UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2022For the quarterly period ended March 31, 2023

 

or

TRANSITION REPORT UNDERPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from  __________ to __________

 

Commission File Number: 000-55689

 

US LIGHTING GROUP, INC.Lighting Group, Inc.

(Exact name of registrant as specified in its charter)

 

Florida 46-3556776
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)

 

1148 East 222nd222nd Street

Euclid, Ohio 44117

(Address of principal executive offices) (Zip code)(Zip Code)

 

(216) 896-7000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None.

Title of each classTrading Symbol(s)Name of each exchange on which registered
N/AN/AN/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
 Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a)13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

TheIndicate the number of shares outstanding of registrant’seach of the issuer’s classes of common stock, as of the latest practicable date. There were 101,609,825 shares of common stock outstanding as of November 17, 2022 was 98,648,735.on May 1, 2023.

 

 

 

 

 

 

US LIGHTING GROUP, INC.Table of Contents

 

INDEX

PART I.Item 1. Financial Statements.FINANCIAL INFORMATION1  1
  
ITEM 1.Financial Statements1
Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 20211
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited)2
Condensed Consolidated Statements of Shareholders’ Equity (Deficit) for the three and nine months ended September 30, 2022 and 2021 (unaudited)3
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)4
Notes to Unaudited Condensed Consolidated Financial Statements5
ITEMItem 2.Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperations.11 
Forward-Looking Statements11
  
General Overview11
  
ITEM 3.Subsequent EventsQuantitative and Qualitative Disclosures about Market Risk1412
  
Results of Operations for the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 202212
  
ITEM 4.Liquidity and Capital Resources13
 
Critical Accounting Policies and Estimates13
Item 3. Quantitative and Qualitative Disclosures About Market Risk.14
Item 4. Controls and Procedures.14
Evaluation of Disclosure Controls and Procedures14
  
Changes in Internal Control Over Financial Reporting14
  
PART II.Item 1. Legal Proceedings.OTHER INFORMATION1516
  
Item 1A. Risk Factors.15
  
ITEM 1.Legal Proceedings16
ITEM 1A.Risk Factors16
ITEMItem 2.Unregistered Sales of Equity Securities and Use of ProceedsProceeds.1615
  
Item 3. Defaults Upon Senior Securities.15
  
ITEM 3.Item 4. Mine Safety Disclosures.Defaults Upon Senior Securities1516
  
Item 5. Other Information.15
  
ITEM 4.Item 6. Exhibits.Mine Safety Disclosures1516
ITEM 5.Other Information16
ITEM 6.Exhibits17
SIGNATURES18

 

i

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

US LIGHTING GROUP, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

  September 30,
2022
  December 31,
2021
 
ASSETS (Unaudited)  (Combined) 
Current Assets:      
Cash $68,000  $289,000 
Accounts Receivable  32,000    
Prepaid expenses and other current assets  82,000   157,000 
Inventory  177,000   65,000 
Deposits and other assets     9,000 
Investment in trading securities     1,647,000 
Total Current Assets  359,000   2,167,000 
         
Property and equipment, net  1,982,000   1,848,000 
Total Assets $2,341,000  $4,015,000 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)        
Current Liabilities:        
Accounts payable $341,000  $77,000 
Accrued expenses     33,000 
Customer advance payments     10,000 
Accrued payroll to a former officer  125,000   686,000 
Convertible notes payable     60,000 
Loan payable– current portion  101,000   82,000 
Loans payable, related party  1,202,000   1,458,000 
Total Current Liabilities  1,769,000   2,406,000 
         
Loans payable, net of current portion, related party  5,709,000    
Loans payable, net of current portion  280,000   344,000 
         
Total Liabilities  7,758,000   2,750,000 
         
Commitments and Contingencies        
         
Shareholders’ Equity (Deficit):        
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued and outstanding      
Common stock, $0.0001 par value, 100,000,000 shares authorized; 98,648,735 and 97,848,735 shares issued and outstanding, respectively  10,000   10,000 
Additional paid-in-capital  19,519,000   17,796,000 
Accumulated deficit  (24,946,000)  (16,541,000)
Total Shareholders’ (Deficit) Equity  (5,417,000)  1,265,000 
         
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT $2,341,000  $4,015,000 


  March 31,
2023
  December 31,
2022
 
 (Unaudited)    
ASSETS      
Current Assets:      
Cash $45,843  $124,529 
Accounts receivable  162,657   5,950 
Prepaid expenses and other current assets  80,920   87,174 
Inventory $188,666  $200,162 
Total Current Assets  478,086   417,815 
         
Property and equipment, net  2,443,506   2,298,107 
Total Assets $2,921,592  $2,715,922 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)        
Current Liabilities:        
Accounts payable $661,309  $607,647 
Accrued expenses  61,735   111,223 
Accrued payroll to a former officer  125,167   125,167 
Convertible notes payable      
Loan payable– current portion  104,499   140,905 
Loans payable, related party  352,296   176,000 
Total Current Liabilities  1,305,006   1,160,942 
         
Loans payable, net of current portion  295,984   300,351 
Loans Payable, related party  6,878,333   7,004,629 
Total Liabilities $8,479,323  $8,465,922 
         
Commitments and Contingencies        
         
Shareholders’ Equity:        
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued and outstanding      
Common stock, $0.0001 par value, 500,000,000 shares authorized; 101,609,825 shares issued and outstanding  10,376   10,209 
Additional paid-in-capital  19,938,444   19,771,111 
Accumulated deficit  (25,506,551)  (25,531,320)
Total Shareholders’ Equity  (5,557,731)  (5,750,000)
   

    
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $2,921,592  $2,715,922 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


US LIGHTING GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

  For the Three Months ended
March 31,
 
  2023   2022 
Sales $1,205,235  $76,000 
Cost of goods sold  701,319   68,000 
Gross profit  503,916   8,000 
         
Operating expenses:        
Selling, general and administrative expenses  472,349   266,000 
Product development costs      
Total operating expenses  472,349   266,000 
         
Income (loss) from operations  31,567   (258,000)
         
Other income (expense):        
Other income, net     15,000 
Unrealized loss     (157,000)
Realized gain     31,000 
Interest income  249   2,000 
Interest expense  (7,046)  (5,000)
Interest expense, related party     (4,000)
Total other expense  (6,797)  (118,000)
         
Net income (loss) from operations  24,769   (376,000)
Net income (loss) $24,769  $(376,000)
         
Basic income (loss) per share $0.00  $(0.00)
Diluted income (loss) per share $0.00  $(0.00)
         
Weighted average common shares outstanding, basic  98,947,384   97,848,735 
Weighted average common shares outstanding, diluted  98,947,384   97,848,735 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 


 

 

US LIGHTING GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSSHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Unaudited) / (Combined)

 

  For the Three Months ended
September 30,
 
  

For the Nine Months ended

September 30,

 
    2022   2021   2022  2021 
Sales $516,000  $21,000  $641,000  $23,000 
Cost of goods sold  528,000      754,000   3,000 
Gross profit (loss)  (12,000)  21,000   (113,000)  20,000 
                 
Operating expenses:                
Selling, general and administrative expenses  526,000   240,000   1,134,000   859,000 
Product development costs  78,000   2,000   123,000   41,000 
Total operating expenses  604,000   242,000   1,257,000   900,000 
                 
Loss from operations  (616,000)  (221,000)  (1,370,000)  (880,000)
                 
Other income (expense):                
Other income (expense), net  (4,000)  3,000   60,000   3,000 
Extinguishment of debt - related party           9,000 
Extinguishment of debt     52,000      52,000 
Unrealized gain (loss)  (32,000)  (9,000)  (288,000)  195,000 
Realized gain (loss)  18,000      (18,000)   
Interest income  1,000   7,000   4,000   7,000 
Interest expense, net  (40,000)  (17,000)  (56,000)  (17,000)
Interest expense, related party     (19,000)     (75,000)
Gain on disposal of fixed assets  10,000      23,000    
Total other income (expense)  (47,000)  17,000   (275,000)  174,000 
                 
Net loss from continuing operations  (663,000)  (204,000)  (1,645,000)  (706,000)
Net income from sale of discontinued operations           3,915,000 
Net loss from discontinued operations     (7,000)     (158,000)
Net income (loss) $(663,000) $(211,000) $(1,645,000) $3,051,000 
                 
Basic loss per share from continuing operations $(0.00) $(0.00) $(0.02) $(0.01)
Basic income (loss) per share from discontinued operations $  $(0.00) $  $0.04 
Basic income (loss) per share $(0.00) $(0.00) $(0.02) $0.03 
Diluted income (loss) per share from discontinued operations $  $(0.00) $  $0.03 
                 
Weighted average common shares outstanding, basic  97,848,735   97,834,996   97,982,618   97,310,548 
Weighted average common shares outstanding, diluted  97,848,735   97,834,996   97,982,618   97,310,548 
  Preferred Stock  Common Stock  Additional
Paid-In
  Accumulated  Total
Stockholders’
 
  Shares  Amount  Shares  Amount  Capital  Deficit  Deficit 
Balance, December 31, 2022    $   99,934,825  $10,209  $19,771,111  $(25,531,320) $(5,750,000)
Proceeds from sale of common stock        1,675,000   167   167,332       167,500 
Net Profit                 24,769   24,769 
Balance, March 31, 2023    $   101,609,825  $10,376  $19,938,443  $(25,506,551) $(5,557,731)

 

  Preferred Stock  Common Stock  Additional
Paid-In
  Accumulated  Total
Stockholders’
 
  Shares  Amount  Shares  Amount  Capital  Deficit  Deficit 
Balance, December 31, 2021    $   98,798,735  $10,000  $17,791,000  $(16,256,000) $1,545,000 
Net Loss                 (376,000)  (376,000)
Balance, March 31, 2022    $   97,848,735  $10,000  $17,791,000  $(69,632,000) $1,169,000 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


 

US LIGHTING GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Unaudited) / (Combined)

  Preferred Stock  Common Stock  Additional
Paid-In
  Accumulated  Total
Stockholders’
 
  Shares  Amount  Shares  Amount  Capital  Deficit  Equity 
Balance, December 31, 2021    $   97,848,735  $10,000  $17,678,000  $(16,423,000) $1,265,000 
Net Loss                 (582,000)  (582,000)
Balance, March 31, 2022        97,848,735   10,000   17,678,000   (17,005,000)  683,000 
Net Loss                 (400,000)  (400,000)
Balance, June 30, 2022        97,848,735   10,000   17,678,000   (17,405,000)  283,000 
Sale of common stock        800,000      80,000      80,000 
Forgiveness of related party debt              1,761,000      1,761,000 
Acquisition of Mig Marine                      (6,878,000)  (6,878,000)
Net Loss                 (663,000)  (663,000)
Balance, September 30, 2022    $   98,648,735  $10,000  $19,519,000  $(24,946,000) $(5,417,000)

  Preferred Stock  Common Stock  Additional
Paid-In
  Common
Stock to
  Accumulated  Total
Stockholders’
 
  Shares  Amount  Shares  Amount  Capital  Be Issued  Deficit  Equity 
Balance, December 31, 2020    $   95,970,735  $10,000  $17,435,000  $  $(19,309,000) $(1,864,000)
Net proceeds from sale of common stock        1,005,000      150,000         150,000 
Net Loss                    (148,000)  (148,000)
Balance, March 31, 2021        96,975,735   10,000   17,585,000      (19,457,000)  (1,862,000)
Proceeds from sale of common stock        1,007,000      151,000   7,000      158,000 
Shares returned        (500,000)               
Common stock issued for services        350,000      55,000         55,000 
Net Income                    3,410,000   3,410,000 
Balance, June 30, 2021        97,832,735   10,000   17,791,000   7,000   (16,047,000)  1,761,000 
Common stock issued                 (7,000)     (7,000)
Net Income                    (211,000)  (211,000)
Balance, September 30, 2021    $   97,832,735  $10,000  $17,791,000  $  $(16,258,000) $1,543,000 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


US LIGHTING GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) / (Combined)

 

 

For the Nine Months Ended

September 30,

  

For the Three Months Ended

March 31,

 
 2022  2021  2023  2022 
Cash Flows from Operating Activities          
Net (loss) income $(1,645,000) $3,051,000 
Adjustments to reconcile net loss to net cash (used) provided by operating activities:        
Net Profit (Loss) $24,769  $(376,000)
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation  139,000   39,000   44,822   19,000 
Amortization of debt discount     8,000 
Stock issued for services     55,000 
Realized loss from investments  18,000    
Unrealized gain (loss) from investments  288,000   (195,000)
Gain on extinguishment of debt     (52,000)
Realized Gain from investments     (31,000)
Unrealized Gain from investments     157,5000 
Changes in Assets and Liabilities:                
Accounts receivable  (32,000)  40,000   (156,706)   
Inventory  (112,000)  (45,000)  11,496    
Prepaid expenses and other current assets  84,000   (22,000)
Prepaid expenses and other  6,254   3,000 
Accounts payable  264,000   (62,000)  39,758   (17,000)
Customer advanced payments  (10,000)         (5,000)
Accruals      (11,000)     (11,000)
Accrued interest on convertible notes  (33,000)  4,000 
Accrued interest on related party loans  36,000   91,000   (211,964)  4,000 
Accrued payroll to a former officer  (411,000)  363,000 
Operating cashflow from discontinued operations     (24,000)
Net cash (used) provided by operating activities  (1,414,000)  3,240,000 
Accrued interest on loans  (49,488)   
Net cash (used in) provided by operating activities  (291,059)  (257,000)
                
Cash Flows from Investing Activities:                
Purchase of property and equipment  (308,000)  (529,000)  (190,221)  (1,000)
Investment in trading securities     (3,800,000)
Sale of fixed assets  35,000   400,000 
Proceeds from investments  1,341,000   892,000 
Net cash provided (used) by investing activities  1,068,000   (3,037,000)
Proceeds trading securities     704,000 
Net cash used in investing activities  (190,221)  703,000 
                
Cash Flows from Financing Activities:                
Proceeds from sale of common stock  80,000   308,000   167,500    
Proceeds from loans payable     177,000       
Proceeds received from notes payable, related party  561,000   546,000 
Payment of loans payable  (105,000)  (161,000)  236,191   (16,000)
Payments on notes payable related party  (411,000)  (1,077,000)     (312,000)
Net cash used in financing activities  125,000   (207,000)
Net cash provided by (used in) financing activities  403,691   (328,000)
                
Net change in cash  (221,000)  (4,000)  (78,686)  118,000 
Cash beginning of period  289,000   108,000   124,529   286,000 
Cash end of period $68,000  $104,000  $45,843  $404,000 
                
Supplemental Cash Flow Information:                
Interest paid $430,000  $60,000  $6,300  $317,000 
Taxes paid $  $  $  $ 
                
Non-cash Financing Activities:                
Offset accounts receivable, related party with notes payable, related party $  $45,000  $  $ 

 

The accompanying notes are integral part of these unaudited condensed consolidated financial statements.

 


 

US LIGHTING GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022MARCH 31, 2023

 

NOTE 1 – ORGANIZATION

 

US Lighting Group, Inc. (the “Company”) was foundedis a parent company comprised of four subsidiaries — Cortes Campers, LLC, a brand of high-end molded fiberglass campers, Futuro Houses, LLC, which is focused on October 17, 2002, in accordance with the lawsdesign and sales of Floridamolded fiberglass homes, Fusion X Marine, LLC, a high-performance boat designer, and is located in Euclid, Ohio.MIG Marine Corporation, a composite manufacturing company that produces proprietary molded fiberglass products for our other business lines.

 

On January 11, 2021, the Company created a new wholly owned subsidiary calledwe formed Cortes Campers LLC, domiciledto operate our new brand of innovative travel trailers. During the second part of 2021, we invested heavily in Wyoming. Cortes Campers, LLC was created to market tow behind travel trailersresearch and development as well as production planning for the recreational vehicle market. The division was17-foot camper and began selling campers in the early stage of revenue generation as of the date of this report. The first camper was delivered on February 19, 2022.

The Company created a new wholly owned subsidiary called Fusion X Marine, LLC on April 12, 2021, domiciled in Wyoming, to sell boats and other related products to the recreational marine market. The subsidiary has had no sales as of the date of this report.

 

On January 12, 2022, the Company createdwe formed Futuro Houses, LLC, a new wholly owned subsidiaryWyoming company, to manufacturedesign, market and selldistribute molded fiberglass houses. As of September 30,homes. Throughout 2022, Futuro Houses LLC had no revenues.engaged in engineering and development of our first “UFO” themed home model inspired by the original Futuro house designed by Finnish architect Matti Suuronen.

 

On August 5, 2022, we acquired MIG Marine Corporation, a fiberglass manufacturing company founded in 2003. With the Company entered into a Stock Purchase Agreement (the “Agreement”) with Paul Spivak, a related party, (“Seller”), whereby the Company agreed to acquire one hundred percent of the outstanding shares of common stockacquisition of Mig Marine, Corp in exchange for a promissory notewe were able to streamline our manufacturing processes, improve production cycles and scale to meet the demand of $6,195,000 (the “Promissory Note”)Cortes Campers generated order back-log.

We plan to expand our manufacturing footprint, enhance production techniques, and a deposit of $683,333 payable on or before August 5, 2023, together representing one hundred percent seller financing of the transaction. The parties agreed that certain assets of Mig Marine were to be excluded from the purchase asdevelop more fully set forthproducts in the Agreement. The followingRV, marine, and composite housing sectors. Current R&D efforts are directed towards future tow-behind camper models under the material termsCortes Campers brand as well as prefabricated housing segment.

As of March 31, 2023, our revenue was driven by shipments of fiberglass campers marketed under the Promissory Note: interest accrues atCortes Campers brand and to a lesser extent from dealerships for the rate of 6.25% per annum commencing September 5, 2022; principal and interest will be repaid in consecutive monthly installments of principal and interest, amortized over five years, on the first day of each month commencing the month following execution of the Promissory Note and continuing until August 5, 2027.Futuro Housing brand.

 

The Mig Marine Corp acquisition has been determined to beCompany is a combination of entities under common control that resultedFlorida corporation founded in a change2003. We are located in the reporting entity. Accordingly, the financial results of the Company have been recast to include the financial results of Mig Marine Corp in the current and prior periods as if Mig Marine Corp had always been consolidated. The assets and liabilities of Mig Marine Corp have been recorded in the Company’s consolidated statements of financial condition at the seller’s historical carrying value. The purchase of Mig Marine Corp was accounted for as an equity transaction for the period ended September 30, 2022 (the period in which the transaction occurred). The following tables summarize the impact of the Mig Marine Corp acquisition to the Company’s unaudited condensed consolidated statement of financial condition as of December 31, 2021, and to the Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021.Euclid, Ohio.

  December 31, 2021
  As
Previously Reported
  Retrospective Adjustments  As Adjusted 
Total assets: $3,035,000  $980,000  $4,015,000 
Total liabilities $1,490,000  $1,260,000  $2,750,000 
Total equity $1,545,000  $(280,000) $1,265,000 
Total liabilities and stockholders’ deficit $3,035,000  $980,000  $4,015,000 

  For The Three Months Ended
September 30, 2021
  For The Nine Months Ended
September 30, 2021
 
  As Previously Reported  Retrospective Adjustments  As Adjusted  As Previously Reported  Retrospective Adjustments  As Adjusted 
Loss from operations $(205,000) $(16,000) $(221,000) $(820,000) $(20,000) $(880,000)
Net loss from continuing operations $(142,000) $(62,000) $(204,000) $(601,000) $(105,000) $(706,000)
Net (loss) income from discontinued operations $(7,000) $  $(7,000) $3,757,000  $  $3,757,000 
Net (loss) income $(149,000) $(62,000) $(211,000) $3,156,000  $(105,000) $3,051,000 
Loss per share $(0.00) $  $(0.00) $0.03  $  $0.03 

 


NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentationPresentation

 

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of and for the ninethree month period ending September 30, 2022March 31, 2023 and are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.2023. These unaudited financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.

 


Use of estimatesEstimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.

 

Concentrations of Credit Risk

 

We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.

 

Cash equivalentsEquivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There was $0$45,843 and $205,000$124,529 of cash equivalents as of the ninethree months ended September 30, 2022March 31, 2023 and the year ended December 31, 2021,2022, respectively, held in the Company’s investment account.

 

Basis of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Intellitronix Corp., Cortes Campers, LLC, Futuro Houses, LLC, Fusion X Marine, LLC, Futuro Houses, LLC and Mig Marine.Marine, LLC. All intercompany transactions and balances have been eliminated in consolidation.

 

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is computed on a first-in, first-out basis. As of September 30, 2022 and December 31, 2021, the Company has $177,000 and $65,000 of raw material inventory, respectively.

The Company provides inventory adjustments based on excess and obsolete inventories determined primarily by future demand forecasts. The write down amount is measured as the difference between the cost of the inventory and market based upon assumptions about future demand and charged to the provision for inventory, which is a component of cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standard Update (“ASU”) No. 2014-09. This standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. generally accepted accounting principles.GAAP. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services.

 

Under this guidance, revenue is recognized when control of promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and costs of sales are recognized once productsproduct titles are deliveredtransferred to the customer’s control and performance obligations are satisfied.

 

RecentlyRecent Accounting Pronouncements

 

The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 


 

 

NOTE 3 - LIQUIDITY

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.

 

During the ninethree months ended September 30, 2022,March 31, 2023, the Company realized a net lossincome of $1,645,000$24,769 and cash used byfor operating activities was $1,414,000,$291,059, compared to cash provided byused for operating activities of $3,240,000$1,2537,657 in the prior period. Based on current projections, we believe our available cash on-hand, of $68,000 andour current efforts to market and sell our productproducts, and our ability to significantly reduce expenses, will provide sufficient cash resources to satisfy our operational needneeds, for at least one year from the next twelve months.   

NOTE 4 – SALE OF ASSETS / DISCONTINUED OPERATIONSdate these financial statements are issued.

 

On May 14, 2021,At March 31, 2023, the Company and Intellitronix Corporation entered into an Asset Purchase Agreement with Ohio INTX Cooperative, a State of Ohio cooperative association, to sell selected assets of Intellitronix Corporation. The Asset Purchase Agreement and related sale was finalizedhad cash on May 14, 2021, with a sale price of $4,520,000. Intellitronix Corporation remains a wholly-owned subsidiary of the Company.

In accordance with the provisions of ASC 205-20, we have not included the results of operations from discontinued operationshand in the resultsamount of continuing$45,843. Management estimates that the current cash funds and liquid investments of $432,243 and the continued increase in revenues, will be sufficient to continue operations in the consolidated statements of operations. The results of operations from discontinued operations for the three and nine months ended September 30, 2021, have been reflected as discontinued operations in the unaudited consolidated statements of operations and consist of the following.through March 31, 2024.

  Three Months ended
September 30,
2021
  Nine Months ended
September 30,
2021
 
Sales from discontinued operations $  $1,484,000 
Cost of goods sold of discontinued operations     593,000 
Gross profit of discontinued operations     891,000 
         
Operating expenses of discontinued operations:        
Selling, general and administrative expenses  597,000   956,000 
Product development costs  30,000   82,000 
Total operating expenses of discontinued operations  627,000   1,038,000 
         
Operating income from discontinued operations  (274,000)  (147,000)
         
Other income (expense) of discontinued operations:        
Gain on sale of assets  3,915,000   3,915,000 
Gain on extinguishment of debt     9,000 
Interest expense  (27,000)  (59,000)
Total other income  3,888,000   3,865,000 
         
Net Income from discontinued operations $3,614,000  $3,733,000 

 

NOTE 54 – INVESTMENT IN TRADING SECURITIES

 

On May 17, 2020, the Company purchased $3,800,000 of various mutual fund assets from a broker. This investment meets the criteria of level one inputs for which quoted market prices are available in active markets for identical assets or liabilities as of the reporting date. As of September 30, 2022, these assets havehad all been sold. The Company has adjusted the reported amounts for these investments to market value resulting in a realized loss and unrealized loss of $288,000$288,281 and $18,000, respectively, foras of the nine monthsyear ended September 30,December 31, 2022.

 


The source of the $3,800,000 that the Company used to purchase various mutual fund assets from the broker was from the sale of certain assets of Intellitronix Corporation that was consummated on May 14, 2021. The Company purchased the mutual fund assets in order to provide shareholders of the Company with a reasonable rate of return while deciding how to deploy these funds towards its planned business operations. However, asAs a result of thisthe Company’s purchase by the Company of mutual fund assets, from the broker, the Company may becould have been deemed to be an “investment company” under the Investment Company Act of 1 Investment Company Act of 1940 (the “Investment Company Act”).

The However, the Company doesdid not intend to be an investment company and does not intendnever intended to be engaged in the business of investing, reinvesting, owning, holding or trading in securities. As such,Based on these facts, the Company intends to relyrelied on Rule 3a-2 under the Investment Company Act, which provides an exclusion from the definition of “investment company” for issuers meeting certain criteria. In an effortThe Company endeavored to ensure that it was compliant with the conditions for relying on this rule within the time period permitted by Rule 3a-2. To comply with this exclusion, the Company has liquidated itsall of the mutual fund assets and no longer owns securities as of September 30, 2022, as was approved and authorized by the Company’s Board of Directors by unanimous written consent on August 17, 2021.

As of December 31, 2021, the account had $205,000 of cash and $1,647,000 of securities. As of December 31, 2021, the Company owned securities that comprised 54%having a value exceeding 40% of the value of the Company’s total assets on a consolidatedan unconsolidated basis. This course of action was approved and authorized by the Company’s board of directors by unanimous written consent on August 17, 2021. As of December 31, 2022 and March 31, 2023, the Company did not own any securities.

 

NOTE 65 – PROPERTY AND EQUIPMENT

 

Property and equipment for continuing operations consist of the following at September 30, 2022March 31, 2023 and December 31, 2021:2022:

 

 September 30,
2022
  December 31,
2021
  March 31,
2023
 December 31,
2022
 
Building and improvements $664,000  $664,000  $664,183  $664,183 
Land  96,000   96,000   96,000   96,000 
Vehicles  147,000   319,000   146,893   146,893 
Office equipment  25,000   24,000   18,421   18,421 
Furniture and fixtures  5,000   5,000 
Production molds and fixtures  851,000   851,000   1,095,758   1,095,758 
Tooling and fixtures  344,000   52,000   651,909   462,570 
Other equipment  66,000      72,059   72,059 
Furniture and fixtures  5,628   4,746 
Total property and equipment cost  2,198,000   1,211,000   2,750,851   2,560,630 
Less: accumulated depreciation and amortization  (216,000)  (163,000)  (307,345)  (262,523)
Property and equipment, net $1,982,000  $1,848,000  $2,443,506  $2,298,107 

 

Depreciation expense for the ninethree months ended September 30,March 31, 2023, and 2022 was $44,822 and 2021 was $139,000 and $39,000,$19,000, respectively.

 


 

 

NOTE 76 – ACCRUED PAYROLL TO OFFICER

 

Beginning in January 2018, the Company’s former President and CEO voluntarily elected to defer payment of his employment compensation. The balance of the compensation owed to the Company’s former President and CEO was $125,0000 and $686,000$125,167 as of September 30, 2022March 31, 2023 and December 31, 2021, respectively.2022. Deferral of wages was haltedended on August 9, 2021, when the Company’s former President and CEO resigned.resigned from that position.

 

NOTE 87 – LOANS PAYABLE TO RELATED PARTIES

 

Loans payable to related parties consists of the following at September 30, 2022March 31, 2023 and December 31, 2021:2022:

 

  September 30,
2022
  December 31,
2021
 
Loan payable to officers/shareholders $6,911,000  $1,458,000 
Loans payable to related parties, current portion  (1,202,000)  (1,458,000)
Loans payable to related parties, net of current portion $5,709,000  $ 
  2023  2022 
Loan payable to officers/shareholders (a) $7,230,629  $7,054,333 
Loan Payable to related party - past due (b)     126,296 
Total loans payable to related parties  7,230,629   7,180,629 
Loan payable to related party, current portion  (352,296)  (302,296)
Total loans payable to related parties  6,788,333   6,878,333 

a.On August 5, 2022, the Company acquired MIG Marine and issued a 6.25% interest bearing note in the amount of $6,878,333; the note is payable to its majority shareholder, Paul Spivak. During the fourth quarter of 2022, there was a loan for $100,000 from Mr. Spivak and another for $76,000 from the Company’s current President & CEO; both these loans are non-interest-bearing loans.

 

On December 1, 2016, the Company acquired Intellitronix Corporation from the Company’s former President and majority shareholder. The Company agreed to pay $4,000,000 in exchange for all the shares of Intellitronix Corporation. The sixty-month loan matured in December 2021, required monthly payments of $74,000, carried an interest rate of 6.25%, and was secured by the assets of Intellitronix Corporation. The loan balance on December 31, 2021, consisting only of accrued interest, was $407,000. During the nine months ended September 30, 2022, the Company made interest payments of $407,000, leaving a balance outstanding of $0 at September 30, 2022. 

b.On August 5, 2022, we acquired Mig Marine from Paul Spivak, our former CEO and a significant shareholder. We paid for Mig Marine with a deferred deposit and a $6,195,000 promissory note. We failed to make required payments under the note in 2022 and the first quarter of 2023, and as a result were in default. However, Mr. Spivak waived the default, waived all interest due on the note for 2022 and 2023, and agreed to defer all payments of the deposit and under the note to January 2024. For more information, please see Note 12 — Subsequent Events.

 

The year ended December 31, 2021, includes $1,051,000Loan payments to related parties were made through a combination of loans from Mr. Spivak, the Company’s majority shareholder and the former President of the Company and Mig Marine. During the nine months ended September 30, 2022, Mr. Spivak loaned the Company an additional $697,000. Pursuantdirect payments to the terms ofnoteholder and instructions from the Purchase Agreement Mr. Spivak forgave all amounts duenoteholder to him, resulting in a creditpay obligations to paid in capital of $1,761,000.

At September 30, 2022, pursuant to the terms of the Promissory Note issued as part of the acquisition of Mig Marine, the Company owes $6,878,000 of principal and $33,000 of accrued interest. The following are the material terms of the Promissory Note: interest accrues at the rate of 6.25% per annum commencing September 5, 2022; principal and interest will be repaid in consecutive monthly installments of principal and interest, amortized over five years,others on the first day of each month commencing the month following execution of the Promissory Note and continuing until August 5, 2027.their behalf.

 

NOTE 98 – LOANS PAYABLE

 

Loans payable for continuing operations consisted of the following as of September 30, 2022March 31, 2023 and December 31, 2021:2022:

 

  

September 30,

2022

  December 31,
2021
 
PayPal Working Capital Loan, net of discount (a) $  $18,000 
PayPal Working Capital Loan, net of discount (b)     7,000 
Secured promissory note (c)  260,000   263,000 
Vehicle loans (d)  63,000   127,000 
Equipment loan (e)     11,000 
Convertible Notes (f)  58,000    
Total loans payable  381,000   426,000 
Loans payable, current portion  (101,000)  (82,000)
Loans payable, net of current portion $280,000  $344,000 

a.On August 12, 2019, the Company entered into a PayPal Working Capital loan. The principal amount of the loan was for $216,000. The Company received net proceeds of $200,000, net of loan fees of $16,000. The loan matures in November 2022 and requires a $1,600 monthly payment.  The loan balance on September 30, 2022, was $0.
  March 31,  December 31, 
  2023  2022 
Real Estate loan (a) $258,657  $259,450 
Vehicle loans (b)  56,097   59,671 
Working capital (c)  85,728   122,135 
Total loans payable  400,483   426,000 
Loans payable, current portion  (104,499)  (140,905)
Loans payable, net of current portion $295,984  $280,000 

 

b.a.On November 25, 2019, the Company entered into a PayPal Working Capital loan. The principal amount of the loan was for $66,000. The Company received net proceeds of $50,000, net of loan fees of $16,000. The loan matures in December 2022 and requires a $600 monthly payment. The loan balance on September 30, 2022, was $0.


c.On August 26, 2020, the Company entered into a loan agreement with Apex Commercial Capital Corp. in the principal amount of $266,000$265,339 with interest at 9.49% per annum and due on September 10, 2030. The loan requires one hundred nineteen (119) monthly payments of $2,322, with a final balloon payment on the one hundred twentieth (120) month, or September 10, 2030, of $224,835. The loan is guaranteed by the Company, and the Company’s former Chief Executive OfficerCEO, and secured by the Company’s real estate. The loan balance on December 31, 2021,2022, was $263,000.$259,450. During the nine monthsyear ended June 30,December 31, 2022, the Company made principal payments of $3,000,$3,084 leaving a total of $260,000$259,450 owed at September 30, 2022.March 31, 2023. 


d.b.The Company purchases vehicles for employees and research and development activities. Generally, vehicles are sold or traded in at the end of the vehicle loan period. The aggregate vehicle loan balance on threetwo vehicles was $105,000$59,671 at December 31, 2020,2022, with an original loan period of 72 to 144 months, and interest rates of zero percent to 10.99%. The loan balance on March 31, 2023, was $56,097.

c.On November 7, 2022, the Company entered into a $150,000 term loan with Fresh Funding related to the working capital for the production of campers. The loan requires weekly payments of $3,981 over the term of 12 months, has an interest rate of 38% per annum, and is guaranteed by both the Company’s former CEO and the current CEO. The loan balance on December 31, 2022, was $122,135. During the year ended December 31, 2021, the Company disposed of one vehicle and purchased another for $40,000. The new vehicle has a 72 month loan term, and an interest rate of 4.15%. During the nine months ended September 30, 2022, Company disposed of another vehicle. The Company made total principal payments of $18,000 on its vehicle loans, leaving an aggregate loan balance on the three vehicles of $127,000 at December 31, 2021. During the nine months ended September 30, 2022,31,2022, the Company made principal payments of $11,000, leaving a total$23,369, and interest payments of $63,000 owed at September 30, 2022.

e.On August 3, 2020, the Company entered into a $18,000 term loan with Leaf Capital related to the purchase of production equipment. The loan requires monthly payments over the term of 36 months, has an interest rate of 8.48% per annum, and is secured by the production equipment. The loan balance on December 31, 2021, was $11,000.$61,497. During the ninethree months ended September 30, 2022,March 31, 2023, the Company made principal payments of $11,000,$26,381, and interest payments of $10,025 leaving a total of $0$85,728 owed at September 30, 2022.March 31, 2023.

NOTE 9 – SHAREHOLDERS’ EQUITY

f.The Company issued convertible secured debentures (“Convertible Notes”) to accredited investors from December 2019 through June 2020, with interest at 10% per annum, a term of eighteen months, and secured by all of the assets of the Company and its subsidiaries. The Convertible Notes provide a conversion right, in which the principal amount of the Convertible Notes, together with any accrued but unpaid interest, could be converted into the Company’s common stock at a conversion price at $0.25 per share. The Convertible Notes balance on December 31, 2021, including accrued interest of $10,000, was $60,000. As of June 4, 2021, the remaining Convertible Note was no longer convertible into shares of common stock since the conversion rights expired on June 4, 2021, and the Convertible Notes stopped accruing interest on its maturity date on June 5, 2021. The Convertible Notes have been reclassified from Convertible Note to Loans Payable on the balance sheet. During the nine months ended September 30, 2022, the Company made payments of $2,000.

 

The following sets forth the loan payments, including interest,Common Shares Issued for the years ended December 31:

2023 $101,000 
2024 $44,000 
2025 $44,000 
2026 $44,000 
2027 $44,000 
Thereafter $104,000 
Total $381,000 

NOTE 10 – COMMON STOCKCash

 

During August 2022,the quarter ended March 31, 2023, the Company sold 800,000received proceeds of $167,500 on the private placement of 1,675,000 shares of common stock, at an average price of $0.10.

Summary of Warrants

There were no warrants granted or exercised during the quarter ended March 31, 2023. Warrants for total proceeds of $80,000.the period ended March 31, 2023, are $0.

 

NOTE 10 – INCOME TAXES

At December 31, 2021, the Company had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately$1,500,000 for Federal and state purposes. The carryforwards expire in various amounts through 2041. Given the Company’s history of net operating losses, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the carryforwards. Accordingly, the Company has not recognized a deferred tax assets for this benefit. Section 382 generally limits the use of NOLs and credits following an ownership change, which occurs when one or more 5 percent shareholders increase their ownership, in aggregate, by more than 50 percentage points over the lowest percentage of stock owned by such shareholders at any time during the “testing period” (generally three years).


Effective January 1, 2007, the Company adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of March 31, 2023, and 2022, the Company did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption.

The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of March 31, 2023, and 2022, the Company has not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2018 through 2022 remain open to examination by the major taxing jurisdictions to which the Company is subject.

Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize the appropriate deferred tax asset at that time.

NOTE 11 – LEGAL PROCEEDINGS

 

There were no reportable legal proceedings initiated, or material developments in previously reported legal proceedings duringfor the third quarter ended March 31, 2023.

 

NOTE 12 – SUBSEQUENT EVENTS

 

On October 25,August 5, 2022, the Company acquired Mig Marine from Paul Spivak, our former CEO and a significant shareholder, for $6,833,333 pursuant to a stock purchase agreement between Mr. Spivak and USLG. The Company filed an amendmentMig Marine purchase price was completely financed by Mr. Spivak: pursuant to its Articlesthe purchase agreement a 10% deposit of Incorporation$638,333 was deferred for one year interest free and was due August 5, 2023; and USLG issued Mr. Spivak a promissory note in the amount of $6,195,000 for the remainder. The note bears interest at the rate of 6.25% per year and had a five-year term with monthly installments of principal and interest due beginning on September 5, 2022, with the State of Florida (the “Amendment”). The Amendment provided for an increasefinal payment on August 5, 2027. As we ramped up our camper business and reinvested revenues in the company, we failed to make any payments under the note, and as a result were in default. Reflecting his faith in USLG and in order to support the operations and continued growth of the numbercompany, Mr. Spivak waived the default, waived all interest due on the note for 2022 and 2023, and agreed to defer all payments of authorized sharesthe deposit and under the note to January 2024, with the final note payment due December 1, 2028. Mr. Spivak provided the waiver and payment deferral on May 1, 2023, effective retroactively.

On April 18, 2023, the Company secured a $30,000 loan from Lending Point to use for inventory purchasing. The loan bears an interest rate of Common Stock to 500 million.13.49% and requires monthly payments of $690 with no pre-payment penalty.

 


 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward-Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes a number of forward-lookingquarterly report contains statements that reflect Management’sare forward-looking within the meaning of Section 21E of the Exchange Act. Forward-looking statements are statements other than historical facts, including, without limitation, statements that are identified by words like “may,” “could,” “would,” “should,” “will,” “believe,” “expect,” “anticipate,” “plan,” “predict,” “estimate,” “target,” “project,” “intend,” or similar expressions. These statements include, among others, statements regarding our current views with respect toexpectations, estimates and projections about future events and financial performance. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate”trends affecting the financial condition and “continue,” or similar words. Those statements include statements regarding the intent, belief or current expectations of us and membersoperations of our management team as well as the assumptions on which suchbusiness. These statements are based. Prospective investors are cautioned that any such forward-looking statements are not guaranteesinherently subject to a variety of future performance and involve riskrisks and uncertainties and that actual results may differ materially from those contemplated by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. Important factors currently known to Management could cause actual results to differ materially from those expressed. You should not rely solely on these forward-looking statements and should consider all uncertainties and risks throughout this document. Forward-looking statements are only predictions and not guarantees of performance and speak only as of the date they are made. We do not undertake to update any forward-looking statement in light of new information or future events.

Although we believe that the expectations, estimates and projections reflected in the forward-looking statements in this report are based on reasonable assumptions when they were made, we cannot assure you that these expectations, estimates and projections will be achieved. We believe the forward-looking statements in this report are reasonable; however, you should not place undue reliance on any forward-looking statement, as they are based on current expectations. Future events and actual results may differ materially from those discussed in the forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions,Some of the occurrence of unanticipated events or changes in the future operating results over time. We believefactors that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made thatcould cause actual results of operations or the results of our future activities will notto differ materially from our assumptions.expectations are discussed Risk Factors that could cause differences include, but are not limited to, expected market demand beginning on page 6 of our Annual Report on Form 10-K for our products, fluctuations in pricing for materials, and competition.the year ended December 31, 2022.

 

General Overview

 

US Lighting Group, Inc. (the “Company”) was originally incorporated in the Stateis a holding company with four operating subsidiaries — Cortes Campers, LLC, a brand of Floridahigh-end molded fiberglass recreational campers, Futuro Houses, LLC, focused on October 17, 2003, under the name Luxurious Travel Corp., The Company acquired alldesign and sales of the issuedmolded fiberglass homes, Fusion X Marine, LLC, a high-performance boat designer, and outstanding capital stock of US Lighting Group, Inc. (founded in 2013 in accordance with the laws of the State of Wyoming) on July 13, 2016, and the corporate name was changed on August 9, 2016, to the US Lighting Group, Inc. At the time the Company designed and manufactured commercial LED lighting, bothMIG Marine Corporation, a composite manufacturing company that produces proprietary molded fiberglass products for retrofits and new construction.our other business lines.

 

Through supplying Original Equipment Manufacturers (OEM’s)We derive expertise and inspiration from the marine industry, where the harshest conditions are expected and must be met with electronic componentssuperior engineering and the Company was introducedlatest in composite technology. We apply these standards to the Recreational Vehicleproducts we manufacture and supply to the recreational vehicle (RV) Industry. Management identified a fast growingmarket and, underserved niche of small, tow-behind fully molded fiberglass travel trailers. The Company started developing a new business planmore recently, to create a luxury 17’ Travel Camper to appeal to young professionals working remotely as well as retirees and other consumers intrigued by the travelling lifestyle.prefabricated housing segment.

 

On May 14, 2021,Molded fiberglass products are exceptionally strong, lightweight and durable. Composite materials are corrosion resistant and provide efficient insulation, making them attractive for both outdoor enthusiasts and residential housing needs. Molded construction also allows for creation of irregular, unusual or circular objects, which permits the Companyinnovative shapes and Intellitronix Corporation entered into an Asset Purchase Agreementfeatures of our products.

Our vision is to promote innovation and challenge manufacturing practices in industries that rely on labor-intensive, outdated and wasteful processes, while providing consumers with Ohio INTX Cooperative, a State of Ohio cooperative association,superior products designed to sell selected assets of Intellitronix Corporation. The Asset Purchase Agreement and related sale was finalized on May 14, 2021. In accordance with the provisions of ASC 205-20, Presentation of Financial Statements, we have separately reported the assets and liabilities, revenue and expenses related to Intellitronnix as discontinued operations.last for generations.

 

On January 11, 2021, the Companywe formed Cortes Campers LLC (“Cortes Campers”), a wholly owned subsidiary, to operate itsour new brand of innovative travel trailers. During the second part of 2021, the Companywe invested heavily invested in Researchresearch and Developmentdevelopment as well as production planning for the 17’ Camper17-foot camper and began selling campers in early 2022. As of March 31, 2023, our revenue was driven by shipments of fiberglass campers marketed under Cortes Campers brand and financial results for the first quarter of 2023 reflect revenue of $905,235 generated by Cortes Campers.

 

Cortes Campers currently builds one molded fiberglass 17-foot travel trailer model, which is unique to the industry due to innovative construction techniques such as an axle-less suspension, floor plan that allows for an eight cubic foot refrigerator and full-size wet bath, marine grade materials, and rugged construction unmatched in the industry. We use marine grade exterior gel coats, which provide our campers with bright and fade-resistant colors, also unmatched in the industry.

Our campers are distributed through a chain of regional distributors and are currently available for purchase in US and Canada. Other molded fiberglass RV manufacturers don’t have a dealer network, which provides Cortes Campers with competitive advantage when approaching dealers.


On January 12, 2022, we formed Futuro Houses, LLC to design, marketing and distribute prefabricated molded fiberglass homes. Throughout 2022, Futuro Houses engaged in engineering and development of our first “UFO” themed home model inspired by the original Futuro house designed by Finnish architect Matti Suuronen. The Company plansprototype was finished in January of 2023, and as of March 31, 2023 Futuro had reported revenues of $300,000.

We plan to increase camper sales, expand itsour manufacturing footprint, enhance production techniques, and develop more products in the RV, marine, and composite housing and electronics sectors. Current R&D efforts are directed towards future tow-behind camper models under Cortes Campers brand as well as prefabricated housing segment.

 

The original Futuro houseIn 2022 Cortes Campers obtained RVIA industry certification (RVIA is a round,prefabricated house designed by Finnish architect Matti Suuronen,voluntary association of recreational vehicle manufacturers which fewer than 100 were built duringpromulgates recreational vehicle safety standards in the late 1960sU.S.) and early 1970s. The shape, reminiscentwas listed on J.D. Power registry, which allowed end-consumers simplified access to financing as well as provided dealers with confidence in our manufacturing techniques and product values. Throughout 2022, and continuing in 2023, we developed relationships with several financial institutions to provide credit to our dealers under floor planning programs. Those arrangements significantly improved dealer acceptance of Cortes Campers as a flying saucer,new manufacturer, which has resulted in increased sales and the structure's airplane hatch entrance has made the houses sought after by collectors and by Airbnb renters. The Futuro was composed of fiberglass-reinforced polyester plastic, polyester-polyurethane, and poly(methyl methacrylate), measuring 4 meters (13 feet) high and 8 meters (26 feet) in diameter.revenue.

 

On August 5, 2022, the Company entered into a Stock Purchase Agreement withwe acquired MIG Marine Corporation (“Mig Marine”) from Paul Spivak, the Company’s majority stockholderour former CEO and former president, acquired one hundred percent of the outstanding shares of common stock of Mig Marine Corp. Mig Marine was formed on March 4, 2003, in Ohio to design, develop and manufacture composite products for the marine and automotive industries.

During 2020 and 2021 the company developed its first model, a 17’ travel camper with all tooling fabricated in house. The company owns the tooling for the exterior shell, inner liner, and interior components, such as countertops, cabinets etc.

The innovative design defies construction techniques currently used by the RV industry. Drawing from its expertise as a boat manufacturer, the Company replaces all wood with composite alternatives or corrosion resistant materials, producing a truly durable camper designed to last a lifetime. Other innovations include axle-less independent suspension, corrosion resistant chassis and four-season insulation, with further developments in the process.


The process has been largely developed for the manufacturing method; however, process modifications might be needed for scaling production to meet the demand. The company conducts its R&D and manufacturing at one location, outside of Cleveland, Ohio.

significant shareholder. The Mig Marine Corp acquisition has been determined to be a combination of entities under common control that resulted in a change in the reporting entity. Accordingly, theour financial results of the Company have been recast to include the financial results of Mig Marine Corp in the current and prior periods as if Mig Marine Corp had always been consolidated.consolidated with USLG. The assets and liabilities of Mig Marine Corp ‘havehave been recorded in the Company’sour consolidated statements of financial condition at the seller’s historical carrying value.

 

Subsequent Events

On August 5, 2022, the Company entered into a Stock Purchase Agreement withwe acquired Mig Marine from Paul Spivak, our former CEO and a significant shareholder, for $6,833,333 pursuant to a stock purchase agreement between Mr. Spivak and USLG. The Mig Marine purchase price was completely financed by Mr. Spivak: pursuant to the Company’s majority stockholderpurchase agreement a 10% deposit of $638,333 was deferred for one year interest free and former president,was due August 5, 2023; and acquired one hundred percentUSLG issued Mr. Spivak a promissory note in the amount of $6,195,000 for the remainder. The note bears interest at the rate of 6.25% per year and had a five-year term with monthly installments of principal and interest due beginning on September 5, 2022, with the final payment on August 5, 2027. As we ramped up our camper business and reinvested revenues in the company, we failed to make any payments under the note, and as a result were in default. Reflecting his faith in USLG and in order to support the operations and continued growth of the outstanding sharescompany, Mr. Spivak waived the default, waived all interest due on the note for 2022 and 2023, and agreed to defer all payments of common stock of Mig Marine Corp. Mig Marine was formedthe deposit and under the note to January 2024, with the final note payment due December 1, 2028. Mr. Spivak provided the waiver and payment deferral on March 4, 2003, in Ohio to design, develop and manufacture composite products for the marine and automotive industries.May 1, 2023, effective retroactively.

 

Results of Operations for the Three Months Ended September 30, 2022March 31, 2023 Compared to the Three Months Ended September 30, 2021March 31, 2022

Sales

 

Total sales from continuing operations for the three monthsquarter ended the September 30, 2022March 31, 2023 were $516,000,$1,205,235, compared to $21,000 for$76,000 the three months ended September 30, 2021,first quarter of 2022, an increase of $495,000 or more than 2,000%.$1,129,235,000. The increase in sales is attributed to new$905,235 of recreational vehicles (RV) and related components sales through our Cortes Campers subsidiary. Duringsubsidiary and $300,000 of revenue from the current period all sales revenue was from Cortes Campers subsidiary, whereas mostsale of September 30, 2021, sales are discontinued and presented as part of discontinued operations.a Futuro Houses dealership.

 


Cost of Goods Sold

 

Cost of goods sold from continuing operations for the three monthsquarter ended the September 30, 2022March 31, 2023 were $528,000,$701,319, compared to $0$68,00 for the three months ended the September 30, 2021.first quarter of 2022. The September 30, 2022 cost of goods sold relates to camper sales from the Company’s Cortes Campers subsidiary, whereas most of September 30, 2021 sales are discontinued and presented as part of discontinued operations.subsidiary.

 

Operating Expenses

 

Selling, general and administrative expenses (“SG&A”) from continuing operations were $526,000$472,349 for the three monthsquarter ended the September 30, 2022,March 31, 2023, compared to $240,000$266,000 for the three months ended the September 30, 2021,first quarter of 2022, an increase of $286,000. The increase over the prior year can be primarily attributed to additional administrative staffing, auditing and professional fees.

Product development costs for the three months ended the June 30, 2022, was $78,000 compared to $2,000 for the three months ended the September 30, 2021, an increase of $76,000. The increase is due to the Company changing its focus to the RV, marine, composite housing, and electronics sectors.

Other Income / Expense

During the three months ended the September 30, 2022, we had total other expenses of $47,000, including: other expense of $4,000, recognized a realized gain of $18,000 and an unrealized loss of $32,000 from investments, interest income of $1,000 related to investments, interest expense of $40,000 and a $10,000 gain on disposal of fixed assets. During the three months ended the September 30, 2021, we had total other income of $17,000. We had other income of $2,000, a gain on extinguishment of debt of $52,000, recognized an unrealized loss of $9,000 from investments, interest expense of $17,000, related party interest expense of $19,000 and $7,000 of interest income.


Net Loss

We had a net loss from continuing operations of $663,000 for the three months ended September 30, 2022, compared to $204,000 for the three months ended the September 30, 2021. Our overall net loss from continuing operations increased mainly due to our increase in SG&A expenses in the current period. For the three months ended September 30, 2021, we also had a $7,000 net loss from discontinued operations.

Results of Operations for the Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

Sales

Total sales from continuing operations for the nine months ended September 30, 2022 were $641,000, compared to $23,000 for the nine months ended September 30, 2021, an increase of $618,000$206,349, or more than 2,000%77.6%. The increase in sales is attributed to new sales through our Cortes Campers subsidiary. During the current period all sales revenue was from Cortes Campers subsidiary, whereas most of September 30, 2021, sales are discontinued and presented as part of discontinued operations.

Cost of Goods Sold

Cost of goods sold from continuing operations for the nine months ended the September 30, 2022 were $754,000, compared to $3,000 for the nine months ended the September 30, 2021. The September 30, 2022 cost of goods sold relates to camper sales from the Company’s Cortes Campers subsidiary, whereas most of June 30, 2021 sales are discontinued and presented as part of discontinued operations.

Operating Expenses

Selling, general and administrative expenses (“SG&A”) from continuing operations were $1,134,000 for the nine months ended the September 30, 2022, compared to $859,000 for the nine months ended the September 30, 2021, an increase of $275,000. The increase over the prior year can be attributed to increased personnel costs associated with the Company’s Cortes Campers Subsidiary.

 

ProductWe had no product development costs for the nine monthsquarter ended the September 30, 2022, were $123,000March 31, 2023, compared to $41,000$0 for the nine months ended the September 30, 2021, an increasefirst quarter of $82,000.2022. The increase is due to the Company changingcontinues its focus to the RV, marine, composite housing, and electronics sectors.

 

Other Income / Income/Expense

 

During the nine monthsquarter ended the September 30,March 31, 2022, we had total other expense of $275,000 including:$6,797. Total other income of $60,000, recognized a realized loss of $18,000 and unrealized loss of $288,000expense from investments, interest income of $4,000 related to investments, and interest expense for the first quarter of $56,000. During the nine months ended September 30, 2021, we had total other income of $174,000. We had other income, of $3,000, recognized an unrealized gain of $195,000 from investments, and interest expense, related party of $75,000 and we had $52,000 gain on extinguishment of debt.2022 was $118,000.

Net Loss

 

We had a net lossincome from continuing operations of $1,645,000$24,769 for the nine monthsquarter ended September 30,March 31, 2022, compared to $706,000a net loss of $376,000 for the nine months ended the September 30, 2021.first quarter of 2022. Our overall net loss from continuing operationsincome increased mainly due to the unrealized loss on our investments in the current periodsales of Cortes Campers RVs and the increase to our SG&A expense. For the nine months ended September 30, 2021, we also had $3,915,000 of income from the sale of discontinued operationsrelated components and a $158,000 net loss from discontinued operations.new distributorships for Futuro Houses.

 


Liquidity and Capital Resources

 

Changes in Cash Flows

 

Net cash used in operating activities for the nine monthsquarter ended September 30, 2022,March 31, 2023 was $1,414,000, as$257,000, compared to net cash provided by operating activities of $3,240,000,$218,559 for the nine monthsfirst quarter of 2022.

Net cash used in investing activities was $190,221 for the quarter ended March 31, 2023, compared to $703,000 for the September 30, 2021, which included $3,915,000 net incomefirst quarter of 2022. The difference is primarily due to a very small investment in fixed assets for the first quarter of 2022 and proceeds of $704,000 received from the sale of discontinued operations.trading securities as compared with a much larger investment in fixed assets for the first quarter of 2023.

 

Net cash provided by investingfinancing activities was $1,068,000 for the nine monthsquarter ended September 30, 2022, compared to net cash used of $3,037,000 for the nine months ended September 30, 2021. In the prior period we used $3,800,000 to invest in trading securities and $529,000 to purchase property and equipment. ThisMarch 31, 2023 was offset with$403,691, which included proceeds of $400,000$167,500 received from the sale of fixed assetscommon stocks and $892,000 from proceeds from investments. In the current period we received $35,000 from the salerepayment of fixed assets, $1,341,000 from proceeds from investments and we used $308,000 to purchase property and equipment.

$236,191 of loans payable. Net cash used in financing activities for the nine months ended September 30,first quarter of 2022 was $125,000 and included$328,000, which was all for the repayment of $105,000 of loans payable, and repayment of $411,000 of notes payable to a related party. Net cash used in financing activities for the nine months ended September 30, 2021, was $207,000 and included proceeds of $308,000 received from the sale of common stock and $177,000 from notes payable. Cash received was offset by the repayment of $161,000 of loans payable, and repayment of $1,077,000 of notes payable to a related party.

 

Loans payable for continuing operations consisted of the following as of September 30, 2022:

  

September 30,

2022

 
Secured promissory note  260,000 
Vehicle loans  63,000 
Convertible Notes  58,000 
Total loans payable  381,000 
Loans payable, current portion  (101,000)
Loans payable, net of current portion $280,000 

Critical Accounting Policies and Estimates

 

ReferPlease refer to our Annual Report on Form 10-K for the year ended December 31, 2021,2022 for a full discussion of our critical accounting policies.


 

Item 3. Quantitative and Qualitative Disclosures aboutAbout Market Risk.

 

We areBecause USLG is a smaller“smaller reporting companycompany” as defined by Rule 12b-2 of the Securities and Exchange Act of 1934 and, as such,Commission we are not required to provide the information under this Item.additional market risk disclosure.

 

Item 4. Controls and Procedures.

 

Evaluation of disclosure controlsDisclosure Controls and procedures.Procedures

 

Our management team, with the participation of our Chief Executive Officerchief executive officer, Anthony Corpora, and Chief Financial Officer,chief financial officer, Donald O. Retreage, Jr., evaluated the effectiveness of ourthe design and operation of USLG’s disclosure controls and procedures pursuant to Rule 13a-15(as defined under the Securities Exchange Act of 1934Act) as of the end of the period covered byMarch 31, 2023. Based upon this Quarterly Report on Form 10-Q. In designingevaluation, Messrs. Corpora and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.


Based on management’s evaluation, weRetreage concluded that ourthe company’s disclosure controls and procedures were not effective as of March 31, 2023.

Changes in Internal Control Over Financial Reporting

Our senior management team is responsible for establishing and maintaining adequate internal control over financial reporting, defined under the dateExchange Act as a process designed by, or under the supervision of, this report,our principal executive and principal financial officers, or persons performing similar functions, and effected by our remediation effortsboard, senior management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. We continue related to each of the material weaknesses that we have identified inreview our internal control over financial reporting and additionalmay from time to time make changes aimed at enhancing their effectiveness and resources will be required in order to fully address these material weaknesses. We have not been able to complete all actions necessary and test the remediated controls in a mannerensure that would enable us to conclude that such controls are effective. We are committed to implementing the necessary controls to remediate the material weaknesses described below as our resources permit. These material weaknesses will not be considered remediated until (1) the new processes are designed, appropriately controlled and implemented for a sufficient period of time and (2) we have sufficient evidence that the new processes and related controls are operating effectively. The following material weaknesses insystems evolve with our internal control over financial reporting were identified by management as September 30, 2022:business.

 

Ineffective Control Environment. The Company did not maintain an effective control environment, which is the foundation necessary for effective internal control over financial reporting. Specifically, the Company (i) did not maintain a functioning independent audit committee; (ii) had an insufficient number of personnel appropriately qualified to perform control design, execution and monitoring activities; (ii) had an insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC disclosure requirements commensurate with the Company’s financial reporting requirements; (iv) had inadequate segregation of duties consistent with control objectives; and (v) lack of written documentation of the Company’s key internal control policies and procedures over financial reporting. The Company is required under Section 404 of the Sarbanes-Oxley Act to have written documentation of key internal controls over financial reporting. The Company did not formally document policies and controls to enable management and other personnel to understand and carry out their internal control responsibilities including the lack of budget-to-actual analyses, balance sheet variation analysis, and pro-forma financial statements. Additionally, the Company did not have an adequate process in place to complete its testing and assessment of the design and operating effectiveness of internal control over financial reporting in a timely manner.

Ineffective controls over financial statement close and reporting process. The Company did not maintain effective controls over its financial statement close and reporting process. Specifically, the Company: (i) had insufficient preparation and review procedures for disclosures accompanying the Company’s financial statements; and (ii) did not provide reasonable assurance that accounts were complete and accurate and agreed to detailed support and that reconciliations of accounts were properly performed, reviewed and approved; and

Insufficient segregation of duties in our finance and accounting functions due to limited personnel. We do not have sufficient segregation of duties within accounting functions. During the quarter ended September 30, 2022, we had limited personnel that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact that these duties were often performed by the same person, this creates a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.

Changes in internal control over financial reporting.

There were major changes in the remediation efforts as it relates effective control environment, controls over financial statement close and reporting process and the segregation of duties in our finance and accounting functions. There were no changes in our internal control over financial reporting identified in connection with the evaluation required by the Securities Exchange Act that occurred during theour first fiscal quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 


 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There were no reportable legal proceedings initiated, or material developments in previously reported legal proceedings, during the third quarter first quarter.

 

Item 1A. Risk Factors.

 

We are a smaller reporting company as defined by Rule 12b-2 ofPlease refer to the Securities Exchange Act of 1934 and, as such, are not requiredrisk factors listed under “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 for information relating to provide the information under this Item.certain risk factors applicable to USLG.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the quarter ended September 30, 2022,end of March 31, 2023, we offered unregistered shares of our common stock in a private placement to accredited investors to fund our working capital needs. In August,During the quarter we sold to four investors 800,0001,675,000 shares for an aggregate amount of $80,000.$167,500. The issuance of shares in the private placement was exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506(b) under the Securities Act. We discontinued the Rule 506(b) private placement at the end of March.

 

Item 3. Defaults Upon Senior Securities.

 

None.On August 5, 2022, we acquired Mig Marine for $6,833,333 from Paul Spivak, our former CEO and a significant shareholder. We paid for Mig Marine with a deferred deposit and $6,195,000 promissory note. As we ramped up our camper business and reinvested revenues in the company, we failed to make any payments under the note in 2022 or the first quarter of 2023, and as a result were in default. Reflecting his faith in USLG and in order to support the operations and continued growth of the company, Mr. Spivak waived the default, waived all interest due on the note for 2022 and 2023, and agreed to defer all payments of the deposit and under the note to January 2024, with the final note payment due December 1, 2028. Mr. Spivak provided the waiver and payment deferral on May 1, 2023, effective retroactively. For more information, please turn to Subsequent Events on page 12.

 

Item 4. Mine Safety DisclosuresDisclosures.

 

Not applicable.We are not engaged in mining operations.

 

Item 5. Other Information.

 

None.


We have disclosed on Form 8-K all reportable events that occurred in the quarter ended March 31, 2023.

 

Item 6. Exhibits.

 

Exhibit Number Description of Exhibit
31.1 Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
   
31.2 Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.2002
   
32.1 Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2Certifications ofand Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.2002
101.INS Inline XBRL Instance Document.                Document
101.SCH Inline XBRL Taxonomy Extension Schema Document.Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 


 

 

SIGNATURES

 

In accordance withPursuant to the requirements of the Securities Exchange Act the registrantof 1934, US Lighting Group, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 US LIGHTING GROUP, INC.Lighting Group, Inc.
  
Date: November 18, 2022By:May 15, 2023/s/ Anthony Corpora
 

By Anthony Corpora,

Chief Executive Officer

(Principal Executive Officer)

(Principal executive officer)
  
Date: November 18, 2022By:May 15, 2023/s/ Donald O. Retreage, Jr.
 

By Donald O. Retreage, Jr., Chief Financial Officer

(Principal Financial Officer)

  
Chief Financial OfficerMay 15, 2023/s/ Michael A. Coates
 

By Michael A. Coates, Corporate Controller

(Principal Financial Officer and
Principal Accounting Officer)

 

 

1816

 

iso4217:USD xbrli:shares