 | ||||||||||||
Net loss | (11,911,151) | (11,911,151) | ||||||||||||||||
Balance at Dec. 31, 2021 | $ 0 | $ 0 | $ 10,479 | 39,512,122 | $ 0 | (23,157,559) | 16,365,042 | |||||||||||
Balance (shares) at Dec. 31, 2021 | 0 | 0 | 104,792,072 | |||||||||||||||
Treasury stock held upon the vesting of restricted common stock | $ (439,728) | (439,728) | ||||||||||||||||
Treasury stock held upon the vesting of restricted common stock (in shares) | 194,704 | |||||||||||||||||
Treasury stock issued upon the exercise of options | (95,124) | $ 143,506 | $ 48,382 | |||||||||||||||
Treasury stock issued upon the exercise of options (in shares) | (63,542) | 66,042 | ||||||||||||||||
Common stock issued upon the exercise of warrants | $ 242 | 3,020,594 | $ 3,020,836 | |||||||||||||||
Common stock issued upon the exercise of warrants (in shares) | 2,416,668 | |||||||||||||||||
Common stock issued upon the exercise of options | 5,075 | 5,075 | ||||||||||||||||
Common stock issued upon the exercise of options (in shares) | 2,500 | |||||||||||||||||
Common stock issued pursuant to the SEPA and supplemental SEPA agreements, For cash, net of issuance costs | [1] | $ 16 | 249,002 | 249,018 | ||||||||||||||
Common stock issued pursuant to the SEPA and supplemental SEPA agreements, For cash, net of issuance costs (in shares) | [1] | 160,782 | ||||||||||||||||
Common stock issued pursuant to the SEPA and supplemental SEPA agreements, In satisfaction of notes payable | $ 9 | 149,991 | 150,000 | |||||||||||||||
Common stock issued pursuant to the SEPA and supplemental SEPA agreements, In satisfaction of notes payable (in shares) | 94,458 | |||||||||||||||||
Common stock issued pursuant to the SEPA and supplemental SEPA agreements, For the repayment of prepaid advances | $ 538 | 6,440,305 | 6,440,843 | |||||||||||||||
Common stock issued pursuant to the SEPA and supplemental SEPA agreements, For the repayment of prepaid advances (in shares) | 5,375,269 | |||||||||||||||||
Restricted stock awards | $ 31 | (31) | ||||||||||||||||
Restricted stock awards (in shares) | 310,000 | |||||||||||||||||
Common stock issued for services | $ 5 | 109,845 | $ 109,850 | |||||||||||||||
Common stock issued for services (in shares) | 51,000 | 51,000 | ||||||||||||||||
Common stock issued upon the conversion of Preferred Stock | $ 150,000 | |||||||||||||||||
Stock issued conversion of notes payable | 94,458 | |||||||||||||||||
Amortization | $ 1,945,272 | $ 103,220 | $ 1,932,402 | $ 1,945,272 | $ 103,220 | $ 1,932,402 | ||||||||||||
Net loss | (19,436,479) | $ (19,436,479) | ||||||||||||||||
Balance at Dec. 31, 2022 | $ 11,320 | $ 53,372,673 | $ (296,222) | $ (42,594,038) | $ 10,493,733 | |||||||||||||
Balance (shares) at Dec. 31, 2022 | 113,202,749 | 131,162 | ||||||||||||||||
[1]Represents gross proceeds of $250,000 less $982 for amortization of deferred issuance costs. |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||
Net of cash issuance costs | $ 365,000 | $ 365,000 |
Gross proceeds of common stock issued pursuant to the SEDA agreement | 250,000 | |
Amortization of issuance costs | $ 982 | |
Fair value of preferred stock issued | $ 6,500,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Cash Flows From Operating Activities: | |||
Net loss | $ (19,436,479) | $ (11,911,151) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Amortization of debt discount | 511,825 | 128,198 | |
Non-cash lease expense | 193,106 | 149,130 | |
Depreciation and amortization expense | 259,399 | 67,715 | |
Non-cash interest expense | 576,932 | ||
Gain on forgiveness of PPP loan and interest | (158,675) | ||
Change in fair value of accrued issuable equity | (147,035) | 125,821 | |
Stock-based compensation | 4,175,014 | 4,200,091 | |
Bad debt expense | 15,026 | ||
Loss on extinguishment of note payable | 8,508 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (1,420,818) | (80,834) | |
Inventory | (1,770,724) | (135,859) | |
Prepaid expenses and other current assets | (1,324,836) | (110,204) | |
Inventory deposits | (3,072) | (309,688) | |
Security deposits | (1,500) | (50,213) | |
Accounts payable | 658,715 | 385,342 | |
Accrued expenses and other current liabilities | 824,826 | 768,215 | |
Lease liability | (205,034) | (144,540) | |
Deferred revenue | (109,303) | 112,303 | |
Total Adjustments | 2,082,354 | 5,105,477 | |
Net Cash Used In Operating Activities | (17,354,125) | (6,805,674) | |
Cash Flows From Investing Activities: | |||
Deposits for purchase of property and equipment | (1,421,432) | (2,153,950) | |
Purchases of property and equipment | (2,682,970) | (383,285) | |
Acquisition of intangible assets | (543,572) | (200,000) | |
Net Cash Used In Investing Activities | (4,647,974) | (2,737,235) | |
Cash Flows from Financing Activities: | |||
Proceeds from note payable | [1] | 4,750,000 | |
Net proceeds from the SEPA | 250,000 | ||
Net proceeds from the prepaid advance liability | [2] | 10,573,068 | |
Issuance costs on prepaid advance liability | (85,000) | ||
Payment of financing costs incurred in connection with the SEPA | (72,800) | ||
Notes payable issuance costs | (17,200) | ||
Payment of financing costs | (365,000) | ||
Repayments of notes payable | (1,000,000) | (2,450,000) | |
Proceeds from the exercise of options | 53,457 | 121,866 | |
Proceeds from the exercise of warrants | 3,020,836 | 11,719,204 | |
Proceeds from sale of Series D Convertible Preferred Stock, common stock and warrants | 6,500,000 | ||
Net Cash Provided By Financing Activities | 17,472,361 | 15,526,070 | |
Net (Decrease) Increase In Cash | (4,529,738) | 5,983,161 | |
Cash - Beginning of Year | 14,863,301 | 8,880,140 | |
Cash - End of Year | 10,333,563 | 14,863,301 | |
Cash paid during the year for: | |||
Interest | 86,062 | 1,635 | |
Non-cash investing and financing activities: | |||
Right of use asset for lease liability | 814,817 | ||
Additions to property and equipment included in accounts payable | 294,794 | ||
Beneficial conversion feature on Series D convertible preferred stock | 2,624,326 | ||
Common stock held in treasury upon the vesting of restricted common stock | 439,728 | ||
Common stock issued in satisfaction of accrued issuable equity | 209,200 | ||
Prepaid advance for repayment of note payable | 3,850,000 | ||
Original issue discount on prepaid advance liability | 789,474 | ||
Common stock issued in satisfaction of note payable | 150,000 | ||
Common stock issued in satisfaction of prepaid advance liability and interest | 6,440,843 | ||
Deposits applied to purchase of property and equipment | 60,445 | ||
Deferred financing costs charged to additional paid in capital | $ 982 | ||
Common shares issued as partial consideration for intangible asset | 18,000 | ||
Series B Convertible Preferred Stock | |||
Non-cash investing and financing activities: | |||
Common stock issued upon the conversion | 70 | ||
Series D Convertible Preferred Stock | |||
Non-cash investing and financing activities: | |||
Beneficial conversion feature on Series D convertible preferred stock | 2,624,326 | ||
Common stock issued upon the conversion | $ 317 | ||
[1] Note payable face value of $5,000,000 , less $250,000 original issue discount. Consists of principal of $15,000,000 on prepaid advance liability, less $3,850,000 and $566,932 withheld to repay note payable and related interest and premiums, respectively, owed to same investor, and, $10,000 withheld for issuance costs. |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Prepaid advance liability, principal amount | $ 15,000,000 |
Prepaid advance liability, withheld to repay note payable | 3,850,000 |
Prepaid advance liability, interest and premiums | 566,932 |
Prepaid advance liability, withheld for issuance costs | 10,000 |
Promissory Note | |
Initial principal amount | 5,000,000 |
Original issuance discount on notes payable | $ 250,000 |
ORGANIZATION, NATURE OF OPERATI
ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTANTIES | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTANTIES | |
ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTANTIES | NOTE 1 - ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTANTIES Organization and Operations KULR Technology Group, Inc. was incorporated on December 11, 2015 under the laws of the State of Delaware as KT High-Tech Marketing, Inc. Effective August 30, 2018, KT High-Tech Marketing, Inc. changed its name to KULR Technology Group, Inc. KULR Technology Group, Inc., through its wholly-owned subsidiary, KULR Technology Corporation (collectively referred to as “KULR” or the “Company”), develops and commercializes high-performance thermal management technologies for electronics, batteries, and other components across a range of applications. Currently, the Company is focused on targeting both high performance aerospace and Department of Defense (“DOD”) applications, such as space exploration, satellite communications, and underwater vehicles, and applying them to mass market commercial applications, such as lithium-ion battery energy storage, electric vehicles, 5G communication, cloud computer infrastructure, consumer and industrial devices. Risks and Uncertainties In March 2020, the World Health Organization declared COVID-19, a novel strain coronavirus, a pandemic. Continuing into 2022, the global economy has been, and continues to be, affected by COVID-19. While the Company continues to see signs of economic recovery as certain governments begin to gradually ease restrictions, provide economic stimulus and accelerate vaccine distribution, the rate of recovery on a global basis has been affected by resurgence of the virus or its variants in certain jurisdictions. For example, in response to an outbreak of infection in Shanghai, beginning in March 2022, governmental authorities in China implemented a lockdown order in that city, significantly slowing economic and business activity in that region and adversely affecting our ability to import product material required to fulfill some customer commitments. We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities and may take additional actions based on their recommendations and requirements or as we otherwise see fit to protect the health and safety of our employees, customers, partners and suppliers. The full extent of the future impact of COVID-19 on the Company’s operations and financial condition is uncertain. Accordingly, COVID-19 could have a material adverse effect on the Company’s business, results of operations, financial condition and prospects during 2023 and beyond, including the demand for its products, interruptions to supply chains, ability to maintain regular research and development and manufacturing schedules as well as the capability to meet customer demands in a timely manner. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The short and long-term worldwide implications of Russia’s invasion of Ukraine are difficult to predict at this time. The imposition of sanctions on Russia by the United States or other countries and possible counter sanctions by Russia, and the resulting economic impacts on oil prices and other materials and goods, could affect the price of materials used in the manufacture of our product candidates. If the price of materials used in the manufacturing of our product candidates increase, that would adversely affect our business and the results of our operations. On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. A statement by the Department of the Treasury, the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts. The standard deposit insurance amount is up to $250,000 per depositor, per insured bank, for each account ownership category. Although we do not have any funds deposited with the aforementioned banks that failed, we regularly maintain cash balances with other financial institutions in excess of the FDIC insurance limit. A failure of a depository institution to return deposits could impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The consolidated financial statements of the Company include the accounts of KULR Technology Group, Inc. and its wholly-owned subsidiary, KULR Technology Corporation. All significant intercompany transactions have been eliminated in the consolidation. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Liquidity During the year ended December 31, 2022, the Company incurred a net loss in the amount of $19,436,479 and used cash in operations of $17,354,125. As of December 31, 2022, the Company had cash of $10,333,563 and working capital of $6,055,477. During the year ended December 31, 2022, the Company generated net cash from financing activities of $17,472,361, mainly from proceeds received from Prepaid Advances, the issuance of a note payable, shares of common stock, and from the exercise of options and warrants to purchase common stock. The Company’s primary source of liquidity has historically been cash generated from equity and debt offerings. Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet future financial obligations as they become due within one year after the date that the financial statements are issued. The above conditions are indicators that substantial doubt about the Company’s ability to continue as a going concern could exist as the Company has a history of recurring net losses, recurring use of cash in operations and declining working capital. Despite these conditions, the Company has a successful track record of raising capital as needed and continues to have a positive, ongoing relationship with a financial institution that has provided access to capital and will continue to support KULR. On May 13, 2022, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”), which gives the Company the right, but not the obligation, to sell up to $50,000,000 of its shares of common stock to YA II PN, Ltd. (“Yorkville”) during the commitment period. Further, on September 23, 2022, the Company entered into the Supplemental SEPA, pursuant to which the Company may request advances (“Prepaid Advances”) up to an aggregate of $50,000,000 from Yorkville. Yorkville has the right to receive shares, and may select the timing and delivery of such shares, in an amount up to the balance of the Prepaid Advance in order to pay down the Prepaid Advance liability. During the year ended December 31, 2022, the Company received aggregate gross proceeds of $4,750,000 from a Promissory Note payable and received gross proceeds of $400,000 and $15,000,000 under the SEPA and the Supplemental SEPA, respectively (of which $150,000 and $3,850,000, respectively, was used to repay the Promissory Note; see Note 12 – Notes Payable). The Company is not permitted to initiate additional sales of its common stock under the SEPA until the Prepaid Advance liability ($8,852,290 at December 31, 2022) is settled. Subsequent to December 31, 2022, the Company issued 3,153,036 shares of common stock, at purchase price per share ranging from $0.90 to $1.20, in satisfaction of the Prepaid Advance Liability in the amount of $3,579,932. See Note 10 – Prepaid Advance Liability and Note 15 – Stockholders’ Equity for additional information. While no assurance can be provided that the Company will be successful in raising additional capital from Yorkville, as they are not obligated to advance funds to the Company so long as there is an outstanding Prepaid Advance, Yorkville has represented that in most scenarios, with mutual consent, they will continue to provide financial support as evidenced by the funds provided during March 2023. On March 10, 2023, the Company and Yorkville closed on a second Prepaid Advance in the amount of $2,000,000. Upon satisfaction of the Prepaid Advance liability, the Company will utilize its ability to draw down on the remaining $33,000,000 available under the SEPA. Based on the above, the Company believes it has sufficient liquidity and access to future capital to continue as a going concern for a period of at least twelve months from the date the financial statements have been issued and that its above plans alleviate any potential substantial doubt about the entity’s ability to continue as a going concern. As of March 24, 2023, the Company’s cash balance was approximately $7.3 million. Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, fair value calculations for intangible assets, equity securities, stock-based compensation and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. See Note 2 – Summary of Significant Accounting Policies, Stock-Based Compensation for additional discussion of the use of estimates in estimating the fair value of the Company’s common stock. Treasury Stock The Company records repurchases of its own common stock at cost. Repurchased common stock is presented as a reduction of equity in the consolidated balance sheets. Subsequent reissuances of treasury stock are accounted for on a weighted average cost basis. Gains resulting from differences between the cost of treasury stock and the re-issuance proceeds are credited to additional paid in capital. Losses resulting from differences between the cost of treasury stock and the re-issuance proceeds are debited to additional paid-in capital. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash and accounts receivable. The Company’s concentrations of credit risk also includes concentrations from key customers and vendors. Cash Concentrations A significant portion of the Company’s cash is held at one major financial institution. The Company has not experienced any losses in such accounts. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. There were uninsured balances of $9,833,541 and $14,363,301 as of December 31, 2022 and 2021, respectively. Customer and Revenue Concentrations The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: Revenues Account Receivables For the Years Ended December 31, As of December 31, 2022 2021 2022 2021 Customer A 13 % 29 % 34 % * Customer B * * * 34 % Customer C 42 % 25 % * * Customer D * 30 % * 42 % Customer E * * * 21 % Customer F 32 % * 61 % * Total 87 % 84 % 95 % 97 % * There is no assurance the Company will continue to receive significant revenues from any of these customers. Any reduction or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. As a result of the Company’s significant customer concentrations, its gross profit and results from operations could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers. Vendor Concentrations Vendor concentrations are as follows for the years ended December 31, 2022 and 2021: For the Years Ended December 31, 2022 2021 Vendor A * * Vendor B * 14 % 0 % 14 % * Less than 10% Accounts Receivable Accounts receivable are carried at their contractual amounts, less an estimate for uncollectible amounts. As of December 31, 2022 and 2021, no allowances for uncollectible amounts were determined to be necessary. Management estimates the allowance for bad debts based on existing economic conditions, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted. Inventory Inventory is comprised of carbon fiber velvet (“CFV”) thermal interface solutions and internal short circuit batteries, which are available for sale, as well as raw materials and work in process related primarily to the manufacture of safe cases. Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The cost of inventory that is sold to third parties is included within cost of sales and the cost of inventory that is given as samples is included within operating expenses. The Company periodically reviews for slow-moving, excess or obsolete inventories. Products that are determined to be obsolete, if any, are written down to net realizable value. On occasion, the Company pays for inventory prior to receiving the goods. These payments are recorded as inventory deposits until the goods are received and these costs are included in the current asset section of the balance sheet. As of December 31, 2022 and 2021, inventory deposits were $285,260 and $309,688, respectively. Finished goods inventory is held on-site at the San Diego, California location. Raw materials are held off-site with certain suppliers. Inventory at December 31, 2022 and 2021 consisted of the following: December 31, December 31, 2022 2021 Raw materials $ 1,075,310 $ — Work-in-process 2,977 — Finished goods 883,748 191,311 Total inventory $ 1,962,035 $ 191,311 Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which range from 3 to 7 years (see Note 5 – Property and Equipment for additional details). Leasehold improvements are amortized over the shorter of (a) the useful life of the asset; or (b) the remaining lease term. Maintenance and repairs are charged to operations as incurred. The Company capitalizes cost attributable to the betterment of property and equipment when such betterment extends the useful life of the assets. Vendor deposits toward the purchase of property and equipment are reflected as equipment deposits on the accompanying balance sheets. The Company reviews for the impairment of long-lived assets annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value. Intangibles Intangible assets are stated at fair value as of the date acquired, less accumulated amortization. Amortization is calculated based on the estimated useful lives of the assets, using the straight-line method or another method that more fairly represents the utilization of the assets, as follows: Estimated Useful Life Patent 17.3 years Intellectual property 5.0 years The Company periodically evaluates the remaining useful lives of our intangible assets to determine whether events or circumstances warrant a revision to the remaining periods of amortization. In the event that the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. If it is determined that an intangible asset has an indefinite useful life, that intangible asset would be subject to impairment testing annually or whenever events or circumstances indicate that its carrying value may not, based on future undiscounted cash flows or market factors, be recoverable. An impairment loss, the recorded amount of which would be based on the fair value of the intangible asset at the measurement date, would be recorded in the period in which the impairment determination was made. Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accrued expenses and other current liabilities, notes payable and loans payable approximate fair values due to the short-term nature of these instruments. Preferred Stock The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. The Company’s preferred shares are classified as stockholders’ equity because they are not subject to mandatory redemption, which would result in liability classified instruments measured at fair value, and because they are not conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) which would result in temporary equity classified instruments. Convertible Instruments The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the FASB ASC. The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Embedded conversion options and any related freestanding instruments are recorded as a discount to the host instrument. If the instrument is determined not to be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the market price of the Company’s common stock as of the commitment date to the effective conversion price of the instrument. Accrued Issuable Equity The Company records accrued issuable equity when it is contractually obligated to issue shares and there has been a delay in the issuance of such shares. Accrued issuable equity is recorded and carried at fair value with changes in its fair value recognized in the Company’s consolidated statements of operations. Once the underlying shares of common stock are issued, the accrued issuable equity is reclassified to equity as of the share issuance date at the then current fair market value of the common stock. Deferred Financing Costs Deferred financing costs, which primarily consist of direct, incremental professional fees incurred in connection with a debt or equity financing, are capitalized as deferred financing costs (a non-current asset) on the balance sheet. Once the financing closes, the Company reclassifies such costs as either discounts to notes payable or as a reduction of proceeds received from equity transactions so that such costs are recorded as a reduction of additional paid-in capital. If the completion of a contemplated financing was deemed to be no longer probable, the related deferred offering costs would be charged to general and administrative expense in the consolidated financial statements. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The following five steps are applied to achieve that core principle: ● Step 1: Identify the contract with the customer; ● Step 2: Identify the performance obligations in the contract; ● Step 3: Determine the transaction price; ● Step 4: Allocate the transaction price to the performance obligations in the contract; and ● Step 5: Recognize revenue when the company satisfies a performance obligation. The Company recognizes revenue primarily from the following different types of contracts: ● Product sales ● Contract services The following table summarizes the Company’s revenue recognized in its consolidated statements of operations: For the Years Ended December 31, 2022 2021 Product sales $ 2,643,325 $ 1,495,328 Contract services 1,351,309 917,540 Total revenue $ 3,994,634 $ 2,412,868 As of December 31, 2022 and 2021, the Company had $23,000 and $132,303 of deferred revenue, respectively, Deferred Labor Costs As of December 31, 2022 and 2021, the Company had $34,402 and $84,324, respectively, of deferred labor costs, which is included in prepaid expenses and other current assets in the Company’s consolidated balance sheets. Deferred labor costs represent costs incurred to fulfill the Company’s contract service revenue. The Company will recognize the deferred labor costs as cost of revenues at the point in time that the Company satisfies its performance obligation under the respective contract, which is generally at the time the services are fulfilled and/or accepted by the customer. Shipping and Handling Costs Amounts billed to a customer in a sales transaction related to shipping and handling are recorded as revenue. Costs incurred for shipping and handling are included as cost of revenues on the accompanying consolidated statements of operations. Research and Development Research and development include expenses incurred in connection with the research and development of our CFV thermal management solution, high-areal-capacity battery electrodes, 3D engineering for a rechargeable battery and non-cash stock-based compensation expenses. Research and development expenses are charged to operations as incurred. Advertising Costs Advertising costs are expensed in the period incurred. Advertising costs charged to operations for the years ended December 31, 2022 and 2021 were $874,398 and $145,025, respectively, and are included in selling, general and administrative in the consolidated statements of operations. Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award since the fair value of the award is more readily determinable than the value of the services. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an award, the Company generally issues new shares of common stock out of its authorized shares, but may issue treasury stock, when available. Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period. The following table presents the computation of basic and diluted net loss per common share: For the Twelve Months Ended December 31, 2022 2021 Numerator: Net loss $ (19,436,479) $ (11,911,151) Deemed dividend to Series D preferred stockholders — (2,624,326) Net loss attributable to common stockholders $ (19,436,479) $ (14,535,477) Denominator (weighted average quantities): Common shares issued 107,683,574 97,708,080 Less: Treasury shares purchased (125,015) — Less: Unvested restricted shares (2,005,109) (2,037,897) Add: Accrued issuable equity 102,323 79,437 Denominator for basic and diluted net loss per share 105,655,773 95,749,620 Basic and diluted net loss per common share $ (0.18) $ (0.15) The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: December 31, 2022 2021 Unvested restricted stock 5,042,500 2,590,000 Unvested market -based equity awards — 3,000,000 Options 640,216 405,216 Warrants 2,524,410 2,594,553 Total 8,207,126 8,589,769 The table above does not include shares to be issued in satisfaction of the remaining prepaid advance liability (see Note 10 – Prepaid Advance Liability). Operating Leases The Company leases properties under operating leases. For leases in effect upon adoption of Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” at January 1, 2020 and for any leases commencing thereafter, the Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”. The lease liability is measured at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset. Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset. Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December 31, 2022 and 2021. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling, general and administrative expenses in the consolidated statements of operations. Reclassifications Certain prior period balances have been reclassified in order to conform to the current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share. Subsequent Events The Company has evaluated subsequent events through the date which the consolidated financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2020-02 (collectively Topic 326). Topic 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This replaces the existing incurred loss model with an expected loss model and requires the use of forward-looking information to calculate credit loss estimates. The Company will be required to adopt the provisions of this ASU on January 1, 2023, with early adoption permitted for certain amendments. Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings. The Company does not expect the adoption of this standard to have a material effect on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. ASU 2020-06 requires entities to provide expanded disclosures about the terms and features of convertible instruments and amends certain guidance in ASC 260, Earnings per Share, relating to the computation of earnings per share for convertible instruments and contracts in an entity’s own equity. The guidance becomes effective for the Company on January 1, 2024, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 effective January 1, 2021 and its adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. In October 2020, the FASB issued ASU 2020-10 “Codification Improvements”, which improves consistency by amending the Codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company adopted ASU 2020-10 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements. On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company adopted ASU 2021-04 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements. |
ASSET PURCHASE
ASSET PURCHASE | 12 Months Ended |
Dec. 31, 2022 | |
ASSET PURCHASE | |
ASSET PURCHASE | NOTE 3 – ASSET PURCHASE On October 6, 2022 (the “Asset Purchase Date”), KULR Technology Group, Inc. (the “Company”) entered into an agreement (the “Asset Purchase Agreement”) with a seller (the “Seller”), pursuant to which the Company purchased all of the assets, including intellectual property, of the Seller (the “Acquired Assets”) for consideration of $3,500,000 (the “Total Consideration”), of which, $2,000,000 (the “Cash Consideration”) will be paid in cash, and the Company will issue shares of common stock with an aggregate fair value of $1,500,000, valued as of the Asset Purchase Date (the “Equity Consideration”). The Asset Purchase Agreement includes customary representations, warranties and covenants of the Company and the Seller. The Purchase Agreement also contains post-closing indemnification provisions pursuant to which the parties have agreed to indemnify each other against losses resulting from certain events, including breaches of representations and warranties, covenants and certain other matters. The Company paid $1,000,000 of the Cash Consideration on October 6, 2022. The remaining Cash Consideration will be paid in two equal installments of $500,000 on each of April 5, 2023 and October 5, 2023 The Company will issue the Equity Consideration in four equal installments of 279,852 common shares, valued as of the Asset Purchase Date at $1.34 per share, on the following dates: (i) October 5, 2023, (ii) October 5, 2024, (iii) October 5, 2025, and (iv) October 5, 2026, provided that the Seller has not terminated his employment with the Company as of the date of payment. All of the Equity Consideration is contingent upon the continued employment of the Seller; further, 75% of the Cash Consideration is subject to Clawback, based on the term of the Seller’s employment by the Company. As such, an aggregate of $3,000,000 of the Total Consideration is accounted for as compensation, which will be recognized on a pro rata basis over the employment term requirement. The remaining $500,000 of Total Consideration is accounted for as consideration for the Acquired Assets. Management determined that the remaining $500,000 of consideration attributable to fair value of the Acquired Assets was concentrated into a single identifiable asset, namely, intellectual property. As a result, this transaction was accounted for as an asset acquisition. The Company incurred legal costs in connection with the execution of the Asset Purchase Agreement, in the aggregate amount of $43,572. The total cost of the intellectual property acquired of $543,572 is included in intangible assets on the accompanying consolidated balance sheet and is being amortized over its estimated useful life of 5 years (see Note 6 – Intangible Assets for additional details). |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS As of December 31, 2022 and 2021, prepaid expenses and other current assets consisted of the following: As of December 31, 2022 2021 Vendor receivables $ 368,069 $ — Deferred labor costs 34,402 84,324 Insurance 12,776 69,925 Professional fees 25,787 65,118 Other 84,120 31,074 Research and development 62,329 — Dues and subscriptions 75,889 — Compensation costs 375,000 — Marketing and sponsorships 574,636 10,231 Total prepaid expenses $ 1,613,008 $ 260,672 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 5 - PROPERTY AND EQUIPMENT As of December 31, 2022 and 2021, property and equipment consisted of the following: December 31, 2022 2021 Estimated Useful Life Construction in progress (1) $ 1,428,217 $ — Machinery & equipment 1,374,293 72,392 5 - 7 years Leasehold improvements 345,709 339,422 Lesser of the useful life of the asset or remaining life of the lease Computer equipment 152,699 47,503 3 years Software 127,193 18,714 3 years Research and development equipment 100,939 12,810 3 years Furniture and fixtures 6,968 6,968 5 years 3,536,018 497,809 Less: accumulated depreciation (342,977) (123,334) Property and equipment, net $ 3,193,041 $ 374,475 (1) Consists primarily of $1,198,733 for the construction of an automation facility and $184,484 for the construction of the mezzanine. Depreciation expense amounted to $219,643 and $66,667, respectively, for the years ended December 31, 2022 and 2021, respectively, which is included in selling, general and administrative and research and development expenses in the consolidated statements of operations. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 6 - INTANGIBLE ASSETS The Company’s intangible assets consist of the following: December 31, 2022 2021 Patent $ 218,000 $ 218,000 Intellectual property 543,572 — 761,572 218,000 Less: accumulated amortization (40,804) (1,048) Intangible assets, net $ 720,768 $ 216,952 In December 2021, the Company acquired a patent for consideration of $218,000. This long-lived intangible asset has a useful life of approximately 17.3 years and is being amortized on a straight-line basis and tested for impairment on an annual basis. On October 5, 2022 the Company acquired intellectual property with an aggregate cost of $543,572 (see Note 3 - Asset Purchase). This long-lived intangible asset has a useful life of 5 years and is being amortized on a straight-line basis and tested for impairment on an annual basis. During the years ended December 31, 2022 and 2021, the Company recognized amortization expense related to intangible assets of $39,756 and $1,048, respectively. As of December 31, 2022, the Company had no impairments of its intangible assets. The weighted average remaining amortization period of the Company’s intangible assets is 8.0 years. Future amortization of intangible asset is as follows: For the Years Ended December 31, 2022 2023 $ 121,293 2024 121,293 2025 121,293 2026 121,293 2027 94,114 Thereafter 141,482 $ 720,768 |
EQUIPMENT DEPOSITS
EQUIPMENT DEPOSITS | 12 Months Ended |
Dec. 31, 2022 | |
EQUIPMENT DEPOSITS | |
EQUIPMENT DEPOSITS | NOTE 7 - EQUIPMENT DEPOSITS The Company entered into agreements with third party contractors for the design and build of a battery packaging and inspection automation system, and automated robotic tending system. As of December 31, 2022 and 2021, the Company had outstanding deposits of $3,514,937 and $2,153,950, respectively, in connection with these agreements. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 8 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2022 and 2021, accrued expenses and other current liabilities consisted of the following: As of December 31, 2022 2021 Professional fees $ 1,180,000 $ 418,154 Payroll and vacation 464,453 302,101 Research and development 196,409 146,158 Subscriptions 65,000 — Inventory 58,804 — Accrued cost of sales — 128,500 Board compensation 122,500 45,680 Marketing and advertising fees 3,999 37,810 Legal fees 2,000 — Other 49,112 84,824 Total accrued expenses and other current liabilities 2,142,277 1,163,227 Add: Accrued interest, non-current 157,054 — Total accrued expenses and other current liabilities $ 2,299,331 $ 1,163,227 |
ACCRUED ISSUABLE EQUITY
ACCRUED ISSUABLE EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED ISSUABLE EQUITY | |
ACCRUED ISSUABLE EQUITY | NOTE 9 - ACCRUED ISSUABLE EQUITY A summary of the accrued issuable equity activity during the year ended December 31, 2022, is presented below: As of December 31, 2022 2021 Beginning balance $ 290,721 $ 128,380 Grant date value of share obligations 176,270 245,720 Cancellation of accrued issuable equity (92,000) — Shares issued in satisfaction of accrued issuable equity — (209,200) Mark-to-market (147,035) 125,821 Ending balance $ 227,956 $ 290,721 During the years ended December 31, 2022 and 2021, the Company entered into certain contractual arrangements for consulting services in exchange for a fixed number of shares of common stock of the Company. On the respective dates the contracts were entered into, the estimated fair value of the shares to be issued was an aggregate of $176,270 and $245,720, respectively. On October 5, 2022, the Company entered into an Asset Purchase Agreement (See Note 3, Asset Purchase), pursuant to which the Company agreed to issue 279,851 shares of common stock on each of the four anniversaries following the Asset Purchase Date, provided that the Seller has not terminated his employment with the Company as of the date of payment. Since all of the Equity Consideration is contingent upon the employment of the Seller, the grant date value of the accrued issuable shares will be accounted for as compensation expense, and will be recognized on a pro rata basis over the four-year employment requirement. As of December 31, 2022, the Company has accrued for the issuance of 69,963 shares of common stock, with an aggregate grant date value of $93,750. During the year ended December 31, 2021, the Company settled certain of its accrued issuable equity obligations through the issuance of an aggregate of 100,000 of its shares with an aggregate fair value of $209,200, remeasured as of the date of settlement. During the year ended December 31, 2022, the Company cancelled certain of its accrued issuable equity obligations of an aggregate of 33,333 of its shares, respectively, with an aggregate fair value of $92,000, respectively, due to a reduction in investor relation services. During the years ended December 31, 2022 and 2021, the Company recorded gains (losses) in the aggregate amount of $147,035 and ($125,821), respectively, related to the change in fair value of accrued issuable equity (see Note 13 – Stockholders’ Equity, Stock-Based Compensation for additional details). The fair value of the accrued but unissued shares as of December 31, 2022 and 2021 was $227,956 and $290,721, respectively. |
PREPAID ADVANCE LIABILITY
PREPAID ADVANCE LIABILITY | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID ADVANCE LIABILITY | |
PREPAID ADVANCE LIABILITY | NOTE 10 – PREPAID ADVANCE LIABILITY The Company’s prepaid advance liability consists of the following: Original Issue Prepaid Advance Discount Debt Discount Net Current portion $ 5,750,000 $ 302,579 $ (396,967) $ 5,655,612 Non-current portion 3,250,000 171,052 (224,374) 3,196,678 Total prepaid advance liability $ 9,000,000 $ 473,631 $ (621,341) $ 8,852,290 On September 23, 2022, the Company entered into a Supplemental Agreement (the “Supplemental Agreement”) to its Standby Equity Purchase Agreement (the “SEPA”) with Yorkville. Under the Supplemental Agreement, the Company may from time-to-time request advances of up to $15,000,000 (each, a “Prepaid Advance”) from Yorkville with a limitation on the aggregate amount of such advances of $50,000,000. At any time that there is a balance outstanding under a Prepaid Advance, the Company is not permitted to deliver Advance Notices (as defined in Note 11, Stockholders’ Equity) under the SEPA. Each Prepaid Advance matures 12 months after the date of the closing of such advance (the “Prepaid Advance Date”), and accrues interest at 10% per annum, subject to an increase to 15% per annum upon events of default as defined. Any Prepaid Advance balance that remains outstanding at maturity must be repaid in cash. Pursuant to the terms of the Supplemental Agreement, Yorkville has the right to receive shares to pay down Prepaid Advances, and may select the timing and delivery of such shares (via an “Investor Notice”), in an amount up to the balance of the Prepaid Advance at a price equal to the lower of (a) 135% of the volume weighted average price (“VWAP”) of the Company’s common stock on the day immediately prior the closing of the Prepaid Advance, or (b) 95% of the lowest VWAP during the three days immediately prior to the Investor Notice. The Company may prepay amounts owed for a Prepaid Advance in cash, provided that the Company gives Yorkville 10 days’ notice of its intent to repay in cash (the “Prepayment Notice”) and provided that the daily VWAP of the Company’s common stock on the date of Prepayment Notice is not less than $0.75. The prepayment amount will be delivered on the 11th trading day after the Prepayment Notice, such that Yorkville has 10 days to deliver an Investor Notice with respect to the outstanding Prepaid Advance. The prepayment amount will be equal to the amount of Prepaid Advance to be repaid, plus all accrued and unpaid interest owed on the Prepaid Advance, as well as a payment premium equal to 5% of the principal amount being repaid. Upon the occurrence of certain triggering events, as defined, the Company may be required to make monthly repayments of amounts outstanding under a Prepaid Advance, with each monthly repayment to be in an amount equal to the sum of (x) $3.0 million, (y) 5% (the “Payment Premium”) in respect of such amount, and (z) all outstanding accrued and unpaid interest in respect of such Prepaid Advance as of each payment date. On September 23, 2022, the Company recorded an initial Prepaid Advance liability in the amount of $15,789,474, which consisted of $15,000,000 of gross cash proceeds (the “Initial Advance”), plus an original issue discount of $789,474. Of the $15,000,000 Initial Advance amount, $3,850,000 was used to repay amounts due under a Note Purchase Agreement with Yorkville. The Company incurred $85,000 of legal and professional fees in connection with its entry into the Supplemental Agreement. The original issue discount and legal and professional fees incurred were recorded as a debt discount, which will be amortized ratably over the term of the Initial Advance. As of December 31, 2022, the Company has issued 5,375,269 shares of common stock as partial repayment of the Initial Advance principal in the amount of $6,000,000 and premium and interest in the amount of $315,843 and $125,000, respectively. The balance of Prepaid Advance Liability as of December 31, 2022 is $8,852,290, which consists of the remaining Initial Advance balance of $9,000,000, plus $473,631 original issue discount on the remaining Initial Advance balance, net of unamortized debt discount of $621,341. During the year ended December 31, 2022, the Company recorded interest expense in the amount of $282,054 and recorded amortization of debt discount in the amount of $253,133 in connection with the Prepaid Advance liability. Subsequent to December 31, 2022, the Company issued 3,153,036 shares of common stock in satisfaction of the Initial Advance liability in the amount of $3,250,000 and interest accrued through March 2023 in the amount of $329,932 (see Note 17, Subsequent Events). As a result, $3,196,678 of Prepaid Advance Liability at December 31, 2022 (consisting of $3,250,000 of Initial Advance balance, plus $171,052 original issue discount, less $224,374 of unamortized debt discount) as well as $157,054 of accrued interest payable as of December 31, 2022, are classified as a non-current liability on the accompanying consolidated balance sheet. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | NOTE 11 – LEASES The Company leases office space in San Diego, California. The lease, as amended, provided for monthly rental payments of $5,127, and the lease term expired on June 30, 2021. Subsequent to the expiration of the lease term, the Company entered into a verbal agreement with the landlord to continue occupying the space on a month-to-month basis until the Company eventually moved out in October 2021. The Company evaluated this operating lease and determined that the short-term exemption available under ASC 842 applied since the lease term is less than 12 months and the lease does not include a purchase option whose exercise is reasonably certain. Since the short-term exemption applies, lease payments are recognized as an expense and no right of use asset or lease liability was recorded related to this lease. On April 5, 2021, the Company entered into a new lease agreement for office space in San Diego, California, effective June 1, 2021. The initial lease term is three years and there is an option to renew for an additional five years. Management does not expect to exercise its option to renew. Monthly rental payments under the new lease begin at $23,787, which is comprised of $18,518 of base rent plus $5,268 of common area maintenance fees, with annual escalation of 3.5%. The Company paid a security deposit of $50,213 in connection with the new lease agreement. The Company determined that the value of the lease liability and the related right-of-use asset at inception was $814,817, using an estimated incremental borrowing rate of 5% based on information available at the commencement date of the lease. During the years ended December 31, 2022 and 2021, operating lease expense was $231,116 and $223,548 respectively. As of December 31, 2022, the Company does not have any financing leases. Maturities of lease liabilities as of December 31, 2022 were as follows: Maturity Year Amount 2023 234,694 2024 99,187 Total lease payments 333,881 Less: Imputed interest (12,278) Present value of lease liabilities 321,603 Less: current portion (223,645) Lease liabilities, non-current portion $ 97,958 Supplemental cash flow information related to the lease was as follows: For the Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating lease $ 205,034 $ 144,540 Right-of-use asset obtained in exchange for lease obligations Operating lease $ — $ 814,817 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE | |
NOTES PAYABLE | NOTE 12 – NOTES PAYABLE During the year ended December 31, 2021, the Company repaid principal on notes payable (the 2021 Notes Payable) to Yorkville in the aggregate amount of $2,450,000, such that the balance on the notes payable was $0 at December 31, 2021. The Company paid debt redemption costs in the aggregate amount of $140,000, which were recognized as expense during the year ended December 31, 2021 (see Note 15 – Stockholders’ Equity for additional details). The Company recorded amortization expense related to the debt discount on the 2021 Notes Payable of $128,198 during the year ended December 31, 2021. On May 13, 2022, the Company entered into a note purchase agreement with Yorkville, pursuant to which Yorkville purchased a full recourse promissory note with an initial principal amount equal to $5,000,000 (the “Promissory Note”) for net cash proceeds of $4,750,000. The Promissory Note included an original issue discount of $250,000, which represents the difference between the principal amount of the Promissory Notes and the proceeds received. The Company also incurred a structuring fee of $10,000, and legal fees of $7,200 in connection with the Promissory Note. The original issue discount, along with structuring fees were recorded as a debt discount to be amortized over the term of the Note using the effective interest rate method. The Promissory Note carries an interest rate of 10% per annum. As of December 31, 2022, the Company had fully repaid the principal and interest due in the amounts of $5,000,000 and $165,493, respectively, of which $3,850,000 and $0, respectively, were paid from the proceeds of the Initial Advance (see Note 10 - Prepaid Advance Liability). During the year ended December 31, 2022, the Company recorded (i) interest expense related to the Promissory Note in the amount $650,493, which included $165,493 of stated interest, a 10% payment premium in the amount of $385,000 and a late payment premium in the amount of $100,000, (ii) amortization of debt discount in the amount of $258,692, and (iii) a gain on the extinguishment of debt in the amount of $8,508, which represented the unamortized portion of debt discount on the date that the debt was extinguished. The following table summarizes activity related to the Promissory Note during the year ended December 31, 2022. Notes Debt Payable Discount Total Balance, January 1, 2022 $ — $ — — Proceeds from promissory note 5,000,000 (250,000) 4,750,000 Debt discount — (17,200) (17,200) Repayments in cash (4,850,000) — (4,850,000) Repayments in shares of common stock (150,000) — (150,000) Amortization of debt discount — 258,692 258,692 Loss on debt extinguishment — 8,508 8,508 Outstanding, December 31, 2022 $ — $ — $ — |
LOAN PAYABLE
LOAN PAYABLE | 12 Months Ended |
Dec. 31, 2022 | |
LOAN PAYABLE | |
LOAN PAYABLE | NOTE 13 – LOAN PAYABLE On April 27, 2020, the Company received $155,226 of cash proceeds pursuant to an unsecured loan (the “PPP” Loan) provided in connection with the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security Act and applicable regulations (“CARES Act”). The PPP Loan, along with interest accrued in the amount of $3,449 was forgiven on July 18, 2022, and the Company recorded a gain on the forgiveness of the loan in the aggregate amount of $158,675, which is reflected in other income on the accompanying statements of operations. The Company recorded interest expense of $825 and $1,701 during the years ended December 31, 2022 and 2021, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14 - INCOME TAXES The income tax provision for the years ended December 31, 2022 and 2021 consists of the following: For the Years Ended December 31, 2022 2021 Federal: Current $ — $ — Deferred (3,967,600) (2,359,473) State and local: Current — — Deferred (1,133,600) (996,095) (5,101,200) (3,355,568) Change in valuation allowance 5,101,200 3,355,568 Income tax provision $ — $ — A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: For the Years Ended December 31, 2022 2021 Tax benefit at federal statutory rate (21.0) % (21.0) % State income taxes, net of federal benefit (6.0) % (6.0) % Permanent differences (0.1) % (1.0) % Other and prior year true-ups 0.9 % 0.0 % Change in valuation allowance 26.2 % 28.0 % Effective income tax rate 0.0 % 0.0 % The Company has determined that a valuation allowance for the entire net deferred tax asset is required. A valuation allowance is required if, based on the weight of evidence, it is more likely than not that some or the entire portion of the deferred tax asset will not be realized. After consideration of all the evidence, management has determined that a full valuation allowance is necessary to reduce the deferred tax asset to zero. The tax effects of temporary differences that give rise to deferred tax assets and liabilities are presented below: For the Years Ended December 31, 2022 2021 Deferred Tax Assets (Liabilities): Net operating loss carryforwards $ 9,078,972 $ 4,978,331 Research and development credit carryforwards 101,422 270,188 Capitalized research and development costs 953,675 — Stock-based compensation 1,587,800 981,067 Property and equipment (382,819) — Debt Discount (16,384) — Accruals and other 63,580 55,460 Gross deferred tax assets 11,386,246 6,285,046 Valuation allowance (11,386,246) (6,285,046) Deferred tax asset, net of valuation allowance $ — $ — Changes in valuation allowance $ 5,101,200 $ 3,355,568 At December 31, 2022 and 2021, the Company had federal net operating loss carry forwards of approximately $33.7 million and $18.6 million, respectively. At December 31, 2022, approximately $3.4 million of federal net operating losses will expire from 2033 to 2037, and approximately $30.3 million will have no expiration. At December 31, 2022 and 2021, the Company had state net operating loss carry forwards of approximately $33.6 and $18.1 million, respectively, which will begin to expire in 2024. The net operating loss carryovers may be subject to annual limitations under Internal Revenue Code Section 382, and similar state provisions, should there be a greater than 50% ownership change as determined under the applicable income tax regulations. The amount of the limitation would be determined based on the value of the company immediately prior to the ownership change and subsequent ownership changes could further impact the amount of the annual limitation. An ownership change pursuant to Section 382 may have occurred in the past or could happen in the future, such that the NOLs available for utilization could be significantly limited. The Company files federal and state (California) tax returns which are subject to audit for the years ending on or after December 31, 2019. No tax audits were commenced or were in process during the years ended December 31, 2022 and 2021. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | NOTE 15 - STOCKHOLDERS’ EQUITY Authorized Capital The Company is authorized to issue 500,000,000 shares of common stock, par value of $0.0001 per share, and 20,000,000 shares of preferred stock, par value of $0.0001 per share. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated as follows: 1,000,000 shares designated as Series A Preferred Stock, 31,000 shares designated as Series B Convertible Preferred Stock, 400 shares designated as Series C Preferred Stock, and 650 shares designated as Series D Convertible Preferred Stock. Equity Incentive Plan On August 15 and November 5, 2018, the Board of Directors and a majority of the Company’s shareholders, respectively, approved the 2018 Equity Incentive Plan (the “2018 Plan”). Under the 2018 Plan, 15,000,000 shares of common stock of the Company are authorized for issuance. The 2018 Plan provides for the issuance of incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants of the Company and its affiliates. The 2018 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s common stock on the date of grant. As of December 31, 2022, there were 10,174,005 shares available for issuance under the 2018 Plan. Standby Equity Purchase Agreement On May 13, 2022, the Company entered into the SEPA with Yorkville. Pursuant to the SEPA, the Company has the right, but not the obligation, to sell to Yorkville up to an aggregate of $50,000,000 of its shares of common stock, par value $0.0001 per share, at the Company’s request any time during the commitment period commencing on May 13, 2022 and terminating on the first day of the month following the 24-month anniversary of the SEPA. Each sale (an “Advance”) that the Company requests under the SEPA (via an “Advance Notice”) may be for a number of shares of common stock with an aggregate value of up to $5,000,000. Shares are sold under the SEPA at 98.0% of the average of the VWAPs during each of the three consecutive trading days commencing on the trading day following the Company’s submission of an Advance Notice to Yorkville. Advances are subject to certain limitations, including that Yorkville will not purchase any shares that would result in it owning more than 4.99% of the Company’s outstanding common stock at the time of an Advance, or more than the amount of shares registered under the registration statement in effect at the time of the Advance. Further, the aggregate amount of shares purchased under the SEPA (as defined) cannot exceed 19.9% of the Company’s outstanding common stock as of the date of the SEPA. Through December 31, 2022, the Company issued Advance Notices to for the issuance of 255,240 shares of common stock valued at $399,018 pursuant to the SEPA, of which 94,458 shares valued at issuance at $150,000, were issued in satisfaction of Notes Payable to Yorkville. On September 23, 2022, the Company entered into the Supplemental Agreement to the SEPA and received a Prepaid Advance in the amount of $15,000,000 pursuant to the Supplemental Agreement (see Note 10 – Prepaid Advance Liability). At any time that there is a balance outstanding under a Prepaid Advance, the Company is not permitted to deliver Advance Notices under the SEPA. Series A Preferred Stock Each record holder of Series A Preferred Stock shall have the right to vote on any matter with holders of the Company’s common stock and other securities entitled to vote, if any, voting together as one class. Each record holder of Series A Preferred Stock is entitled to one-hundred votes per share of Series A Preferred Stock held by such holder. The Series A Preferred Stock is not convertible into any series or class of stock of the Company. In addition, holders of the Series A Preferred Stock shall not be entitled to receive dividends, nor do they have a right to distribution from the assets of the Company in the event of any liquidation, dissolution, or winding up of the Company. On November 5, 2018, the Company received a written consent of the majority of the stockholders to issue 1,000,000 shares of the Company’s Series A Preferred Stock to Mr. Mo, if necessary, as a measure to protect the Company from an uninvited takeover. As of the date of filing, the shares of Series A Preferred Stock have not been issued. Series B Convertible Preferred Stock Holders of shares of Series B Convertible Preferred Stock are not entitled to voting rights or dividend rights. The Series B Convertible Preferred Stock does not contain any redemption provisions or other provisions requiring cash settlement within control of the holder. Series B Convertible Preferred Stock is senior in liquidation preference to common stock. Each share of Series B Convertible Preferred Stock, after 181 days after issuance and without the payment of additional consideration, is convertible at the option of the holder into fifty (50) fully paid and non-assessable shares of common stock. It was determined that the embedded conversion option is clearly and closely related to the equity host, therefore it is not bifurcated and not accounted for as a derivative. During the year ended December 31, 2021, the Company issued an aggregate of 698,600 shares of common stock upon the conversion of 13,972 shares of Series B Preferred stock, after which no Series B Convertible Preferred Stock remained outstanding. There are no Series B Convertible shares available to issue at December 31, 2022. Series C Convertible Preferred Stock Series C Convertible Preferred Stock is senior in liquidation preference to the Company’s common stock for an amount equal to the stated value per share of $10,000 (“Stated Value”). Holders of shares of Series C Convertible Preferred Stock shall vote on an as-if-converted-to-common-stock basis with the common stockholders. Holders of shares of Series C Convertible Preferred Stock are entitled to receive dividends when, as and if declared by the Board of Directors, at an annual rate of twelve percent (12)% beginning one year after each share’s issuance. The Company may elect to redeem all or part of each share of Series C Convertible Preferred Stock for the Stated Value. There are no Series C Convertible shares outstanding or available to issue at December 31, 2022. Series D Convertible Preferred Stock On May 19, 2021, the Company entered into a Securities Purchase Agreement (“SPA”) with an investor, pursuant to which the Company agreed to issue to the investor an aggregate of 650 shares of Series D convertible preferred stock (the “Series D Preferred”) pursuant to a new designation of preferred stock, and one-year warrants to purchase 2,600,000 shares of common stock (the “Warrants”) at a price of $2.50 per share, for aggregate gross proceeds of $6,500,000 (the “Offering”). The Company also agreed to pay the investor a commitment fee of 1,300,000 shares of common stock at the closing of the Offering. The closing of the Offering occurred on May 20, 2021. In connection with the closing of the financing, the Company repaid in full its aggregate remaining notes payable obligation of $1,400,000. The Series D Preferred have a fixed conversion price of $2.05, are convertible into an aggregate of 3,170,730 shares of common stock and have the right to vote on an as-converted basis. Holders of the Series D Preferred shall be entitled to receive cumulative dividends annually at an annual rate equal to ten percent (10%). Dividends shall be payable in cash or, at the option of the holder of the Series D Preferred, converted into shares of common stock as provided in the certificate of designation for the Series D Preferred. Provided that the shares of common stock issuable upon conversion of the Series D Preferred is registered pursuant to an effective registration statement, the Company shall have the option, but not the obligation, to redeem, in cash, all or part of the Series D Preferred. The Company determined that the Series D Preferred was permanent equity given that there was no redemption provision at the holder’s option and it was determined that the conversion option was clearly and closely related to the equity host, so it didn’t need to be bifurcated. The Company further determined that the $10,000 cash structuring fee, debt redemption costs of $140,000, and the remaining notes payable obligation of $1,400,000 paid to the investor, would be accounted for as a reduction of the $6,500,000 of gross proceeds. The remaining proceeds of $6,490,000 were allocated on a relative fair value basis to the Series D Preferred ($3,875,675), the commitment shares ($1,339,582) and the Warrant ($1,274,743). The Company used the Black-Scholes option pricing model to determine the fair value of the Warrant using the following assumptions: exercise price of $2.50 per share, market price of $2.05 per share, expected term of 1.0 year, volatility of 142% and a risk-free interest rate of 0.05%. Finally, the Company determined that the Series D Preferred had a beneficial conversion feature equal to $2,624,326 which is a deemed dividend and represents an adjustment to the numerator in the loss per share calculation. The cash issuance costs of $365,000 (inclusive of the $10,000 cash structuring fee) were charged to additional paid-in-capital. On June 17, 2021, all of the outstanding shares of Series D Preferred were converted into 3,170,730 shares of common stock, after which no Series D Convertible Preferred Stock remained outstanding. There are no Series D Convertible shares available at December 31, 2022. Common Stock During the year ended December 31, 2021, the Company issued an aggregate of 170,000 shares of immediately vested common stock with a grant date value of $376,909 for legal and consulting services and issued 6,000 shares with a grant date value of $18,000 related to the acquisition of an intangible asset during the year ended December 31, 2021. During the year ended December 31, 2021, KULR issued an aggregate of 184,784 shares of common stock upon the exercise of options. During the year ended December 31, 2021, KULR issued an aggregate of 6,793,358 shares of our common stock upon the exercise of warrants. During the year ended December 31, 2022, the Company issued an aggregate of 51,000 shares of immediately vested common stock with a grant date value of $109,850 for legal and consulting services. During the year ended December 31, 2022, the Company issued an aggregate of 2,416,668 shares of common stock upon the exercise of warrants pursuant to which the Company received an aggregate of $3,020,835 of gross proceeds. Treasury Stock Pursuant to the exercise of options, the Company transferred 63,542 shares that were held in treasury for an aggregate of $48,382 gross proceeds. As of December 31, 2022, the Company has 131,162 shares held in treasury valued at their cost of $296,222. During the year ended December 31, 2022, the company withheld 194,704 shares valued at $439,728 for employee income tax withholding obligations in connection with the vesting of restricted common stock during the period. Warrants A summary of warrants activity during the year ended December 31, 2022 is presented below: Weighted Weighted Average Average Number of Exercise Remaining Intrinsic Warrants Price Term (Yrs) Value Outstanding, January 1, 2022 2,594,553 $ 1.25 Issued 2,346,525 1.00 Exercised (2,416,668) (1.25) Expired — — Forfeited — — Outstanding, December 31, 2022 2,524,410 $ 1.02 3.0 $ 492,770 Exercisable, December 31, 2022 2,524,410 $ 1.02 3.0 $ 492,770 A summary of outstanding and exercisable warrants as of December 31, 2022 is presented below: Warrants Outstanding Warrants Exercisable Weighted Outstanding Average Exercisable Exercise Number of Remaining Life Number of Price Warrants In Years Warrants $ 1.25 177,885 3.0 177,885 $ 1.00 2,346,525 3.0 2,346,525 2,524,410 3.0 2,524,410 Stock-Based Compensation During the years ended December 31, 2022 and 2021, the Company recognized stock-based compensation expense of $4,175,014 and $4,200,091, respectively, related to restricted common stock, warrants and stock options, of which $4,136,494 and $4,171,241, respectively are included within selling, general and administrative expenses, and $38,520 and $28,850, respectively are included within research and development expenses on the consolidated statements of operations. The following table presents information related to stock-based compensation for the years ended December 31, 2022 and 2021: For the Years Ended December 31, 2022 2021 Common stock issued for services $ 109,850 $ 167,710 Accrued issuable equity (common stock) 84,270 245,719 Amortization of stock options 103,220 68,239 Amortization of market-based awards 1,932,402 2,111,845 Amortization of restricted stock units 1,945,272 1,606,578 Total $ 4,175,014 $ 4,200,091 Stock Options A summary of options activity (excluding market-based option awards) during the year ended December 31, 2022 is presented below: Weighted Weighted Average Average Number of Exercise Remaining Intrinsic Options Price Term (Yrs) Value Outstanding, January 1, 2022 405,216 $ 2.29 Granted 330,000 1.71 Exercised (66,042) 0.71 Expired — — Forfeited (28,958) 1.49 Outstanding, December 31, 2022 640,216 $ 1.72 3.6 $ 60,767 Exercisable, December 31, 2022 199,174 $ 1.43 2.1 $ 58,476 The following table presents information related to stock options (excluding market-based option awards) as of December 31, 2022: Options Outstanding Options Exercisable Weighted Outstanding Average Exercisable Exercise Number of Remaining Life Number of Price Options In Years Options $0.66 110,486 1.0 106,320 $1.28 - $1.50 140,000 — — $1.55 - $1.99 90,000 3.4 5,208 $2.05 - $2.44 299,730 3.4 87,646 640,216 2.1 199,174 For the years ended December 31, 2022 and 2021, the weighted average grant date fair value per share of options was $1.23 and $0.80, respectively. The Company has computed the fair value of stock options granted using the Black-Scholes option pricing model. In applying the Black-Scholes option pricing model, the Company used the following assumptions: For the Years Ended December 31, 2022 2021 Risk free interest rate 1.18% - 4.54 % 0.20% - 0.85 % Expected term (years) 3.5 - 3.9 2.5 - 3.5 Expected volatility 104% - 116 % 93% - 109 % Expected dividends 0 % 0 % Option forfeitures are accounted for at the time of occurrence. The expected term used is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company does not yet have a trading history to support its historical volatility calculations. Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over a period of time equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. As of December 31, 2022, there was $442,199 of unrecognized stock-based compensation expense related to the above stock options, which will be recognized over the weighted average remaining vesting period of 3.1 Market-Based Awards and Exchange for Restricted Stock Units On March 1, 2021, in connection with the appointment of the Company’s Chief Operating Officer (the “COO”), the COO became eligible to receive of up to 1,500,000 shares of the Company’s common stock which would be earned based upon achieving certain market capitalization milestones up to $4 billion (the “Market-based RSU Award”). The grant date value of this award of $2,911,420 was determined using a Monte Carlo valuation model for market-based vesting awards, and was amortizable over each of the tranches’ prospective derived service period. On June 10, 2021, the Chief Executive Officer (the “CEO”) received an option for the purchase of up to 1,500,000 shares of the Company’s common stock at an exercise price of $2.60 per share (the “Market-based Option Award”, and together with the Market-based RSU Award, the “Market-based Awards”), which would be earned based upon achieving certain market capitalization milestones up to $4 billion. The grant date value of this award of $2,579,000 was determined using a Monte Carlo valuation model for market-based vesting awards, and was amortizable over each of the tranches’ prospective derived service period. On November 1, 2022 (the “Modification Date”), the Board approved the termination of the Market-Based Awards and approved the grant of 1,500,000 restricted stock units (the “RSUs”) with a grant date fair value of $3,075,000, to each of the COO and CEO (the “Grantees”). The grant date value was determined using the stock price per share immediately preceding the Board approval of the grant. The RSUs will vest in four equal installments over the course of four years in accordance with the following schedule: Number of Restricted Stock Vesting Date Units That Vest November 1, 2023 750,000 November 1, 2024 750,000 November 1, 2025 750,000 November 1, 2026 750,000 The exchange of RSUs for the Market-based Awards was accounted for as a modification of stock awards; as such, the amortizable value of the RSUs was determined to be $4,226,175, which represents the unrecognized grant-date fair value of the Market-based awards of $1,446,175, plus $2,780,000 representing the incremental fair value of the RSUs over the fair value of the Market Based Awards at the modification date. The following assumptions were used in applying the Monte Carlo valuation model to the Company’s market-based awards on each of the measurement dates described above. November 1, March 1, June 10, 2022 2021 2021 Risk free interest rate 4.33 % 0.71 % 0.73 % Expected volatility 100.0 % 98.9 % 98.5 % Expected dividend yield 0 % 0 % 0 % Expected term 3.3 years 2.1 years 2.2 years Restricted Common Stock The following table presents information related to restricted stock awards and restricted stock units (excluding Market-Based RSU Awards) as of December 31, 2022: Weighted Average Shares of Restricted Grant Date Common Stock Fair Value Non-vested balance, January 1, 2022 2,590,000 $ 2.52 Granted 3,310,000 2.05 Vested (857,500) 2.38 Canceled — — Non-vested shares, December 31, 2022 5,042,500 $ 2.23 During the year ended December 31, 2021, KULR issued as incentive shares to its employees, an aggregate of 2,677,744 shares of our restricted common stock, of which, 117,744 shares were subsequently cancelled. As of December 31, 2022, there was $7,813,665 of unrecognized stock-based compensation expense related to restricted stock that will be recognized over the weighted average remaining vesting period of 3.1 years. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 16 - COMMITMENTS AND CONTINGENCIES Patent License Agreement On March 21, 2018, the Company entered into an agreement with the National Renewable Energy Laboratory (“NREL”) granting the Company an exclusive license to commercialize its patented Internal Short Circuit technology. The agreement is effective for as long as the licensed patents are enforceable, subject to certain early termination provisions specified in the agreement. In consideration, the Company agreed to pay to NREL the following: (i) a cash payment of $12,000 payable over one year, (ii) royalties ranging from 1.5% to 3.75% on the net sales price of the licensed products, as defined in the agreement, with minimum annual royalty payments ranging from $0 to $7,500. In addition, the Company shall use commercially reasonable efforts to bring the licensed products to market through a commercialization program that requires that certain milestones be met, as specified in the agreement. During the years ended December 31, 2022 and 2021, the Company recorded royalty expense of $6,304 and $2,558, respectively, which were included within cost of revenues. Technology Development and Sponsorship Agreement On March 31, 2021, the Company entered into a multi-year technology development and sponsorship agreement, pursuant to which the Company has committed to spend an aggregate of $900,000 in sponsorship fees, payable in three installments, of which $250,000 was paid on April 1, 2021, $300,000 was paid on January 31, 2022, and $350,000 is due during the first quarter of 2023. Payments under this agreement are initially recorded as a prepaid expense and are then amortized over the performance period. During the years ended December 31, 2022 and 2021, $300,000 and $250,000, respectively, of sponsorship fees expense were recognized related to this agreement. In addition, the Company has committed to paying an aggregate of $750,000 related to technology co-development fees, which is to be paid in three equal installments. As of December 31, 2022, the co-development technologies had not been agreed to and no portion of the technology co-development fees has been paid. On December 16, 2021, the Company entered into a one-year sponsorship agreement (the “Second Sponsorship Agreement”) which provides the Company with the right to display its name and logo during certain events during the period from January 1, 2022 through December 31, 2022. During the year ended December 31, 2022, the Company recorded $1,350,000 of sponsorship fees expense related to this agreement. On June 15, 2022, the Company amended the Second Sponsorship Agreement to extend the term through December 31, 2023. The agreement provides the Company with the right to publicize and highlight the sponsorship and display its name and logo during certain events and use digital marketing and social media platforms throughout the 2023 calendar year. The Company has committed to pay an aggregate of $1,450,000 in sponsorship fees in three installments, of which $500,000 was paid in July 2022, $475,000 was paid in January 2023, and $475,000 is payable in April 2023. As of December 31, 2022, $500,000 is included in prepaid expenses (see Note 4 - Prepaid Expenses and Other Current Assets) and will be amortized over the performance period of January 1, 2023 to December 31, 2023 using the straight-line method. Research and Development Agreements On April 5, 2021, the Company entered into a two-year research and development agreement to develop high-areal-capacity battery electrodes to increase the energy density of batteries. Pursuant to the terms of the agreement, the Company has committed to spend an aggregate amount of $580,375, payable in eight quarterly installments of $72,547. During the years ended December 31, 2022 and 2021, $290,188 and $217,641, respectively, of research and development expense was recognized related to this agreement. On August 18, 2021, the Company entered into a multi-year research and development agreement for a solid-state rechargeable battery, pursuant to which the Company has committed to spend an aggregate amount of $592,196 in eight quarterly payments of $74,025. During the years ended December 31, 2022 and 2021, $296,100 and $123,375, respectively, of research and development expense was recognized related to this agreement. Consulting Agreement On September 30, 2020, the Company entered into a 2-year consulting agreement with a contractor to provide services as an Advisory Board Member related to government and defense acquisitions in exchange for 60,000 shares of restricted common stock. Pursuant to the consulting agreement, the shares are subject to the Company’s claw back, based upon the satisfaction of meeting general performance parameters. As of December 31, 2022, the grant date fair value of the common stock was recognized as stock-based compensation expense ratably over the vesting period. During the years ended December 31, 2022 and 2021, $25,545 and $46,455 of expense was recognized as stock-based compensation under this agreement. See Note 15 – Stockholders’ Equity for additional details. Election of Directors and Appointment of Certain Officers On November 1, 2022, the Board of the Company appointed a Lead Independent Director (“Lead Director”) and a non-Lead Independent Director (“non-Lead Director”) of the Board, to hold office until the earlier of the expiration of the term of office of the director whom they have replaced, successors are duly elected and qualified, or the earlier of such director’s death, resignation, disqualification, or removal. Furthermore, the Lead Director will receive annual cash compensation equal to $150,000 upon their appointment and the non-Lead Independent Director (“non-Lead Director”) will receive annual cash compensation equal to $95,000. Additionally, all independent Board members will be granted 37,500 shares of common stock of which shares shall vest quarterly in 7,500 share installments with the first installment vesting December 31, 2022. On March 16, 2022, the Company hired an individual to serve as the Director of Engineering. Effective November 1, 2022, the Company appointed this individual as Chief Technology Officer (the “CTO”) of the Company, upon which the Company issued 100,000 shares of restricted common stock with an aggregate grant date value of $205,000, which shall vest in four equal annual installments beginning November 1, 2023. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 17 - SUBSEQUENT EVENTS Prepaid Advance Liability Subsequent to December 31, 2022, the Company issued 3,153,036 shares of common stock, at purchase prices per share ranging from $0.90 to $1.20, pursuant to Investor Notices submitted by Yorkville for aggregate proceeds of $3,579,932. The proceeds were applied against the principal and interest due for Initial Advance in the aggregate amounts of $3,250,000 and $329,932, respectively. As of March 28, 2023, the remaining balance on the Initial Advance is $5,750,000. See Note 10 – Prepaid Advance Liability for additional information. On March 10, 2023, the Company and Yorkville agreed and closed on a second Prepaid Advance for $2,000,000 (the “Second Advance”). Interest accrues on the outstanding balance of each Prepaid Advance at an annual rate of 10%, subject to an increase to 15% upon events of default as defined. Operating Lease On January 18, 2023, the Company entered into a new lease agreement for office space in Webster, Texas. The initial lease term is twelve months and thirteen days. Monthly rental payments under the new lease are $5,047, which is comprised of $4,245 of base rent plus $802 of common area maintenance fees. The Company determined that the value of the lease liability and the related right-of-use asset at inception was $51,154, using an estimated incremental borrowing rate of 5%. Patent License Agreement During February 2023, the Company entered into a licensing agreement whereby the Company obtained an exclusive license to commercialize its patented Format Fractional Thermal Runaway Calorimeter. The agreement is effective for as long as the licensed patents are enforceable, subject to certain early termination provisions specified in the agreement. In consideration, the Company agreed to pay the following: (i) a cash payment of $60,000 payable upon the execution of this agreement, (ii) royalties of 5.5% on the net sales price of royalty-based products, and services for each accounting period, as defined in the agreement, with minimum annual royalty payments of $20,000 for each accounting period. In addition, the Company shall establish: (a) that a market for the licensed invention has been created, and to the extent practicable, that a market has been created in the United States; (b) that it is being utilized; (c) that its benefits are, to the extent permitted by law or Government regulations, available to the public on reasonable terms; and (d) that market demand, at least in the United States, shall be reasonably met. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The consolidated financial statements of the Company include the accounts of KULR Technology Group, Inc. and its wholly-owned subsidiary, KULR Technology Corporation. All significant intercompany transactions have been eliminated in the consolidation. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Liquidity | Liquidity During the year ended December 31, 2022, the Company incurred a net loss in the amount of $19,436,479 and used cash in operations of $17,354,125. As of December 31, 2022, the Company had cash of $10,333,563 and working capital of $6,055,477. During the year ended December 31, 2022, the Company generated net cash from financing activities of $17,472,361, mainly from proceeds received from Prepaid Advances, the issuance of a note payable, shares of common stock, and from the exercise of options and warrants to purchase common stock. The Company’s primary source of liquidity has historically been cash generated from equity and debt offerings. Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet future financial obligations as they become due within one year after the date that the financial statements are issued. The above conditions are indicators that substantial doubt about the Company’s ability to continue as a going concern could exist as the Company has a history of recurring net losses, recurring use of cash in operations and declining working capital. Despite these conditions, the Company has a successful track record of raising capital as needed and continues to have a positive, ongoing relationship with a financial institution that has provided access to capital and will continue to support KULR. On May 13, 2022, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”), which gives the Company the right, but not the obligation, to sell up to $50,000,000 of its shares of common stock to YA II PN, Ltd. (“Yorkville”) during the commitment period. Further, on September 23, 2022, the Company entered into the Supplemental SEPA, pursuant to which the Company may request advances (“Prepaid Advances”) up to an aggregate of $50,000,000 from Yorkville. Yorkville has the right to receive shares, and may select the timing and delivery of such shares, in an amount up to the balance of the Prepaid Advance in order to pay down the Prepaid Advance liability. During the year ended December 31, 2022, the Company received aggregate gross proceeds of $4,750,000 from a Promissory Note payable and received gross proceeds of $400,000 and $15,000,000 under the SEPA and the Supplemental SEPA, respectively (of which $150,000 and $3,850,000, respectively, was used to repay the Promissory Note; see Note 12 – Notes Payable). The Company is not permitted to initiate additional sales of its common stock under the SEPA until the Prepaid Advance liability ($8,852,290 at December 31, 2022) is settled. Subsequent to December 31, 2022, the Company issued 3,153,036 shares of common stock, at purchase price per share ranging from $0.90 to $1.20, in satisfaction of the Prepaid Advance Liability in the amount of $3,579,932. See Note 10 – Prepaid Advance Liability and Note 15 – Stockholders’ Equity for additional information. While no assurance can be provided that the Company will be successful in raising additional capital from Yorkville, as they are not obligated to advance funds to the Company so long as there is an outstanding Prepaid Advance, Yorkville has represented that in most scenarios, with mutual consent, they will continue to provide financial support as evidenced by the funds provided during March 2023. On March 10, 2023, the Company and Yorkville closed on a second Prepaid Advance in the amount of $2,000,000. Upon satisfaction of the Prepaid Advance liability, the Company will utilize its ability to draw down on the remaining $33,000,000 available under the SEPA. Based on the above, the Company believes it has sufficient liquidity and access to future capital to continue as a going concern for a period of at least twelve months from the date the financial statements have been issued and that its above plans alleviate any potential substantial doubt about the entity’s ability to continue as a going concern. As of March 24, 2023, the Company’s cash balance was approximately $7.3 million. |
Use of Estimates | Use of Estimates Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, fair value calculations for intangible assets, equity securities, stock-based compensation and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. See Note 2 – Summary of Significant Accounting Policies, Stock-Based Compensation for additional discussion of the use of estimates in estimating the fair value of the Company’s common stock. |
Treasury Stock | Treasury Stock The Company records repurchases of its own common stock at cost. Repurchased common stock is presented as a reduction of equity in the consolidated balance sheets. Subsequent reissuances of treasury stock are accounted for on a weighted average cost basis. Gains resulting from differences between the cost of treasury stock and the re-issuance proceeds are credited to additional paid in capital. Losses resulting from differences between the cost of treasury stock and the re-issuance proceeds are debited to additional paid-in capital. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash and accounts receivable. The Company’s concentrations of credit risk also includes concentrations from key customers and vendors. Cash Concentrations A significant portion of the Company’s cash is held at one major financial institution. The Company has not experienced any losses in such accounts. Cash held in US bank institutions is currently insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 at each institution. There were uninsured balances of $9,833,541 and $14,363,301 as of December 31, 2022 and 2021, respectively. Customer and Revenue Concentrations The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows: Revenues Account Receivables For the Years Ended December 31, As of December 31, 2022 2021 2022 2021 Customer A 13 % 29 % 34 % * Customer B * * * 34 % Customer C 42 % 25 % * * Customer D * 30 % * 42 % Customer E * * * 21 % Customer F 32 % * 61 % * Total 87 % 84 % 95 % 97 % * There is no assurance the Company will continue to receive significant revenues from any of these customers. Any reduction or delay in operating activity from any of the Company’s significant customers, or a delay or default in payment by any significant customer, or termination of agreements with significant customers, could materially harm the Company’s business and prospects. As a result of the Company’s significant customer concentrations, its gross profit and results from operations could fluctuate significantly due to changes in political, environmental, or economic conditions, or the loss of, reduction of business from, or less favorable terms with any of the Company’s significant customers. Vendor Concentrations Vendor concentrations are as follows for the years ended December 31, 2022 and 2021: For the Years Ended December 31, 2022 2021 Vendor A * * Vendor B * 14 % 0 % 14 % * Less than 10% |
Accounts Receivable | Accounts Receivable Accounts receivable are carried at their contractual amounts, less an estimate for uncollectible amounts. As of December 31, 2022 and 2021, no allowances for uncollectible amounts were determined to be necessary. Management estimates the allowance for bad debts based on existing economic conditions, the financial conditions of the customers, and the amount and age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted. |
Inventory | Inventory Inventory is comprised of carbon fiber velvet (“CFV”) thermal interface solutions and internal short circuit batteries, which are available for sale, as well as raw materials and work in process related primarily to the manufacture of safe cases. Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out method. The cost of inventory that is sold to third parties is included within cost of sales and the cost of inventory that is given as samples is included within operating expenses. The Company periodically reviews for slow-moving, excess or obsolete inventories. Products that are determined to be obsolete, if any, are written down to net realizable value. On occasion, the Company pays for inventory prior to receiving the goods. These payments are recorded as inventory deposits until the goods are received and these costs are included in the current asset section of the balance sheet. As of December 31, 2022 and 2021, inventory deposits were $285,260 and $309,688, respectively. Finished goods inventory is held on-site at the San Diego, California location. Raw materials are held off-site with certain suppliers. Inventory at December 31, 2022 and 2021 consisted of the following: December 31, December 31, 2022 2021 Raw materials $ 1,075,310 $ — Work-in-process 2,977 — Finished goods 883,748 191,311 Total inventory $ 1,962,035 $ 191,311 |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation which is recorded commencing at the in-service date using the straight-line method at rates sufficient to charge the cost of depreciable assets to operations over their estimated useful lives, which range from 3 to 7 years (see Note 5 – Property and Equipment for additional details). Leasehold improvements are amortized over the shorter of (a) the useful life of the asset; or (b) the remaining lease term. Maintenance and repairs are charged to operations as incurred. The Company capitalizes cost attributable to the betterment of property and equipment when such betterment extends the useful life of the assets. Vendor deposits toward the purchase of property and equipment are reflected as equipment deposits on the accompanying balance sheets. The Company reviews for the impairment of long-lived assets annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value. |
Intangibles | Intangibles Intangible assets are stated at fair value as of the date acquired, less accumulated amortization. Amortization is calculated based on the estimated useful lives of the assets, using the straight-line method or another method that more fairly represents the utilization of the assets, as follows: Estimated Useful Life Patent 17.3 years Intellectual property 5.0 years The Company periodically evaluates the remaining useful lives of our intangible assets to determine whether events or circumstances warrant a revision to the remaining periods of amortization. In the event that the estimate of an intangible asset’s remaining useful life has changed, the remaining carrying amount of the intangible asset is amortized prospectively over that revised remaining useful life. If it is determined that an intangible asset has an indefinite useful life, that intangible asset would be subject to impairment testing annually or whenever events or circumstances indicate that its carrying value may not, based on future undiscounted cash flows or market factors, be recoverable. An impairment loss, the recorded amount of which would be based on the fair value of the intangible asset at the measurement date, would be recorded in the period in which the impairment determination was made. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 — quoted prices in active markets for identical assets or liabilities Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example, cash flow modeling inputs based on assumptions) The carrying amounts of the Company’s financial instruments, such as cash, accounts receivable, accrued expenses and other current liabilities, notes payable and loans payable approximate fair values due to the short-term nature of these instruments. |
Preferred Stock | Preferred Stock The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. The Company’s preferred shares are classified as stockholders’ equity because they are not subject to mandatory redemption, which would result in liability classified instruments measured at fair value, and because they are not conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) which would result in temporary equity classified instruments. |
Convertible Instruments | Convertible Instruments The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with Topic 815 of the FASB ASC. The accounting treatment of derivative financial instruments requires that the Company record embedded conversion options and any related freestanding instruments at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Embedded conversion options and any related freestanding instruments are recorded as a discount to the host instrument. If the instrument is determined not to be a derivative liability, the Company then evaluates for the existence of a beneficial conversion feature by comparing the market price of the Company’s common stock as of the commitment date to the effective conversion price of the instrument. |
Accrued Issuable Equity | Accrued Issuable Equity The Company records accrued issuable equity when it is contractually obligated to issue shares and there has been a delay in the issuance of such shares. Accrued issuable equity is recorded and carried at fair value with changes in its fair value recognized in the Company’s consolidated statements of operations. Once the underlying shares of common stock are issued, the accrued issuable equity is reclassified to equity as of the share issuance date at the then current fair market value of the common stock. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs, which primarily consist of direct, incremental professional fees incurred in connection with a debt or equity financing, are capitalized as deferred financing costs (a non-current asset) on the balance sheet. Once the financing closes, the Company reclassifies such costs as either discounts to notes payable or as a reduction of proceeds received from equity transactions so that such costs are recorded as a reduction of additional paid-in capital. If the completion of a contemplated financing was deemed to be no longer probable, the related deferred offering costs would be charged to general and administrative expense in the consolidated financial statements. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The following five steps are applied to achieve that core principle: ● Step 1: Identify the contract with the customer; ● Step 2: Identify the performance obligations in the contract; ● Step 3: Determine the transaction price; ● Step 4: Allocate the transaction price to the performance obligations in the contract; and ● Step 5: Recognize revenue when the company satisfies a performance obligation. The Company recognizes revenue primarily from the following different types of contracts: ● Product sales ● Contract services The following table summarizes the Company’s revenue recognized in its consolidated statements of operations: For the Years Ended December 31, 2022 2021 Product sales $ 2,643,325 $ 1,495,328 Contract services 1,351,309 917,540 Total revenue $ 3,994,634 $ 2,412,868 As of December 31, 2022 and 2021, the Company had $23,000 and $132,303 of deferred revenue, respectively, |
Deferred Labor Costs | Deferred Labor Costs As of December 31, 2022 and 2021, the Company had $34,402 and $84,324, respectively, of deferred labor costs, which is included in prepaid expenses and other current assets in the Company’s consolidated balance sheets. Deferred labor costs represent costs incurred to fulfill the Company’s contract service revenue. The Company will recognize the deferred labor costs as cost of revenues at the point in time that the Company satisfies its performance obligation under the respective contract, which is generally at the time the services are fulfilled and/or accepted by the customer. |
Shipping and Handling Costs | Shipping and Handling Costs Amounts billed to a customer in a sales transaction related to shipping and handling are recorded as revenue. Costs incurred for shipping and handling are included as cost of revenues on the accompanying consolidated statements of operations. |
Research and Development | Research and Development Research and development include expenses incurred in connection with the research and development of our CFV thermal management solution, high-areal-capacity battery electrodes, 3D engineering for a rechargeable battery and non-cash stock-based compensation expenses. Research and development expenses are charged to operations as incurred. |
Advertising Costs | Advertising Costs Advertising costs are expensed in the period incurred. Advertising costs charged to operations for the years ended December 31, 2022 and 2021 were $874,398 and $145,025, respectively, and are included in selling, general and administrative in the consolidated statements of operations. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award since the fair value of the award is more readily determinable than the value of the services. The fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Upon the exercise of an award, the Company generally issues new shares of common stock out of its authorized shares, but may issue treasury stock, when available. |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common and dilutive common-equivalent shares outstanding during each period. The following table presents the computation of basic and diluted net loss per common share: For the Twelve Months Ended December 31, 2022 2021 Numerator: Net loss $ (19,436,479) $ (11,911,151) Deemed dividend to Series D preferred stockholders — (2,624,326) Net loss attributable to common stockholders $ (19,436,479) $ (14,535,477) Denominator (weighted average quantities): Common shares issued 107,683,574 97,708,080 Less: Treasury shares purchased (125,015) — Less: Unvested restricted shares (2,005,109) (2,037,897) Add: Accrued issuable equity 102,323 79,437 Denominator for basic and diluted net loss per share 105,655,773 95,749,620 Basic and diluted net loss per common share $ (0.18) $ (0.15) The following shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: December 31, 2022 2021 Unvested restricted stock 5,042,500 2,590,000 Unvested market -based equity awards — 3,000,000 Options 640,216 405,216 Warrants 2,524,410 2,594,553 Total 8,207,126 8,589,769 The table above does not include shares to be issued in satisfaction of the remaining prepaid advance liability (see Note 10 – Prepaid Advance Liability). |
Operating Leases | Operating Leases The Company leases properties under operating leases. For leases in effect upon adoption of Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” at January 1, 2020 and for any leases commencing thereafter, the Company recognizes a liability to make lease payments, the “lease liability”, and an asset representing the right to use the underlying asset during the lease term, the “right-of-use asset”. The lease liability is measured at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate. The right-of-use asset is measured at the amount of the lease liability adjusted for the remaining balance of any lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the right-of-use-asset. Operating lease expense consists of a single lease cost calculated so that the remaining cost of the lease is allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the right-of-use asset. |
Income Taxes | Income Taxes The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included or excluded in the financial statements or tax returns. Deferred tax assets and liabilities are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts (“temporary differences”) at enacted tax rates in effect for the years in which the temporary differences are expected to reverse. The Company utilizes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December 31, 2022 and 2021. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date. The Company’s policy is to classify assessments, if any, for tax related interest as interest expense and penalties as selling, general and administrative expenses in the consolidated statements of operations. |
Reclassifications | Reclassifications Certain prior period balances have been reclassified in order to conform to the current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share. |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through the date which the consolidated financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements, except as disclosed. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2020-02 (collectively Topic 326). Topic 326 requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This replaces the existing incurred loss model with an expected loss model and requires the use of forward-looking information to calculate credit loss estimates. The Company will be required to adopt the provisions of this ASU on January 1, 2023, with early adoption permitted for certain amendments. Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings. The Company does not expect the adoption of this standard to have a material effect on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. ASU 2020-06 requires entities to provide expanded disclosures about the terms and features of convertible instruments and amends certain guidance in ASC 260, Earnings per Share, relating to the computation of earnings per share for convertible instruments and contracts in an entity’s own equity. The guidance becomes effective for the Company on January 1, 2024, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 effective January 1, 2021 and its adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures. In October 2020, the FASB issued ASU 2020-10 “Codification Improvements”, which improves consistency by amending the Codification to include all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the Codification by amending and adding new headings, cross referencing to other guidance, and refining or correcting terminology. The guidance is effective for the Company beginning in the first quarter of fiscal year 2022 with early adoption permitted. The Company adopted ASU 2020-10 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements. On May 3, 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectively to modifications or exchanges occurring after the effective date of the new standard. Early adoption is permitted, including adoption in an interim period. If an issuer elects to early adopt the new standard in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The Company adopted ASU 2021-04 effective January 1, 2022 and its adoption did not have a material impact on its condensed consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of concentrations of credit risk | Revenues Account Receivables For the Years Ended December 31, As of December 31, 2022 2021 2022 2021 Customer A 13 % 29 % 34 % * Customer B * * * 34 % Customer C 42 % 25 % * * Customer D * 30 % * 42 % Customer E * * * 21 % Customer F 32 % * 61 % * Total 87 % 84 % 95 % 97 % * Vendor concentrations are as follows for the years ended December 31, 2022 and 2021: For the Years Ended December 31, 2022 2021 Vendor A * * Vendor B * 14 % 0 % 14 % * Less than 10% |
Schedule of inventory | December 31, December 31, 2022 2021 Raw materials $ 1,075,310 $ — Work-in-process 2,977 — Finished goods 883,748 191,311 Total inventory $ 1,962,035 $ 191,311 |
Schedule of estimated useful life of intangible assets | Estimated Useful Life Patent 17.3 years Intellectual property 5.0 years |
Schedule of revenue recognized | For the Years Ended December 31, 2022 2021 Product sales $ 2,643,325 $ 1,495,328 Contract services 1,351,309 917,540 Total revenue $ 3,994,634 $ 2,412,868 |
Schedule of of basic and diluted net loss per common share | For the Twelve Months Ended December 31, 2022 2021 Numerator: Net loss $ (19,436,479) $ (11,911,151) Deemed dividend to Series D preferred stockholders — (2,624,326) Net loss attributable to common stockholders $ (19,436,479) $ (14,535,477) Denominator (weighted average quantities): Common shares issued 107,683,574 97,708,080 Less: Treasury shares purchased (125,015) — Less: Unvested restricted shares (2,005,109) (2,037,897) Add: Accrued issuable equity 102,323 79,437 Denominator for basic and diluted net loss per share 105,655,773 95,749,620 Basic and diluted net loss per common share $ (0.18) $ (0.15) |
Schedule of shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive | December 31, 2022 2021 Unvested restricted stock 5,042,500 2,590,000 Unvested market -based equity awards — 3,000,000 Options 640,216 405,216 Warrants 2,524,410 2,594,553 Total 8,207,126 8,589,769 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |
Schedule of prepaid expenses and other current assets | As of December 31, 2022 2021 Vendor receivables $ 368,069 $ — Deferred labor costs 34,402 84,324 Insurance 12,776 69,925 Professional fees 25,787 65,118 Other 84,120 31,074 Research and development 62,329 — Dues and subscriptions 75,889 — Compensation costs 375,000 — Marketing and sponsorships 574,636 10,231 Total prepaid expenses $ 1,613,008 $ 260,672 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | December 31, 2022 2021 Estimated Useful Life Construction in progress (1) $ 1,428,217 $ — Machinery & equipment 1,374,293 72,392 5 - 7 years Leasehold improvements 345,709 339,422 Lesser of the useful life of the asset or remaining life of the lease Computer equipment 152,699 47,503 3 years Software 127,193 18,714 3 years Research and development equipment 100,939 12,810 3 years Furniture and fixtures 6,968 6,968 5 years 3,536,018 497,809 Less: accumulated depreciation (342,977) (123,334) Property and equipment, net $ 3,193,041 $ 374,475 (1) Consists primarily of $1,198,733 for the construction of an automation facility and $184,484 for the construction of the mezzanine. |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2012 | |
INTANGIBLE ASSETS | |
Schedule of company's intangible assets | December 31, 2022 2021 Patent $ 218,000 $ 218,000 Intellectual property 543,572 — 761,572 218,000 Less: accumulated amortization (40,804) (1,048) Intangible assets, net $ 720,768 $ 216,952 |
Schedule of future amortization intangible assets | For the Years Ended December 31, 2022 2023 $ 121,293 2024 121,293 2025 121,293 2026 121,293 2027 94,114 Thereafter 141,482 $ 720,768 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2022 2021 Professional fees $ 1,180,000 $ 418,154 Payroll and vacation 464,453 302,101 Research and development 196,409 146,158 Subscriptions 65,000 — Inventory 58,804 — Accrued cost of sales — 128,500 Board compensation 122,500 45,680 Marketing and advertising fees 3,999 37,810 Legal fees 2,000 — Other 49,112 84,824 Total accrued expenses and other current liabilities 2,142,277 1,163,227 Add: Accrued interest, non-current 157,054 — Total accrued expenses and other current liabilities $ 2,299,331 $ 1,163,227 |
ACCRUED ISSUABLE EQUITY (Tables
ACCRUED ISSUABLE EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED ISSUABLE EQUITY | |
Schedule of accrued issuable equity | As of December 31, 2022 2021 Beginning balance $ 290,721 $ 128,380 Grant date value of share obligations 176,270 245,720 Cancellation of accrued issuable equity (92,000) — Shares issued in satisfaction of accrued issuable equity — (209,200) Mark-to-market (147,035) 125,821 Ending balance $ 227,956 $ 290,721 |
PREPAID ADVANCE LIABILITY (Tabl
PREPAID ADVANCE LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID ADVANCE LIABILITY | |
Summary of prepaid advance liability | Original Issue Prepaid Advance Discount Debt Discount Net Current portion $ 5,750,000 $ 302,579 $ (396,967) $ 5,655,612 Non-current portion 3,250,000 171,052 (224,374) 3,196,678 Total prepaid advance liability $ 9,000,000 $ 473,631 $ (621,341) $ 8,852,290 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Schedule of maturities of lease liabilities | Maturity Year Amount 2023 234,694 2024 99,187 Total lease payments 333,881 Less: Imputed interest (12,278) Present value of lease liabilities 321,603 Less: current portion (223,645) Lease liabilities, non-current portion $ 97,958 |
Schedule of supplemental cash flow information related to the lease | For the Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating lease $ 205,034 $ 144,540 Right-of-use asset obtained in exchange for lease obligations Operating lease $ — $ 814,817 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NOTES PAYABLE | |
Summary of notes payable activity | Notes Debt Payable Discount Total Balance, January 1, 2022 $ — $ — — Proceeds from promissory note 5,000,000 (250,000) 4,750,000 Debt discount — (17,200) (17,200) Repayments in cash (4,850,000) — (4,850,000) Repayments in shares of common stock (150,000) — (150,000) Amortization of debt discount — 258,692 258,692 Loss on debt extinguishment — 8,508 8,508 Outstanding, December 31, 2022 $ — $ — $ — |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of Components of Income Tax Expense (Benefit) | For the Years Ended December 31, 2022 2021 Federal: Current $ — $ — Deferred (3,967,600) (2,359,473) State and local: Current — — Deferred (1,133,600) (996,095) (5,101,200) (3,355,568) Change in valuation allowance 5,101,200 3,355,568 Income tax provision $ — $ — |
Schedule of Effective Income Tax Rate Reconciliation | For the Years Ended December 31, 2022 2021 Tax benefit at federal statutory rate (21.0) % (21.0) % State income taxes, net of federal benefit (6.0) % (6.0) % Permanent differences (0.1) % (1.0) % Other and prior year true-ups 0.9 % 0.0 % Change in valuation allowance 26.2 % 28.0 % Effective income tax rate 0.0 % 0.0 % |
Schedule of Deferred Tax Assets and Liabilities | For the Years Ended December 31, 2022 2021 Deferred Tax Assets (Liabilities): Net operating loss carryforwards $ 9,078,972 $ 4,978,331 Research and development credit carryforwards 101,422 270,188 Capitalized research and development costs 953,675 — Stock-based compensation 1,587,800 981,067 Property and equipment (382,819) — Debt Discount (16,384) — Accruals and other 63,580 55,460 Gross deferred tax assets 11,386,246 6,285,046 Valuation allowance (11,386,246) (6,285,046) Deferred tax asset, net of valuation allowance $ — $ — Changes in valuation allowance $ 5,101,200 $ 3,355,568 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
Schedule of warrants activity | Weighted Weighted Average Average Number of Exercise Remaining Intrinsic Warrants Price Term (Yrs) Value Outstanding, January 1, 2022 2,594,553 $ 1.25 Issued 2,346,525 1.00 Exercised (2,416,668) (1.25) Expired — — Forfeited — — Outstanding, December 31, 2022 2,524,410 $ 1.02 3.0 $ 492,770 Exercisable, December 31, 2022 2,524,410 $ 1.02 3.0 $ 492,770 |
Schedule of outstanding and exercisable warrants | A summary of outstanding and exercisable warrants as of December 31, 2022 is presented below: Warrants Outstanding Warrants Exercisable Weighted Outstanding Average Exercisable Exercise Number of Remaining Life Number of Price Warrants In Years Warrants $ 1.25 177,885 3.0 177,885 $ 1.00 2,346,525 3.0 2,346,525 2,524,410 3.0 2,524,410 |
Schedule of Information relating to stock based compensation | For the Years Ended December 31, 2022 2021 Common stock issued for services $ 109,850 $ 167,710 Accrued issuable equity (common stock) 84,270 245,719 Amortization of stock options 103,220 68,239 Amortization of market-based awards 1,932,402 2,111,845 Amortization of restricted stock units 1,945,272 1,606,578 Total $ 4,175,014 $ 4,200,091 |
Schedule of stock option activity outstanding and exercisable | Weighted Weighted Average Average Number of Exercise Remaining Intrinsic Options Price Term (Yrs) Value Outstanding, January 1, 2022 405,216 $ 2.29 Granted 330,000 1.71 Exercised (66,042) 0.71 Expired — — Forfeited (28,958) 1.49 Outstanding, December 31, 2022 640,216 $ 1.72 3.6 $ 60,767 Exercisable, December 31, 2022 199,174 $ 1.43 2.1 $ 58,476 The following table presents information related to stock options (excluding market-based option awards) as of December 31, 2022: Options Outstanding Options Exercisable Weighted Outstanding Average Exercisable Exercise Number of Remaining Life Number of Price Options In Years Options $0.66 110,486 1.0 106,320 $1.28 - $1.50 140,000 — — $1.55 - $1.99 90,000 3.4 5,208 $2.05 - $2.44 299,730 3.4 87,646 640,216 2.1 199,174 |
Schedule of RSUs will vest in four equal installments | Number of Restricted Stock Vesting Date Units That Vest November 1, 2023 750,000 November 1, 2024 750,000 November 1, 2025 750,000 November 1, 2026 750,000 |
Schedule of restricted stock awards and restricted stock units (excluding Market-Based RSU Awards) | Weighted Average Shares of Restricted Grant Date Common Stock Fair Value Non-vested balance, January 1, 2022 2,590,000 $ 2.52 Granted 3,310,000 2.05 Vested (857,500) 2.38 Canceled — — Non-vested shares, December 31, 2022 5,042,500 $ 2.23 |
Stock options | |
STOCKHOLDERS' EQUITY | |
Schedule of stock options granted | For the Years Ended December 31, 2022 2021 Risk free interest rate 1.18% - 4.54 % 0.20% - 0.85 % Expected term (years) 3.5 - 3.9 2.5 - 3.5 Expected volatility 104% - 116 % 93% - 109 % Expected dividends 0 % 0 % |
Amortization of market-based awards | |
STOCKHOLDERS' EQUITY | |
Schedule of stock options granted | November 1, March 1, June 10, 2022 2021 2021 Risk free interest rate 4.33 % 0.71 % 0.73 % Expected volatility 100.0 % 98.9 % 98.5 % Expected dividend yield 0 % 0 % 0 % Expected term 3.3 years 2.1 years 2.2 years |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Customer, Revenue and Vendor Concentrations (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | Total Customers | Revenue Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 87% | 84% |
Revenues | Customer A | Revenue Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 13% | 29% |
Revenues | Customer C | Revenue Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 42% | 25% |
Revenues | Customer D | Revenue Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 30% | |
Revenues | Customer F | Revenue Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 32% | |
Account Receivables | Total Customers | Customer Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 95% | 97% |
Account Receivables | Customer A | Customer Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 34% | |
Account Receivables | Customer B | Customer Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 34% | |
Account Receivables | Customer D | Customer Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 42% | |
Account Receivables | Customer E | Customer Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 21% | |
Account Receivables | Customer F | Customer Concentrations | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 61% | |
Accounts Payable | Vendor Concentrations | Total Vendors | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 0% | 14% |
Accounts Payable | Vendor Concentrations | Vendor B | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Concentration Risk, Percentage | 14% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventory (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Raw materials | $ 1,075,310 | |
Work-in-process | 2,977 | |
Finished goods | 883,748 | $ 191,311 |
Total inventory | $ 1,962,035 | $ 191,311 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangibles (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Patent | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 17 years 3 months 18 days |
Intellectual property | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Company's revenue recognized in its consolidated statements of operations (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Total revenue | $ 3,994,634 | $ 2,412,868 |
Product sales | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Total revenue | 2,643,325 | 1,495,328 |
Contract services | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Total revenue | $ 1,351,309 | $ 917,540 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of basic and diluted net loss per common share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | ||
Net loss | $ (19,436,479) | $ (11,911,151) |
Deemed dividend to Series D preferred stockholders | (2,624,326) | |
Net Loss Attributable to Common Stockholders | $ (19,436,479) | $ (14,535,477) |
Denominator (weighted average quantities): | ||
Common shares issued | 107,683,574 | 97,708,080 |
Less: Treasury shares purchased | (125,015) | |
Less: Unvested restricted shares | (2,005,109) | (2,037,897) |
Add: Accrued issuable equity | 102,323 | 79,437 |
Denominator for basic net loss per share | 105,655,773 | 95,749,620 |
Denominator for diluted net loss per share | 105,655,773 | 95,749,620 |
Basic net loss per common share (In dollars per share) | $ (0.18) | $ (0.15) |
Diluted net loss per common share (In dollars per share) | $ (0.18) | $ (0.15) |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shares were excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of shares were excluded from the calculation of weighted average dilutive common shares | 8,207,126 | 8,589,769 |
Unvested restricted stock | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of shares were excluded from the calculation of weighted average dilutive common shares | 5,042,500 | 2,590,000 |
Unvested market -based equity awards | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of shares were excluded from the calculation of weighted average dilutive common shares | 3,000,000 | |
Options | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of shares were excluded from the calculation of weighted average dilutive common shares | 640,216 | 405,216 |
Warrants | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of shares were excluded from the calculation of weighted average dilutive common shares | 2,524,410 | 2,594,553 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||
Jan. 01, 2023 | Jan. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 24, 2023 | Mar. 10, 2023 | Sep. 23, 2022 | May 13, 2022 | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Net loss | $ (19,436,479) | $ (11,911,151) | |||||||
Cash in operations | 17,354,125 | 6,805,674 | |||||||
Cash | 10,333,563 | 14,863,301 | |||||||
Working capital | 6,055,477 | ||||||||
Net Cash Provided By Financing Activities | 17,472,361 | 15,526,070 | |||||||
Proceeds from note payable | [1] | 4,750,000 | |||||||
Repayments of Notes Payable | 1,000,000 | 2,450,000 | |||||||
Prepaid Advance Liability | 8,852,290 | $ 15,000,000 | |||||||
Remaining balance on initial Prepaid Advance liability | 5,655,612 | ||||||||
Uninsured cash | 9,833,541 | 14,363,301 | |||||||
Inventory deposits | 285,260 | 309,688 | |||||||
Deferred revenue | 23,000 | 132,303 | |||||||
Deferred labor costs | 34,402 | 84,324 | |||||||
Advertising costs | $ 874,398 | $ 145,025 | |||||||
Minimum | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Property and equipment useful life | 3 years | ||||||||
Maximum | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Property and equipment useful life | 7 years | ||||||||
Subsequent event | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Number of stock issued (in shares) | 3,153,036 | ||||||||
Subsequent event | Common Stock [Member] | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Number of stock issued (in shares) | 3,153,036 | ||||||||
Subsequent event | Minimum | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Shares issued price (in dollars per share) | $ 0.90 | ||||||||
Subsequent event | Maximum | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Shares issued price (in dollars per share) | $ 1.20 | ||||||||
SEPA | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Value of shares to be issued | $ 50,000,000 | $ 50,000,000 | |||||||
Aggregate gross proceeds | $ 4,750,000 | ||||||||
Proceeds from note payable | 400,000 | ||||||||
Repayments of Notes Payable | 150,000 | ||||||||
Remaining liquidity to draw down | 33,000,000 | ||||||||
SEPA | Subsequent event | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Prepaid Advance Liability | $ 2,000,000 | ||||||||
Cash | $ 7,300,000 | ||||||||
Supplemental Agreement to the SEPA | |||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
Proceeds from note payable | 15,000,000 | ||||||||
Repayments of Notes Payable | 3,850,000 | ||||||||
Prepaid Advance Liability | 8,852,290 | ||||||||
Remaining balance on initial Prepaid Advance liability | $ 3,579,932 | ||||||||
[1] Note payable face value of $5,000,000 , less $250,000 original issue discount. |
ASSET PURCHASE (Details)
ASSET PURCHASE (Details) - USD ($) | 12 Months Ended | |||||||
Oct. 06, 2023 | Oct. 05, 2023 | Apr. 05, 2023 | Oct. 06, 2022 | Oct. 05, 2022 | May 13, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
ASSET PURCHASE | ||||||||
Total consideration | $ 3,500,000 | |||||||
Cash consideration | 2,000,000 | $ 1,000,000 | ||||||
Total consideration to seller | $ 216,000 | |||||||
Aggregate fair value | $ 1,500,000 | |||||||
Shares issuable | 279,852 | |||||||
Prepaid advance liability | $ 1.34 | |||||||
Percentage of assets acquisition | 75% | |||||||
Total aggregate assets consideration | $ 3,000,000 | |||||||
Remaining fair value of assets consideration acquired | 500,000 | |||||||
Legal fees | $ 7,200 | 43,572 | ||||||
Intangible assets acquired | 720,768 | $ 216,952 | ||||||
Intellectual property | ||||||||
ASSET PURCHASE | ||||||||
Intangible assets acquired | $ 543,572 | $ 543,572 | ||||||
Estimated useful life of intangible assets amortization | 5 years | 5 years | ||||||
First installments | ||||||||
ASSET PURCHASE | ||||||||
Cash consideration | $ 500,000 | |||||||
Second installments | ||||||||
ASSET PURCHASE | ||||||||
Cash consideration | $ 500,000 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ||
Vendor receivables | $ 368,069 | |
Deferred labor costs | 34,402 | $ 84,324 |
Insurance | 12,776 | 69,925 |
Professional fees | 25,787 | 65,118 |
Other | 84,120 | 31,074 |
Research and development | 62,329 | |
Dues and subscriptions | 75,889 | |
Compensation costs | 375,000 | |
Marketing and sponsorships | 574,636 | 10,231 |
Total prepaid expenses | $ 1,613,008 | $ 260,672 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 3,536,018 | $ 497,809 |
Less: accumulated deprecation | (342,977) | (123,334) |
Property and equipment, net | $ 3,193,041 | 374,475 |
Minimum | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Estimated Useful Life | 3 years | |
Maximum | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Estimated Useful Life | 7 years | |
Construction in progress | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 1,428,217 | |
Machinery & equipment | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 1,374,293 | 72,392 |
Machinery & equipment | Minimum | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Estimated Useful Life | 5 years | |
Machinery & equipment | Maximum | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Estimated Useful Life | 7 years | |
Leasehold improvements | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 345,709 | 339,422 |
Computer equipment | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 152,699 | 47,503 |
Property and equipment, Estimated Useful Life | 3 years | |
Software | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 127,193 | 18,714 |
Property and equipment, Estimated Useful Life | 3 years | |
Research and development equipment | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 100,939 | 12,810 |
Property and equipment, Estimated Useful Life | 3 years | |
Furniture and fixtures | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 6,968 | $ 6,968 |
Property and equipment, Estimated Useful Life | 5 years | |
Automation facility | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 1,198,733 | |
Mezzanine | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, Gross | $ 184,484 |
PROPERTY AND EQUIPMENT - Additi
PROPERTY AND EQUIPMENT - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
PROPERTY AND EQUIPMENT | ||
Depreciation expense | $ 219,643 | $ 66,667 |
INTANGIBLE ASSETS - Company's i
INTANGIBLE ASSETS - Company's intangible assets (Details) - USD ($) | Dec. 31, 2022 | Oct. 05, 2022 | Dec. 31, 2021 |
INTANGIBLE ASSETS | |||
Intangible assets, gross | $ 761,572 | $ 218,000 | |
Less: accumulated amortization | (40,804) | (1,048) | |
Intangible assets, net | 720,768 | 216,952 | |
Patent | |||
INTANGIBLE ASSETS | |||
Intangible assets, gross | 218,000 | $ 218,000 | |
Intellectual property | |||
INTANGIBLE ASSETS | |||
Intangible assets, gross | 543,572 | ||
Intangible assets, net | $ 543,572 | $ 543,572 |
INTANGIBLE ASSETS - Additional
INTANGIBLE ASSETS - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Oct. 05, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
INTANGIBLE ASSETS | |||
Intangible assets, gross | $ 761,572 | $ 218,000 | |
Intangible assets acquired | 720,768 | 216,952 | |
Amortization of intangible assets | 39,756 | 1,048 | |
Impairment of intangible assets | $ 0 | ||
Weighted average remaining amortization period | 8 years | ||
Patent | |||
INTANGIBLE ASSETS | |||
Intangible assets, gross | $ 218,000 | $ 218,000 | |
Useful life | 17 years 3 months 18 days | ||
Intellectual property | |||
INTANGIBLE ASSETS | |||
Intangible assets, gross | $ 543,572 | ||
Useful life | 5 years | 5 years | |
Intangible assets acquired | $ 543,572 | $ 543,572 |
INTANGIBLE ASSETS - Future amor
INTANGIBLE ASSETS - Future amortization of intangible asset (Details) | Dec. 31, 2022 USD ($) |
INTANGIBLE ASSETS | |
2023 | $ 121,293 |
2024 | 121,293 |
2025 | 121,293 |
2026 | 121,293 |
2027 | 94,114 |
Thereafter | 141,482 |
Future amortization of intangible asset, net | $ 720,768 |
EQUIPMENT DEPOSITS (Details)
EQUIPMENT DEPOSITS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
EQUIPMENT DEPOSITS | ||
Equipment deposits | $ 3,514,937 | $ 2,153,950 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Professional fees | $ 1,180,000 | $ 418,154 |
Payroll and vacation | 464,453 | 302,101 |
Research and development | 196,409 | 146,158 |
Subscriptions | 65,000 | |
Inventory | 58,804 | |
Accrued cost of sales | 128,500 | |
Board compensation | 122,500 | 45,680 |
Marketing and advertising fees | 3,999 | 37,810 |
Legal fees | 2,000 | |
Other | 49,112 | 84,824 |
Total accrued expenses and other current liabilities | 2,142,277 | 1,163,227 |
Add: Accrued interest, non-current | 157,054 | |
Total accrued expenses and other current liabilities | $ 2,299,331 | $ 1,163,227 |
ACCRUED ISSUABLE EQUITY (Detail
ACCRUED ISSUABLE EQUITY (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
ACCRUED ISSUABLE EQUITY | ||
Beginning balance | $ 290,721 | $ 128,380 |
Grant date value of share obligations | 176,270 | 245,720 |
Cancellation of accrued issuable equity | (92,000) | |
Shares issued in satisfaction of accrued issuable equity | (209,200) | |
Mark-to-market | (147,035) | 125,821 |
Ending balance | $ 227,956 | $ 290,721 |
ACCRUED ISSUABLE EQUITY - Addit
ACCRUED ISSUABLE EQUITY - Additional information (Details) - USD ($) | 12 Months Ended | ||
Oct. 05, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
ACCRUED ISSUABLE EQUITY | |||
Value of services | $ 176,270 | $ 245,720 | |
Shares issued in exchange for certain services, aggregate shares | 33,333 | 100,000 | |
Shares issued in exchange for services, aggregate fair value | $ 92,000 | $ 209,200 | |
Gains (losses) related to the change in fair value | 147,035 | 125,821 | |
Fair value of unissued share | $ 227,956 | $ 290,721 | |
Common Stock | |||
ACCRUED ISSUABLE EQUITY | |||
Shares issued during period shares other | 279,851 | ||
Stock accrued for the issuance of shares | 69,963 | ||
Aggregate value accrued for the issuance of shares | $ 93,750 |
PREPAID ADVANCE LIABILITY - Sum
PREPAID ADVANCE LIABILITY - Summary of prepaid advance liability (Details) - USD ($) | Dec. 31, 2022 | Sep. 23, 2022 |
PREPAID ADVANCE LIABILITY | ||
Prepaid Advance | $ 9,000,000 | |
Original Issue Discount | 473,631 | |
Debt Discount | (621,341) | |
Net | 8,852,290 | $ 15,000,000 |
Current portion | ||
PREPAID ADVANCE LIABILITY | ||
Prepaid Advance | 5,750,000 | |
Original Issue Discount | 302,579 | |
Debt Discount | (396,967) | |
Net | 5,655,612 | |
Non-current portion | ||
PREPAID ADVANCE LIABILITY | ||
Prepaid Advance | 3,250,000 | |
Original Issue Discount | 171,052 | |
Debt Discount | (224,374) | |
Net | $ 3,196,678 |
PREPAID ADVANCE LIABILITY - Add
PREPAID ADVANCE LIABILITY - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Mar. 28, 2023 | Dec. 31, 2022 | Sep. 23, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
PREPAID ADVANCE LIABILITY | ||||||
Repayments of notes payable | $ 1,000,000 | $ 2,450,000 | ||||
Legal fees and professional fees in connection with supplemental agreement | $ 85,000 | |||||
Prepaid advance liability | $ 8,852,290 | 15,000,000 | 8,852,290 | |||
Prepaid Advance | 9,000,000 | 9,000,000 | ||||
Original Issue Discount | 473,631 | 473,631 | ||||
Debt Discount | 621,341 | 621,341 | ||||
Interest expense | 282,054 | |||||
Amortization of debt discount connection with prepaid advance liability | 253,133 | |||||
Net | 8,852,290 | 15,000,000 | 8,852,290 | |||
Accrued interest, non-current | 157,054 | 157,054 | ||||
Non-current portion | ||||||
PREPAID ADVANCE LIABILITY | ||||||
Prepaid advance liability | 3,196,678 | 3,196,678 | ||||
Prepaid Advance | 3,250,000 | 3,250,000 | ||||
Original Issue Discount | 171,052 | 171,052 | ||||
Debt Discount | 224,374 | 224,374 | ||||
Net | 3,196,678 | 3,196,678 | ||||
Subsequent event | ||||||
PREPAID ADVANCE LIABILITY | ||||||
Initial Advance principal amount | $ 5,750,000 | |||||
Initial advance liability (in shares) | 3,153,036 | |||||
Initial advance liability | $ 3,250,000 | |||||
Accrued interest | $ 329,932 | |||||
Yorkville | ||||||
PREPAID ADVANCE LIABILITY | ||||||
Prepaid advance | 15,000,000 | |||||
Maximum prepaid advance | $ 50,000,000 | |||||
Prepaid Advance, maturity period after the date of closing of advance | 12 months | |||||
Percentage of interest rate per annum | 10% | |||||
Percentage of interest rate upon default per annum | 15% | |||||
Percentage of VWAP of common stock | 135% | |||||
Percentage of lowest VWAP of common stock | 95% | |||||
Period for calculating VWAP | 3 days | |||||
Prepayment notice period | 10 days | |||||
VWAP per share, minimum value | $ 0.75 | |||||
Percentage of payment premium | 5% | |||||
Monthly repayment amount | $ 3,000,000 | |||||
Initial advance | 15,000,000 | |||||
Original issue discount | 789,474 | |||||
Repayments of notes payable | 3,850,000 | |||||
Stock issued value | 5,375,269 | |||||
Initial Advance principal amount | $ 6,000,000 | |||||
Premium amount | 315,843 | |||||
Amount of interest | $ 125,000 | |||||
Yorkville | Purchase Agreement [Member] | ||||||
PREPAID ADVANCE LIABILITY | ||||||
Prepaid advance | $ 15,789,474 |
LEASES - Maturity (Details)
LEASES - Maturity (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
LEASES | ||
2023 | $ 234,694 | |
2024 | 99,187 | |
Total lease payments | 333,881 | |
Less: Imputed interest | (12,278) | |
Present value of lease liabilities | 321,603 | |
Less: current portion | (223,645) | $ (262,379) |
Lease liabilities, non-current portion | $ 97,958 | $ 407,898 |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information related to the lease (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows for operating lease | $ 5,127 | $ 205,034 | $ 144,540 |
Right-of-use asset obtained in exchange for lease obligations | |||
Operating lease | $ 814,817 |
LEASES - Additional Information
LEASES - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2021 | Jun. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | ||||
Monthly rental payments | $ 5,127 | $ 205,034 | $ 144,540 | |
Right of use asset for lease liability | $ 814,817 | |||
Estimated incremental borrowing rate | 5% | |||
Operating lease expense | $ 231,116 | $ 223,548 | ||
New lease agreement for office space in San Diego, California | ||||
LEASES | ||||
Lease term (in years) | 3 years | |||
Renewal term | 5 years | |||
Monthly lease rental | $ 23,787 | |||
Lease base rent | 18,518 | |||
Common area maintenance fees included in monthly lease rental | $ 5,268 | |||
Lease annual escalation rate | 3.50% | |||
Security deposit | $ 50,213 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | 12 Months Ended | |||
May 13, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | ||
NOTES PAYABLE | ||||
Debt redemption costs | $ 140,000 | |||
Amortization expense related to the debt discount | $ 511,825 | 128,198 | ||
Net cash proceeds | [1] | 4,750,000 | ||
Legal fees | $ 7,200 | 43,572 | ||
Interest expense related to the Promissory Note | 0 | 0 | ||
Unamortized portion of debt discount | (8,508) | |||
Yorkville | ||||
NOTES PAYABLE | ||||
Repayments of note payable | 2,450,000 | |||
Notes payable | 5,000,000 | 0 | ||
Debt redemption costs | 140,000 | |||
Amortization expense related to the debt discount | $ 258,692 | $ 128,198 | ||
Net cash proceeds | 4,750,000 | |||
Original issuance discount on note payable | 250,000 | |||
Structuring fees | 10,000 | |||
Legal fees | $ 7,200 | |||
Interest rate | 10% | 10% | ||
Principal | $ 5,000,000 | |||
Interest | 165,493 | |||
Principal due paid from the proceeds of the Initial Advance | 3,850,000 | |||
Interest due paid from the proceeds of the Initial Advance | 0 | |||
Interest expense related to the Promissory Note | 650,493 | |||
Premium paid | 385,000 | |||
Amount of late payment premium | 100,000 | |||
Unamortized portion of debt discount | $ 8,508 | |||
[1] Note payable face value of $5,000,000 , less $250,000 original issue discount. |
NOTES PAYABLE - Summary of acti
NOTES PAYABLE - Summary of activity related to the promissory note (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Notes Payable | |
Repayments in cash | $ (4,850,000) |
Repayments in shares of common stock | (150,000) |
Debt Discount | |
Debt discount | 17,200 |
Amortization of debt discount | (258,692) |
Loss on extinguishment of note payable | 8,508 |
Total | |
Beginning balance | 0 |
Proceeds from promissory note | (4,750,000) |
Debt discount | 17,200 |
Repayments in cash | (4,850,000) |
Repayments in shares of common stock | (150,000) |
Amortization of debt discount | (258,692) |
Loss on extinguishment of note payable | 8,508 |
Ending balance | 0 |
Promissory Note | |
Notes Payable | |
Beginning balance | 0 |
Proceeds from promissory note | (5,000,000) |
Repayments in cash | (4,850,000) |
Repayments in shares of common stock | (150,000) |
Ending balance | 0 |
Debt Discount | |
Beginning balance | 0 |
Proceeds from promissory note | (250,000) |
Debt discount | (17,200) |
Amortization of debt discount | 258,692 |
Loss on extinguishment of note payable | 8,508 |
Ending balance | 0 |
Total | |
Debt discount | (17,200) |
Repayments in cash | (4,850,000) |
Repayments in shares of common stock | (150,000) |
Amortization of debt discount | 258,692 |
Loss on extinguishment of note payable | $ 8,508 |
LOAN PAYABLE (Details)
LOAN PAYABLE (Details) - USD ($) | 12 Months Ended | |||
Apr. 27, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 18, 2022 | |
LOAN PAYABLE | ||||
Gain on forgiveness of PPP loan and interest | $ 158,675 | |||
Paycheck Protection Program Loan | ||||
LOAN PAYABLE | ||||
Cash proceeds from unsecured loan | $ 155,226 | |||
Accrued interest related to the loan | $ 3,449 | |||
Gain on forgiveness of PPP loan and interest | 158,675 | |||
Interest expense of loan | $ 825 | $ 1,701 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Federal: | ||
Deferred | $ (3,967,600) | $ (2,359,473) |
State and local: | ||
Deferred | (1,133,600) | (996,095) |
Income Tax Expense Benefit, Federal, State And local, Net | (5,101,200) | (3,355,568) |
Change in valuation allowance | $ 5,101,200 | $ 3,355,568 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the statutory federal income tax rate (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Tax benefit at federal statutory rate | (21.00%) | (21.00%) |
State income taxes, net of federal benefit | (6.00%) | (6.00%) |
Permanent differences | (0.10%) | (1.00%) |
Other and prior year true-ups | 0.90% | 0% |
Change in valuation allowance | 26.20% | 28% |
Effective income tax rate | 0% | 0% |
INCOME TAXES - Tax effects (Det
INCOME TAXES - Tax effects (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred Tax Assets: | ||
Net operating loss carryforwards | $ 9,078,972 | $ 4,978,331 |
Research and development credit carryforwards | 101,422 | 270,188 |
Capitalized research and development costs | 953,675 | |
Stock-based compensation | 1,587,800 | 981,067 |
Property and equipment | (382,819) | |
Debt Discount | (16,384) | |
Accruals and other | 63,580 | 55,460 |
Gross deferred tax assets | 11,386,246 | 6,285,046 |
Valuation allowance | (11,386,246) | (6,285,046) |
Changes in valuation allowance | $ 5,101,200 | $ 3,355,568 |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Operating loss carryforwards | $ 33.7 | $ 18.6 |
Federal net operating losses | 3.4 | |
Deferred tax assets, Operating loss carryforwards not subject to expiration | 30.3 | |
Net operating loss carry forwards | $ 33.6 | $ 18.1 |
Operating loss carryforwards limitations on use | The net operating loss carryovers may be subject to annual limitations under Internal Revenue Code Section 382, and similar state provisions, should there be a greater than 50% ownership change as determined under the applicable income tax regulations. | |
Operating loss carry forwards expiration year | net operating losses will expire from 2033 to 2037 |
STOCKHOLDERS' EQUITY - Addition
STOCKHOLDERS' EQUITY - Additional Information (Details) | 12 Months Ended | ||||||||||||
Nov. 01, 2022 USD ($) shares | May 13, 2022 USD ($) $ / shares | Jun. 10, 2021 USD ($) $ / shares shares | May 20, 2021 USD ($) | May 19, 2021 USD ($) $ / shares shares | Mar. 01, 2021 USD ($) shares | Dec. 31, 2022 USD ($) Y Vote $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Sep. 23, 2022 USD ($) | Jun. 17, 2021 shares | Nov. 05, 2018 shares | Aug. 15, 2018 shares | May 05, 2018 shares | |
STOCKHOLDERS' EQUITY | |||||||||||||
Common stock authorized | shares | 500,000,000 | 500,000,000 | |||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||||||||
Preferred stock, shares authorized | shares | 20,000,000 | 20,000,000 | |||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||||||||
Number of votes per common stock | Vote | 1 | ||||||||||||
Stock issues conversion of notes payable (in shares) | shares | 94,458 | ||||||||||||
Stock issued conversion of notes payable | $ | $ 150,000 | ||||||||||||
Prepaid advance liability | $ | $ 8,852,290 | $ 15,000,000 | |||||||||||
Preferred stock, shares issued | shares | 109,850 | ||||||||||||
Gross proceeds from exercise of warrants | $ | $ 3,020,836 | $ 11,719,204 | |||||||||||
Partial payment of principal balance on promissory note | $ | $ 1,000,000 | 2,450,000 | |||||||||||
Shares of common stock issued related to consulting services provided | shares | 51,000 | ||||||||||||
Grant date value of common stock issued related to consulting services provided | $ | $ 109,850 | $ 376,909 | |||||||||||
Gross proceeds from exercise of options, transferred from treasury | $ | 48,382 | ||||||||||||
Treasury stock, value | $ | $ 296,222 | ||||||||||||
Treasury stock, shares held | shares | 131,162 | 0 | |||||||||||
Structuring fee paid to investor | $ | $ 10,000 | ||||||||||||
Stock options exercised | shares | 66,042 | ||||||||||||
Commitment shares issued in connection with sale of Series D Preferred Stock | $ | $ 1,339,582 | ||||||||||||
Beneficial conversion feature on Series D convertible preferred stock | $ | $ 2,624,326 | ||||||||||||
Grant date value of stock | $ | $ 18,000 | ||||||||||||
Weighted Average Exercise Price Exercisable | $ / shares | $ 1.43 | ||||||||||||
Debt redemption costs | $ | $ 140,000 | ||||||||||||
Common Stock, Shares, Issued | shares | 113,202,749 | 104,792,072 | |||||||||||
Deferred offering costs | $ | $ 71,818 | ||||||||||||
Stock options granted | shares | 330,000 | ||||||||||||
Grant date fair value | $ | $ 60,767 | ||||||||||||
Series A Preferred Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Preferred stock, shares authorized | shares | 1,000,000 | 1,000,000 | |||||||||||
Preferred stock, shares issued | shares | 0 | 0 | 1,000,000 | ||||||||||
Preferred stock, shares outstanding | shares | 0 | 0 | |||||||||||
Series B Convertible Preferred Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Preferred stock, shares authorized | shares | 31,000 | 31,000 | |||||||||||
Preferred stock, shares issued | shares | 0 | 0 | |||||||||||
Preferred stock conversion terms | 181 days | ||||||||||||
Shares of common stock issued upon conversion | shares | 50 | ||||||||||||
Number of shares converted | shares | 13,972 | ||||||||||||
Preferred stock, shares outstanding | shares | 0 | 0 | |||||||||||
Series C Preferred Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Preferred stock, shares authorized | shares | 400 | 400 | |||||||||||
Preferred stock, shares issued | shares | 0 | 0 | |||||||||||
Preferred stock, shares outstanding | shares | 0 | 0 | |||||||||||
Series C Convertible Preferred Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Cumulative dividends annual rate percentage | 12% | ||||||||||||
Liquidation Preference, Value | $ | $ 10,000 | ||||||||||||
Preferred stock, shares outstanding | shares | 0 | ||||||||||||
Series D Convertible Preferred Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Preferred stock, shares authorized | shares | 650 | ||||||||||||
Outstanding aggregate principal balance | $ | $ 1,400,000 | ||||||||||||
Relative fair value of Series D Preferred Stock | $ | $ 3,875,675 | ||||||||||||
Beneficial conversion feature on Series D convertible preferred stock | $ | $ 2,624,326 | ||||||||||||
Preferred stock, shares outstanding | shares | 0 | ||||||||||||
Debt redemption costs | $ | $ 140,000 | ||||||||||||
2018 Group Equity Incentive Plan | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Number of awards authorized | shares | 10,174,005 | 15,000,000 | 15,000,000 | ||||||||||
Risk free rate | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Warrant measurement input | 0.0005 | ||||||||||||
Expected term (in years) | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Warrant measurement input | Y | 1 | ||||||||||||
Expected volatility | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Warrant measurement input | 1.42 | ||||||||||||
Exercise price | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Warrant measurement input | $ | 2.50 | ||||||||||||
Market price per share | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Warrant measurement input | $ | 2.05 | ||||||||||||
SEPA | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||||||||||
Aggregate value of common stock shares outstanding | $ | $ 50,000,000 | ||||||||||||
Percentage Of Shares Sold | 98% | ||||||||||||
Value of shares to be issued | $ | $ 50,000,000 | $ 50,000,000 | |||||||||||
Partial payment of principal balance on promissory note | $ | $ 150,000 | ||||||||||||
Securities Purchase Agreement | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Proceeds from sale of Convertible Preferred Stock and warrants | $ | 6,490,000 | ||||||||||||
Gross proceeds from issuance of preferred stock and warrants | $ | 6,500,000 | ||||||||||||
Securities Purchase Agreement | Series D Convertible Preferred Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Shares of common stock issued upon conversion | shares | 3,170,730 | ||||||||||||
Warrants to purchase common shares issued | shares | 2,600,000 | ||||||||||||
Exercisable, Weighted Average Remaining Life (in years) | 1 year | ||||||||||||
Number of stock issued (in shares) | shares | 650 | ||||||||||||
Partial payment of principal balance on promissory note | $ | $ 1,400,000 | ||||||||||||
Structuring fee paid to investor | $ | $ 10,000 | ||||||||||||
Warrants exercised | shares | 2,600,000 | ||||||||||||
Aggregate gross proceeds | $ | $ 6,500,000 | ||||||||||||
Commitment fee shares of common stock | shares | 1,300,000 | ||||||||||||
Fixed conversion price | $ / shares | $ 2.05 | ||||||||||||
Cumulative dividends annual rate percentage | 10% | ||||||||||||
Purchase price per share | $ / shares | $ 2.50 | ||||||||||||
Legal and consulting services | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Shares of common stock issued related to consulting services provided | shares | 170,000 | ||||||||||||
Grant date value of common stock issued related to consulting services provided | $ | $ 376,909 | ||||||||||||
Stock options | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Weighted average grant date fair value of options (in dollars per share) | $ / shares | $ 1.23 | $ 0.80 | |||||||||||
Share based compensation amortizable value | $ | $ 442,199 | ||||||||||||
Market-Based Awards | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Common stock authorized | shares | 1,500,000 | ||||||||||||
Unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period | 3 years 1 month | ||||||||||||
Grant date value of stock | $ | $ 2,579,000 | $ 2,911,420 | |||||||||||
Weighted Average Exercise Price Exercisable | $ / shares | $ 2.60 | ||||||||||||
Market capitalization milestone amount | $ | $ 4,000,000,000 | ||||||||||||
Market-Based Awards | COO | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Common stock authorized | shares | 1,500,000 | ||||||||||||
Market capitalization milestone amount | $ | $ 4,000,000,000 | ||||||||||||
Restricted common stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Share based compensation amortizable value | $ | $ 4,226,175 | ||||||||||||
Stock options granted | shares | 1,500,000 | ||||||||||||
Grant date fair value | $ | $ 3,075,000 | ||||||||||||
Share based compensation unrecognized grant date fair value | $ | 1,446,175 | ||||||||||||
Share based compensation incremental cost | $ | $ 2,780,000 | ||||||||||||
Treasury Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Gross proceeds from exercise of options, transferred from treasury | $ | $ 143,506 | ||||||||||||
Stock options exercised | shares | (63,542) | ||||||||||||
Treasury shares transferred | shares | 63,542 | ||||||||||||
Aggregate gross proceeds from transfer of treasury shares | $ | $ 48,382 | ||||||||||||
Treasury stock shares | shares | 131,162 | ||||||||||||
Treasury stock value | $ | $ 296,222 | ||||||||||||
Treasury shares withheld | shares | 194,704 | ||||||||||||
Amount of treasury shares withheld | $ | $ 439,728 | ||||||||||||
Common Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Shares of common stock issued upon conversion | shares | 3,170,730 | ||||||||||||
Warrants to purchase common shares issued | shares | 2,416,668 | 6,793,358 | |||||||||||
Shares of common stock issued related to consulting services provided | shares | 51,000 | 170,000 | |||||||||||
Grant date value of common stock issued related to consulting services provided | $ | $ 5 | $ 17 | |||||||||||
Stock options exercised | shares | 184,784 | ||||||||||||
Warrants exercised | shares | 2,416,668 | 6,793,358 | |||||||||||
Aggregate gross proceeds | $ | $ 3,020,835 | ||||||||||||
Shares issued during period shares other | shares | 255,240 | ||||||||||||
Stock Issued | $ | $ 399,018 | ||||||||||||
Common Stock | Series B Convertible Preferred Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Stock issues conversion of notes payable (in shares) | shares | 698,600 | ||||||||||||
Stock issued conversion of notes payable | $ | $ 70 | ||||||||||||
Common Stock | Series D Convertible Preferred Stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Stock issues conversion of notes payable (in shares) | shares | 3,170,730 | ||||||||||||
Stock issued conversion of notes payable | $ | $ 317 | ||||||||||||
Common Stock | SEPA | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Stock issued value | $ | $ 5,000,000 | ||||||||||||
Common Stock | Legal and consulting services | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Common Stock, Shares, Issued | shares | 6,000 | ||||||||||||
Common Stock | Restricted common stock | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Share based compensation amortizable value | $ | $ 7,813,665 | ||||||||||||
Unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period | 3 years 1 month 6 days | ||||||||||||
Stock options granted | shares | 2,677,744 | ||||||||||||
Forfeited (in shares) | shares | 117,744 | ||||||||||||
Warrants | |||||||||||||
STOCKHOLDERS' EQUITY | |||||||||||||
Warrants to purchase common shares issued | shares | 2,524,410 | 2,594,553 | |||||||||||
Exercisable, Weighted Average Remaining Life (in years) | 3 years | ||||||||||||
Warrants exercised | shares | 2,524,410 | 2,594,553 | |||||||||||
Relative fair value of warrants | $ | $ 1,274,743 |
STOCKHOLDERS' EQUITY - Summary
STOCKHOLDERS' EQUITY - Summary of warrants activity (Details) - Warrants | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
STOCKHOLDERS' EQUITY | |
Number of Warrants, Outstanding at the beginning | shares | 2,594,553 |
Number of Warrants, Issued | shares | 2,346,525 |
Number of warrants, Exercised | shares | (2,416,668) |
Number of Warrants, Outstanding at the end | shares | 2,524,410 |
Number of Warrants, Exercisable at the end | shares | 2,524,410 |
Weighted Average Exercise Price, Outstanding, Beginning (in dollars per share) | $ / shares | $ 1.25 |
Weighted Average Exercise Price, Issued (in dollars per share) | $ / shares | 1 |
Weighted Average Exercise Price, Exercised (in dollars per share) | $ / shares | (1.25) |
Weighted Average Exercise Price, Outstanding, Ending (in dollars per share) | $ / shares | 1.02 |
Weighted Average Exercise Price, Exercisable at the end (in dollars per share) | $ / shares | $ 1.02 |
Weighted Average Remaining Term, Outstanding at the end (in years) | 3 years |
Weighted Average Remaining Term, Exercisable at the end (in years) | 3 years |
Intrinsic Value, Outstanding at the end (in dollars) | $ | $ 492,770 |
Intrinsic Value, Exercisable at the end (in dollars) | $ | $ 492,770 |
STOCKHOLDERS' EQUITY - Outstand
STOCKHOLDERS' EQUITY - Outstanding and exercisable warrants (Details) - Warrants | Dec. 31, 2022 $ / shares shares |
STOCKHOLDERS' EQUITY | |
Warrants exercised | 2,524,410 |
Exercisable, Weighted Average Remaining Life (in years) | 3 years |
Exercisable, Number of Warrants | 2,524,410 |
Exercise price, 1.25 | |
STOCKHOLDERS' EQUITY | |
Exercise Price of Warrants Outstanding (in dollars per share) | $ / shares | $ 1.25 |
Warrants exercised | 177,885 |
Exercisable, Weighted Average Remaining Life (in years) | 3 years |
Exercisable, Number of Warrants | 177,885 |
Exercise price, 1.00 | |
STOCKHOLDERS' EQUITY | |
Exercise Price of Warrants Outstanding (in dollars per share) | $ / shares | $ 1 |
Warrants exercised | 2,346,525 |
Exercisable, Weighted Average Remaining Life (in years) | 3 years |
Exercisable, Number of Warrants | 2,346,525 |
STOCKHOLDERS' EQUITY - Stock-Ba
STOCKHOLDERS' EQUITY - Stock-Based Compensation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
STOCKHOLDERS' EQUITY | ||
Stock-based compensation | $ 4,175,014 | $ 4,200,091 |
Selling, general and administrative expenses | ||
STOCKHOLDERS' EQUITY | ||
Stock-based compensation expense | 4,136,494 | 4,171,241 |
Research and development expenses | ||
STOCKHOLDERS' EQUITY | ||
Stock-based compensation expense | 38,520 | 28,850 |
Amortization of restricted stock units | ||
STOCKHOLDERS' EQUITY | ||
Stock-based compensation | 1,945,272 | 1,606,578 |
Common stock issued for services | ||
STOCKHOLDERS' EQUITY | ||
Stock-based compensation | 109,850 | 167,710 |
Accrued issuable equity (common stock) | ||
STOCKHOLDERS' EQUITY | ||
Stock-based compensation | 84,270 | 245,719 |
Amortization of stock options | ||
STOCKHOLDERS' EQUITY | ||
Stock-based compensation | 103,220 | 68,239 |
Amortization of market-based awards | ||
STOCKHOLDERS' EQUITY | ||
Stock-based compensation | 1,932,402 | 2,111,845 |
Warrants | Amortization of restricted stock units | Stock options | ||
STOCKHOLDERS' EQUITY | ||
Stock-based compensation expense | $ 4,175,014 | $ 4,200,091 |
STOCKHOLDERS' EQUITY - Summar_2
STOCKHOLDERS' EQUITY - Summary of options activity (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) $ / shares shares | |
STOCKHOLDERS' EQUITY | |
Number of Options, Outstanding | shares | 405,216 |
Number of Options, Granted | shares | 330,000 |
Number of Options, Exercised | shares | (66,042) |
Number of Options, Expired | shares | 0 |
Number of Options, Forfeited | shares | (28,958) |
Number of Options, Outstanding | shares | 640,216 |
Number of Options, Exercisable | shares | 199,174 |
Weighted Average Exercise Price, Outstanding | $ / shares | $ 2.29 |
Weighted Average Exercise Price, Granted | $ / shares | 1.71 |
Weighted Average Exercise Price, Exercised | $ / shares | 0.71 |
Weighted Average Exercise Price, Expired | $ / shares | 0 |
Weighted Average Exercise Price, Forfeited | $ / shares | 1.49 |
Weighted Average Exercise Price Outstanding | $ / shares | 1.72 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 1.43 |
Weighted Average Remaining Term, Outstanding | 3 years 7 months 6 days |
Weighted Average Remaining Term, Exercisable | 2 years 1 month 6 days |
Number of Options Intrinsic Value, Outstanding | $ | $ 60,767 |
Number of Options Intrinsic Value, Exercisable | $ | $ 58,476 |
STOCKHOLDERS' EQUITY - Stock op
STOCKHOLDERS' EQUITY - Stock options (excluding market-based option awards) (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Exercise Price | $ 1.43 | |
Options Outstanding, Number of Options | 640,216 | 405,216 |
Options Exercisable, Weighted Average Remaining Life (In Years) | 2 years 1 month 6 days | |
Options Exercisable Number of Options | 199,174 | |
0.66 Exercise Price | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Exercise Price | $ 0.66 | |
Options Outstanding, Number of Options | 110,486 | |
Options Exercisable, Weighted Average Remaining Life (In Years) | 1 year | |
Options Exercisable Number of Options | 106,320 | |
ExercisePriceRange1.28To1.50Member | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Number of Options | 140,000 | |
Options Exercisable, Weighted Average Remaining Life (In Years) | 0 years | |
ExercisePriceRange1.28To1.50Member | Minimum [Member] | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Exercise Price | $ 1.28 | |
ExercisePriceRange1.28To1.50Member | Maximum [Member] | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Exercise Price | $ 1.50 | |
Exercise Price Range 1.55 to 1.99 [Member] | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Number of Options | 90,000 | |
Options Exercisable, Weighted Average Remaining Life (In Years) | 3 years 4 months 24 days | |
Options Exercisable Number of Options | 5,208 | |
Exercise Price Range 1.55 to 1.99 [Member] | Minimum [Member] | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Exercise Price | $ 1.55 | |
Exercise Price Range 1.55 to 1.99 [Member] | Maximum [Member] | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Exercise Price | $ 1.99 | |
Exercise Price Range 2.05 to 2.44 [Member] | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Number of Options | 299,730 | |
Options Exercisable, Weighted Average Remaining Life (In Years) | 3 years 4 months 24 days | |
Options Exercisable Number of Options | 87,646 | |
Exercise Price Range 2.05 to 2.44 [Member] | Minimum [Member] | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Exercise Price | $ 2.05 | |
Exercise Price Range 2.05 to 2.44 [Member] | Maximum [Member] | ||
STOCKHOLDERS' EQUITY | ||
Options Outstanding, Exercise Price | $ 2.44 |
STOCKHOLDERS' EQUITY - Fair val
STOCKHOLDERS' EQUITY - Fair value of stock options granted using the Black-Scholes options and Monte Carlo valuation model (Details) | 12 Months Ended | ||||
Nov. 01, 2022 | Jun. 10, 2021 | Mar. 01, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
STOCKHOLDERS' EQUITY | |||||
Expected term (years) | 3 years 3 months 18 days | ||||
Expected dividends | 0% | 0% | |||
Market-Based Awards | |||||
STOCKHOLDERS' EQUITY | |||||
Risk free interest rate | 4.33% | 0.73% | 0.71% | ||
Expected term (years) | 2 years 2 months 12 days | 2 years 1 month 6 days | |||
Expected volatility | 100% | 98.50% | 98.90% | ||
Expected dividends | 0% | 0% | 0% | ||
Minimum | |||||
STOCKHOLDERS' EQUITY | |||||
Risk free interest rate | 1.18% | 0.20% | |||
Expected term (years) | 3 years 6 months | 2 years 6 months | |||
Expected volatility | 104% | 93% | |||
Maximum | |||||
STOCKHOLDERS' EQUITY | |||||
Risk free interest rate | 4.54% | 0.85% | |||
Expected term (years) | 3 years 10 months 24 days | 3 years 6 months | |||
Expected volatility | 116% | 109% |
STOCKHOLDERS' EQUITY - Market-B
STOCKHOLDERS' EQUITY - Market-Based Awards and Exchange for Restricted Stock Units (Details) - shares | 12 Months Ended | ||
Nov. 01, 2024 | Nov. 01, 2023 | Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |||
Number of Restricted Stock Units That Vest | 750,000 | 750,000 | 750,000 |
STOCKHOLDERS' EQUITY - Restrict
STOCKHOLDERS' EQUITY - Restricted Common Stock (Details) - Restricted common stock | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Shares of Restricted Common Stock | |
Non-vested balance, January 1, 2022 | shares | 2,590,000 |
Granted | shares | 3,310,000 |
Vested | shares | (857,500) |
Non-vested shares, December 31, 2022 | shares | 5,042,500 |
Weighted Average Grant Date Fair Value Per Share | |
Non-vested balance, January 1, 2022 (in dollars per share) | $ / shares | $ 2.52 |
Granted (in dollars per share) | $ / shares | 2.05 |
Vested (in dollars per share) | $ / shares | 2.38 |
Non-vested shares, December 31, 2022 (in dollars per share) | $ / shares | $ 2.23 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||
Nov. 01, 2022 USD ($) shares | Jan. 31, 2022 USD ($) | Dec. 16, 2021 | Aug. 18, 2021 USD ($) installment | Apr. 05, 2021 USD ($) installment | Apr. 01, 2021 USD ($) | Mar. 31, 2021 USD ($) installment | Sep. 30, 2020 shares | Mar. 21, 2018 USD ($) | Feb. 28, 2023 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) installment shares | Dec. 31, 2021 USD ($) | Apr. 30, 2023 USD ($) | Jan. 31, 2023 USD ($) | Jul. 31, 2022 USD ($) | Jun. 15, 2022 USD ($) | |
Commitments and Contingencies | |||||||||||||||||
Research and development | $ 3,977,563 | $ 1,662,183 | |||||||||||||||
Prepaid expenses | 500,000 | ||||||||||||||||
Annual royalty payment amount | 6,304 | 2,558 | |||||||||||||||
Number of installments | installment | 3 | ||||||||||||||||
Repayments of notes payable | $ (1,000,000) | (2,450,000) | |||||||||||||||
Restricted common stock | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Number of shares, granted | shares | 3,310,000 | ||||||||||||||||
Lead Independent Director | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Aggregate amount spend on agreement | $ 150,000 | ||||||||||||||||
Number of market-based awards vested | shares | 37,500 | ||||||||||||||||
Non-Lead Independent Director | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Aggregate amount spend on agreement | $ 95,000 | ||||||||||||||||
Number of market-based awards vested | shares | 7,500 | ||||||||||||||||
Patent License Agreement | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Research and development | $ 12,000 | ||||||||||||||||
Patent License Agreement | Minimum | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Percentage of royalty on net sale price | 1.50% | ||||||||||||||||
Annual royalty payment amount | $ 0 | ||||||||||||||||
Patent License Agreement | Maximum | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Percentage of royalty on net sale price | 3.75% | ||||||||||||||||
Annual royalty payment amount | $ 7,500 | ||||||||||||||||
Technology Development and Sponsorship Agreement | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Committed sponsorship fees | $ 900,000 | ||||||||||||||||
Committed technology development fees | $ 750,000 | ||||||||||||||||
Prepaid expenses | $ 300,000 | ||||||||||||||||
Expense recognized | $ 250,000 | ||||||||||||||||
Number of installments | installment | 3 | ||||||||||||||||
Additional installment amount due | $ 300,000 | $ 250,000 | $ 0 | ||||||||||||||
Sponsorship fees | 1,350,000 | ||||||||||||||||
Sponsorship agreement term | 1 year | ||||||||||||||||
Sponsorship agreement fees | $ 500,000 | $ 1,450,000 | |||||||||||||||
Research and Development Agreements | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Aggregate amount spend on agreement | $ 580,375 | ||||||||||||||||
Expense recognized | 290,188 | ||||||||||||||||
Expense recognized under the agreement | 217,641 | ||||||||||||||||
Number of installments | installment | 8 | ||||||||||||||||
Additional installment amount due | $ 72,547 | ||||||||||||||||
Term of agreement | 2 years | ||||||||||||||||
Consulting agreement | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Consultant agreement term | 2 years | ||||||||||||||||
Shares to be issued under Consulting Agreement | shares | 60,000 | ||||||||||||||||
Stock-based compensation expense | 25,545 | 46,455 | |||||||||||||||
Multi-year research and development agreement | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Aggregate amount spend on agreement | $ 592,196 | ||||||||||||||||
Expense recognized | $ 296,100 | $ 123,375 | |||||||||||||||
Number of installments | installment | 8 | ||||||||||||||||
Additional installment amount due | $ 74,025 | ||||||||||||||||
Common Stock | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Shares issued during period shares other | shares | 255,240 | ||||||||||||||||
Shares issued other value | $ 399,018 | ||||||||||||||||
Common Stock | Restricted Stock Units | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Shares issued during period shares other | shares | 100,000 | ||||||||||||||||
Shares issued other value | $ 205,000 | ||||||||||||||||
Subsequent event | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Annual royalty payment amount | $ 20,000 | ||||||||||||||||
Subsequent event | Technology Development and Sponsorship Agreement | |||||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Additional installment amount due | $ 350,000 | ||||||||||||||||
Sponsorship agreement fees | $ 475,000 | $ 475,000 |
SUBSEQUENT EVENTS - Prepaid Adv
SUBSEQUENT EVENTS - Prepaid Advance Liability (Details) - USD ($) | 12 Months Ended | |||
Mar. 28, 2023 | Mar. 10, 2023 | Jan. 01, 2023 | Dec. 31, 2021 | |
SUBSEQUENT EVENTS | ||||
Aggregate proceeds | $ 18,000 | |||
Subsequent event | ||||
SUBSEQUENT EVENTS | ||||
Common stock issued | 3,153,036 | |||
Aggregate proceeds | $ 3,579,932 | |||
Proceeds were applied against the principal | 3,250,000 | |||
Proceeds were applied against the interest | $ 329,932 | |||
Prepaid advances | $ 2,000,000 | |||
Percentage of prepaid advances at annual rate | 10% | |||
Balance on the Initial Advance | $ 5,750,000 | |||
Subsequent event | Minimum | ||||
SUBSEQUENT EVENTS | ||||
Purchase prices (in dollars per share) | $ 0.90 | |||
Percentage of prepaid advances at annual rate | 15% | |||
Subsequent event | Maximum | ||||
SUBSEQUENT EVENTS | ||||
Purchase prices (in dollars per share) | $ 1.20 |
SUBSEQUENT EVENTS - Operating L
SUBSEQUENT EVENTS - Operating Lease (Details) - USD ($) | Jan. 18, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
SUBSEQUENT EVENTS | |||
Lease liabilities | $ 321,603 | ||
Right of use assets | 328,941 | $ 665,687 | |
Lease liability and the related right-of-use asset | $ 97,958 | $ 407,898 | |
Subsequent event | |||
SUBSEQUENT EVENTS | |||
Initial lease term | 12 months 13 days | ||
Monthly rental payments under the new lease | $ 5,047 | ||
Base rent | 4,245 | ||
Common area maintenance fees | 802 | ||
Lease liabilities | $ 51,154 |
SUBSEQUENT EVENTS - Patent Lice
SUBSEQUENT EVENTS - Patent License Agreement (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jan. 18, 2023 | Feb. 28, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
SUBSEQUENT EVENTS | ||||
Annual royalty payment amount | $ 6,304 | $ 2,558 | ||
Subsequent event | ||||
SUBSEQUENT EVENTS | ||||
Cash payable upon the execution of this agreement | $ 60,000 | |||
Percentage of royalty fee | 5% | 5.50% | ||
Annual royalty payment amount | $ 20,000 |