Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 14, 2023 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-41266 | |
Entity Registrant Name | CEA INDUSTRIES INC. | |
Entity Central Index Key | 0001482541 | |
Entity Tax Identification Number | 27-3911608 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 385 South Pierce Avenue | |
Entity Address, Address Line Two | Suite C | |
Entity Address, City or Town | Louisville | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80027 | |
City Area Code | (303) | |
Local Phone Number | 993-5271 | |
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 | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,076,372 | |
Common Stock, $0.00001 par value | ||
Title of 12(b) Security | Common Stock, $0.00001 par value | |
Trading Symbol | CEAD | |
Security Exchange Name | NASDAQ | |
Warrants To Purchase Common Stock [Member] | ||
Title of 12(b) Security | Warrants to purchase common stock | |
Trading Symbol | CEADW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 13,342,805 | $ 18,637,114 |
Accounts receivable, net | 272,547 | 2,649 |
Inventory, net | 315,096 | 348,411 |
Prepaid expenses and other | 323,751 | 1,489,921 |
Total Current Assets | 14,254,199 | 20,478,095 |
Noncurrent Assets | ||
Property and equipment, net | 45,737 | 68,513 |
Intangible assets, net | 1,830 | 1,830 |
Deposits | 14,747 | 14,747 |
Operating lease right-of-use asset | 383,169 | 462,874 |
Total Noncurrent Assets | 445,483 | 547,964 |
TOTAL ASSETS | 14,699,682 | 21,026,059 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 571,885 | 1,207,258 |
Deferred revenue | 474,888 | 4,338,570 |
Accrued equity compensation | 89,970 | |
Current portion of operating lease liability | 124,319 | 118,235 |
Total Current Liabilities | 1,171,092 | 5,754,033 |
Noncurrent Liabilities | ||
Operating lease liability, net of current portion | 290,051 | 376,851 |
Total Noncurrent Liabilities | 290,051 | 376,851 |
TOTAL LIABILITIES | 1,461,143 | 6,130,884 |
Commitments and Contingencies (Note 6) | ||
SHAREHOLDERS’ EQUITY | ||
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; 0 shares issued and outstanding | ||
Common stock, $0.00001 par value; 200,000,000 authorized; 8,076,372 and 7,953,974 shares issued and outstanding, respectively | 81 | 80 |
Additional paid in capital | 49,441,231 | 49,173,836 |
Accumulated deficit | (36,202,773) | (34,278,741) |
Total Shareholders’ Equity | 13,238,539 | 14,895,175 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 14,699,682 | $ 21,026,059 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par or stated value per share | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par or stated value per share | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 8,076,372 | 7,953,974 |
Common stock, shares outstanding | 8,076,372 | 7,953,974 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenue, net | $ 913,571 | $ 5,063,079 | $ 6,659,858 | $ 9,822,391 |
Cost of revenue | 1,017,634 | 4,465,888 | 5,831,953 | 8,828,453 |
Gross profit (loss) | (104,063) | 597,191 | 827,905 | 993,938 |
Operating expenses: | ||||
Advertising and marketing expenses | 21,551 | 304,600 | 256,965 | 865,305 |
Product development costs | 58,978 | 76,487 | 254,473 | |
Selling, general and administrative expenses | 681,448 | 1,292,746 | 2,452,305 | 3,684,617 |
Goodwill impairment charges | 631,064 | |||
Total operating expenses | 702,999 | 1,656,324 | 2,785,757 | 5,435,459 |
Operating loss | (807,062) | (1,059,133) | (1,957,852) | (4,441,521) |
Other income (expense): | ||||
Other income (expense), net | 6,358 | 7,778 | 191,358 | |
Interest income (expense), net | 8,043 | 10,725 | 26,042 | 24,585 |
Total other income (expense) | 8,043 | 17,083 | 33,820 | 215,943 |
Loss before provision for income taxes | (799,019) | (1,042,050) | (1,924,032) | (4,225,578) |
Income taxes | ||||
Net loss | (799,019) | (1,042,050) | (1,924,032) | (4,225,578) |
Convertible preferred series B stock dividends | (35,984) | |||
Deemed dividend on convertible preferred series B stock on down round | (439,999) | |||
Net loss available to common shareholders | $ (799,019) | $ (1,042,050) | $ (1,924,032) | $ (4,701,561) |
Loss per common share - basic | $ (0.10) | $ (0.13) | $ (0.24) | $ (0.69) |
Loss per common share - diluted | $ (0.10) | $ (0.13) | $ (0.24) | $ (0.69) |
Weighted average number of common shares outstanding, basic | 8,076,372 | 7,953,974 | 8,074,842 | 6,804,741 |
Weighted average number of common shares outstanding, diluted | 8,076,372 | 7,953,974 | 8,074,842 | 6,804,741 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance value at Dec. 31, 2021 | $ 16 | $ 25,211,017 | $ (28,781,566) | $ (3,570,533) |
Balance, shares at Dec. 31, 2021 | 1,600,835 | |||
Fair value of vested stock options granted to employees | 208,672 | 208,672 | ||
Net loss | (4,225,578) | (4,225,578) | ||
Common shares issued in settlement of restricted stock units issued to directors | 24,994 | 24,994 | ||
Common shares issued in settlement of restricted stock units issued to directors, shares | 3,367 | |||
Fair value of restricted stock units issued to directors | 17,418 | 17,418 | ||
Cashless exercise of prefunded warrants | 2 | (2) | ||
Fair value of vested stock options granted to directors | 29,656 | 29,656 | ||
Issuance of common shares to round up partial shares following reverse split | ||||
Issuance of common shares to round up partial shares following reverse split, shares | 6,798 | |||
Common shares and warrants issued for cash | $ 58 | 21,711,073 | 21,711,131 | |
Common shares and warrants issued for cash, shares | 5,811,138 | |||
Common shares and warrants issued on conversion of series B preferred stock | $ 4 | 1,979,996 | 1,980,000 | |
Common shares issued and warrants on conversion of series B preferred stock, shares | 362,306 | |||
Dividends on series B preferred stock | (35,984) | (35,984) | ||
Cashless exercise of prefunded warrants, shares | 169,530 | |||
Ending balance value at Sep. 30, 2022 | $ 80 | 49,146,840 | (33,007,144) | 16,139,776 |
Balance, shares at Sep. 30, 2022 | 7,953,974 | |||
Beginning balance value at Jun. 30, 2022 | $ 80 | 49,091,496 | (31,965,094) | 17,126,482 |
Balance, shares at Jun. 30, 2022 | 7,953,974 | |||
Fair value of vested stock options granted to employees | 49,099 | 49,099 | ||
Net loss | (1,042,050) | (1,042,050) | ||
Fair value of restricted stock units issued to directors | 6,245 | 6,245 | ||
Cashless exercise of prefunded warrants | ||||
Ending balance value at Sep. 30, 2022 | $ 80 | 49,146,840 | (33,007,144) | 16,139,776 |
Balance, shares at Sep. 30, 2022 | 7,953,974 | |||
Beginning balance value at Dec. 31, 2022 | $ 80 | 49,173,836 | (34,278,741) | 14,895,175 |
Balance, shares at Dec. 31, 2022 | 7,953,974 | |||
Fair value of vested stock options granted to employees | 166,080 | 166,080 | ||
Net loss | (1,924,032) | (1,924,032) | ||
Common shares issued in settlement of restricted stock units issued to directors | $ 1 | (1) | ||
Common shares issued in settlement of restricted stock units issued to directors, shares | 122,398 | |||
Fair value of restricted stock units issued to directors | 101,316 | 101,316 | ||
Ending balance value at Sep. 30, 2023 | $ 81 | 49,441,231 | (36,202,773) | 13,238,539 |
Balance, shares at Sep. 30, 2023 | 8,076,372 | |||
Beginning balance value at Jun. 30, 2023 | $ 81 | 49,426,065 | (35,403,754) | 14,022,392 |
Balance, shares at Jun. 30, 2023 | 8,076,372 | |||
Fair value of vested stock options granted to employees | 15,166 | 15,166 | ||
Net loss | (799,019) | (799,019) | ||
Ending balance value at Sep. 30, 2023 | $ 81 | $ 49,441,231 | $ (36,202,773) | $ 13,238,539 |
Balance, shares at Sep. 30, 2023 | 8,076,372 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (1,924,032) | $ (4,225,578) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and intangible asset amortization expense | 22,476 | 24,731 |
Share-based compensation | 177,427 | 280,739 |
Provision for doubtful accounts | (2,056) | 93,500 |
Provision for excess and obsolete inventory | 111,123 | (5,332) |
Loss on disposal of assets | 100 | 4,489 |
Amortization of operating lease ROU asset | 79,705 | 76,917 |
Goodwill impairment charges | 631,064 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (267,842) | 8,801 |
Inventory | (77,808) | (230,966) |
Prepaid expenses and other | 1,166,170 | 171,582 |
Accounts payable and accrued liabilities | (635,373) | 910,523 |
Deferred revenue | (3,863,683) | 1,595,644 |
Operating lease liability, net | (80,716) | (65,157) |
Accrued equity compensation | (14,065) | |
Net cash provided by (used in) operating activities | (5,294,509) | (743,108) |
Cash Flows From Investing Activities | ||
Purchases of property and equipment | (30,348) | |
Proceeds from the sale of property and equipment | 200 | 2,250 |
Net cash provided by (used in) investing activities | 200 | (28,098) |
Cash Flows From Financing Activities | ||
Payment of dividends on series B preferred stock | (35,984) | |
Redemption of series B preferred stock | (1,980,000) | |
Net cash proceeds on sale of common stock and warrants, net of expenses | 21,711,131 | |
Net cash provided by financing activities | 19,695,147 | |
Net change in cash and cash equivalents | (5,294,309) | 18,923,941 |
Cash and cash equivalents, beginning of period | 18,637,114 | 2,159,608 |
Cash and cash equivalents, end of period | 13,342,805 | 21,083,549 |
Supplemental cash flow information: | ||
Interest paid | ||
Income taxes paid | ||
Non-cash investing and financing activities: | ||
Conversion of series B preferred stock | 1,980,000 | |
Deemed dividend on series B preferred stock arising on down round | 439,999 | |
Cashless exercise of prefunded warrants | 2 | |
Options issued for accrued equity compensation liability | $ 89,970 | $ 78,938 |
Nature of Operations and Signif
Nature of Operations and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Nature of Operations and Significant Accounting Policies | Note 1 – Nature of Operations and Significant Accounting Policies Description of Business CEA Industries Inc., formerly Surna Inc. (the “Company”), was incorporated in Nevada on October 15, 2009. We design, engineer and sell environmental control and other technologies for the Controlled Environment Agriculture (“CEA”) industry. The CEA industry is one of the faster-evolving sectors of the United States’ economy. From leafy greens (kale, Swiss chard, mustard, cress), microgreens (leafy greens harvested at the first true leaf stage), ethnic vegetables, ornamentals, and small fruits (such as strawberries, blackberries and raspberries) to bell peppers, cucumbers, and tomatoes and cannabis and hemp, more and more producers consider or act to grow crops indoors in response to market dynamics or as part of their preferred farming practice. In service of the CEA industry, we provide: (i) architectural design and licensed engineering of commercial scale thermodynamic systems specific to cultivation facilities, (ii) liquid-based process cooling systems and other climate control systems, (iii) air handling equipment and systems, (iv) air sanitation products, (v) LED lighting, (vi) benching and racking solutions for indoor cultivation, (vii) proprietary and third party controls systems and technologies used for environmental, lighting, and climate control, and (viii) preventive maintenance services, through our partnership with a certified service contractor network, for CEA facilities. Our customers include commercial, state- and provincial-regulated CEA growers in the U.S. and Canada. Customers are those growers building new facilities and those expanding or retrofitting existing facilities. Currently, our revenue stream is derived primarily from supplying our products, services, and technologies to commercial indoor facilities ranging from several thousand to more than 100,000 square feet. Headquartered in Louisville, Colorado, we leverage our experience in this space to bring value-added climate control solutions to our customers that help improve their overall crop quality and yield, optimize energy and water efficiency, and satisfy the evolving state and local codes, permitting and regulatory requirements. Although most of our customers do, we neither produce nor sell cannabis or its related products. Impact of the COVID-19 Pandemic on Our Business The impact of the government and the business economic response to the COVID-19 pandemic affected demand across the majority of our markets and disrupted workflow and completion schedules on projects. We believe we continue to see adverse effects on our sales, project implementation, supply chain infrastructure, operating margins, costs, and working capital. Due to this uncertainty, we continue to monitor costs and continue to take actions to reduce costs in order to mitigate the long-term impact of the COVID-19 pandemic to the best of our ability. However, these actions may not be sufficient in the long run to avoid reduced sales, increased losses, and reduced operating cash flows in our business. During the year ended December 31, 2022, and continuing into the current fiscal quarter, the Company experienced delays in the receipt of equipment it had ordered to meet its customer orders due to disruption and delays in its supply chain. Consequently, our revenue recognition of some customer sales has been delayed until future periods when the shipment of orders can be completed. Impact of Ukrainian Conflict Currently, we believe that the conflict between Ukraine and Russia does not have any direct impact on our operations, financial condition, or financial reporting. We believe the conflict will have only a general impact on our operations in the same manner as it has a general impact on all businesses that have their operations limited to North America resulting from international sanction and embargo regulations, possible shortages of goods and goods incorporating parts that may be supplied from the Ukraine or Russia, supply chain challenges, and the international and US domestic inflationary results of the conflict and government spending for and funding of our country’s response. As our operations are related only to the North American controlled environment agricultural industry, largely within the cannabis space, we do not believe we will be targeted for cyber-attacks related to this conflict. We have no operations in the countries directly involved in the conflict or are specifically impacted by any of the sanctions and embargoes, as we principally operate in the United States and Canada. We do not believe that the conflict will have any impact on our internal control over financial reporting. Other than general securities market trends, we do not have reason to believe that investors will evaluate the company as having special risks or exposures related to the Ukrainian conflict. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Inflation Our operations are being influenced by the inflation existent in the larger economy and in the industries related to building renovations, retrofitting and new build CEA facilities in which we operate. We believe that we will continue to face inflationary increases in the cost of products and our operations, which will adversely affect our margins and financial results and the pricing of our service and product supply contracts. Inflation is reflected in higher wages, increased pricing of equipment, delivery and transportation costs, and general operational expenses. As we move forward, we plan to continuously monitor our various contract terms and may decide to add clauses that will permit us to adjust pricing if inflation and price increase pressures on us will impact our ability to perform our contracts and maintain our margins. Financial Statement Presentation The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023. The balance sheet information as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2022. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its controlled and wholly owned subsidiaries, Hydro Innovations, LLC (“Hydro”) and Surna Cultivation Technologies LLC (“SCT”). Intercompany transactions, profit, and balances are eliminated in consolidation. Use of Estimates Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Key estimates include: allocation of transaction prices to performance obligations under contracts with customers, standalone selling prices, timing of expected revenue recognition on remaining performance obligations under contracts with customers, valuation of intangible assets and goodwill, valuation of equity-based compensation, valuation of deferred tax assets and liabilities, warranty accruals, accounts receivable and inventory allowances, and legal contingencies. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Cash, Cash Equivalents, and Restricted Cash All highly liquid investments with original maturities of three months or less at the date of purchase are considered to be cash equivalents. The Company may, from time to time, have deposits in financial institutions that exceed the federally insured amount of $ 250,000 13,343,000 13,093,000 Income (Loss) Per Common Share Basic income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period without consideration of common stock equivalents. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding and potentially dilutive common stock equivalents, including stock options, warrants and restricted stock units and other equity-based awards, except in cases where the effect of the common stock equivalents would be antidilutive. Potential common stock equivalents consist of common stock issuable upon exercise of stock options and warrants and the vesting of restricted stock units using the treasury method. As of September 30, 2023 and 2022, there were respectively, 7,992,829 7,881,160 7,623,772 369,057 257,388 Goodwill The Company recorded goodwill in connection with its acquisition of Hydro Innovations, LLC in July 2014. Goodwill is reviewed for impairment annually or more frequently when events or changes in circumstances indicate that fair value of the reporting unit has been reduced to less than its carrying value. The Company performs a quantitative impairment test annually on December 31 by comparing the fair value of the reporting unit with its carrying amount, including goodwill. The Company’s fair value is calculated using a market valuation technique whereby an appropriate control premium is applied to the Company’s market capitalization as calculated by applying its publicly quoted share price to the number of its common shares issued and outstanding. If the fair value of the reporting unit exceeds its carrying amount, goodwill is considered not impaired. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company determined that it has one reporting unit. As of June 30, 2022, the Company experienced a triggering event due to a drop in its stock price and performed a quantitative analysis for potential impairment of its goodwill. Based on this analysis, the Company determined that its carrying value exceeded its fair value. As a result, the Company recorded a non-cash goodwill impairment charge of $ 631,064 Temporary Equity Shares of preferred stock that are redeemable for cash or other assets are classified as temporary equity if they are redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the Company. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, net of issuance costs, which is subsequently adjusted to redemption value (including the amount for dividends earned but not yet declared or paid) at each balance sheet date if the instrument is currently redeemable or if it is probable that the instrument will become redeemable. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Revenue Recognition The following table sets forth the Company’s revenue by source: Schedule of Revenue by Source 2023 2022 2023 2022 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Equipment and systems sales $ 647,870 $ 4,941,380 $ 5,944,445 $ 9,375,093 Engineering and other services 235,301 104,434 462,943 382,559 Shipping and handling 1,000 17,265 18,335 64,739 Forfeited non-refundable customer deposits 29,400 - 234,135 - Total revenue $ 913,571 $ 5,063,079 $ 6,659,858 $ 9,822,391 Revenue Recognition Accounting Policy Summary The Company accounts for revenue in accordance with ASC 606. Under the revenue standard, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Most of the Company’s contracts contain multiple performance obligations that include engineering and technical services as well as the delivery of a diverse range of climate control system equipment and components, which can span multiple phases of a customer’s project life cycle from facility design and construction to equipment delivery and system installation and start-up. The Company does not provide construction services or system installation services. Some of the Company’s contracts with customers contain a single performance obligation, typically engineering only services contracts. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, the Company allocates the transaction price to each performance obligation based on the standalone selling price. When estimating the selling price, the Company uses various observable inputs. The best observable input is the Company’s actual selling price for the same good or service, however, this input is generally not available for the Company’s contracts containing multiple performance obligations. For engineering services, the Company estimates the standalone selling price by reference to certain physical characteristics of the project, such as facility size and mechanical systems involved, which are indicative of the scope and complexity of the mechanical engineering services to be provided. For equipment sales, the standalone selling price is determined by forecasting the expected costs of the equipment and components and then adding an appropriate margin, based on a range of acceptable margins established by management. Depending on the nature of the performance obligations, the Company may use a combination of different methods and observable inputs if certain performance obligations have highly variable or uncertain standalone selling prices. Once the selling prices are determined, the Company applies the relative values to the total contract consideration and estimates the amount of the transaction price to be recognized as each promise is fulfilled. Generally, satisfaction occurs when control of the promised goods is transferred to the customer or as services are rendered or completed in exchange for consideration in an amount for which the Company expects to be entitled. The Company recognizes revenue for the sale of goods when control transfers to the customer, which primarily occurs at the time of shipment. The Company’s historical rates of return are insignificant as a percentage of sales and, as a result, the Company does not record a reserve for returns at the time the Company recognizes revenue. The Company has elected to exclude from the measurement of the transaction price all taxes (e.g., sales, use, value added, and certain excise taxes) that are assessed by a governmental authority in connection with a specific revenue-producing transaction and collected by the Company from the customer. Accordingly, the Company recognizes revenue net of sales taxes. The revenue and cost for freight and shipping is recorded when control over the sale of goods passes to the Company’s customers. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) The Company also has performance obligations to perform certain engineering services that are satisfied over a period of time. Revenue is recognized from this type of performance obligation as services are rendered based on the percentage completion towards certain specified milestones. The Company offers assurance-type warranties for its products and products manufactured by others to meet specifications defined by the contracts with customers and does not have any material separate performance obligations related to these warranties. The Company maintains a warranty reserve based on historical warranty costs. Disaggregation of Revenue In accordance with ASC 606-10-50-5 through 6, the Company considered the appropriate level of disaggregated revenue information that depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Additionally, per the implementation guidance in ASC 606-10-55-90 through 91, the Company also considered (a) disclosures presented outside of the financial statements such as earnings releases and investor presentations, (b) information regularly reviewed by the Chief Operating Decision Maker for evaluating the financial performance of operating segments and (c) other information that is similar to the types of information identified in (a) and (b) and that is used by the Company or users of the Company’s financial statements to evaluate financial performance or make resource allocation decisions. Finally, we considered the examples of categories found in the guidance that might be appropriate, including: (a) type of good or service (major product lines), (b) geographical region (country or region), (c) market or type of customer (government or non-government customers), (d) type of contract (fixed-price or time-and-materials), (e) contract duration (short- or long-term), (f) timing of transfer of goods or services (point-in-time or over time) and (g) sales channels (direct to customers or through intermediaries). Based on the aforementioned guidance and considerations, the Company determined that disaggregation of revenue by sales, services, shipping and handling, and miscellaneous was required. Other Judgments and Assumptions The Company typically receives customer payments in advance of its performance of services or transfers of goods. Applying the practical expedient in ASC 606-10-32-18, which the Company has elected, the Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Accordingly, the remaining performance obligations related to customer contracts does not consider the effects of the time value of money. Applying the practical expedient in ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred since the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs include certain sales commissions and incentives, which are included in selling, general and administrative expenses, and are payable only when associated revenue has been collected and earned by the Company. Contract Assets and Contract Liabilities Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on the terms established in its contracts. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Contract assets include unbilled amounts where revenue recognized exceeds the amount billed to the customer and the right of payment is conditional, subject to completing a milestone, such as a phase of a project. The Company typically does not have material amounts of contract assets since revenue is recognized as control of goods are transferred or as services are performed. As of September 30, 2023 and December 31, 2022, the Company had no contract assets. Contract liabilities consist of advance payments in excess of revenue recognized. The Company’s contract liabilities are recorded as a current liability in deferred revenue in the consolidated balance sheets since the Company generally expects to recognize revenue in less than one year. Non-refundable customer deposits are recognized as revenue when previously abandoned customer contracts have been forfeited and a period of three years has passed. As of September 30, 2023, and December 31, 2022, deferred revenue, which was classified as a current liability, was $ 474,888 4,338,570 For the three and nine months ended September 30, 2023, the Company recognized revenue of $ 12,461 3,911,083 125,731 2,318,935 Remaining Performance Obligations Remaining performance obligations, or backlog, represents the aggregate amount of the transaction price allocated to the remaining obligations that the Company has not performed under its customer contracts. The Company has elected not to use the optional exemption in ASC 606-10-50-14, which exempts an entity from such disclosures if a performance obligation is part of a contract with an original expected duration of one year or less. Accordingly, the information disclosed about remaining performance obligations includes all customer contracts, including those with an expected duration of one year or less. Industry uncertainty, project financing concerns, and the licensing and qualification of our prospective customers, which are out of the Company’s control, make it difficult for the Company to predict when it will recognize revenue on its remaining performance obligations. There are risks that the Company may not realize the full contract value on customer projects in a timely manner or at all, and completion of a customer’s cultivation facility project is dependent upon the customer’s ability to secure funding and real estate, obtain a license and then build their cultivation facility so they can take possession of the equipment. Accordingly, the time it takes for customers to complete a project, which corresponds to when the Company is able to recognize revenue, is driven by numerous factors including: (i) the large number of first-time participants interested in the indoor cannabis cultivation business; (ii) the complexities and uncertainties involved in obtaining state and local licensure and permitting; (iii) local and state government delays in approving licenses and permits due to lack of staff or the large number of pending applications, especially in states where there is no cap on the number of cultivators; (iv) the customer’s need to obtain cultivation facility financing; (v) the time needed, and coordination required, for our customers to acquire real estate and properly design and build the facility (to the stage when climate control systems can be installed); (vi) the large price tag and technical complexities of the climate control and air sanitation system; (vii) the availability of power; and (viii) delays that are typical in completing any construction project. Further, based on the current economic climate, t and the Company’s recent cost cutting measures, there is no assurance that the Company will be able to fulfill its backlog, and the Company may experience contract cancellations, project scope reductions and project delays. As of September 30, 2023, the Company’s remaining performance obligations, or backlog, was approximately $ 548,000 353,000 65,000 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) The remaining performance obligations expected to be recognized through 2024 are as follows: Schedule of Remaining Performance Obligations Expected to be Recognized 2023 2024 Total Remaining performance obligations related to engineering only paid contracts $ - $ - $ - Remaining performance obligations related to partial equipment paid contracts 195,000 353,000 548,000 Total remaining performance obligations $ 195,000 $ 353,000 $ 548,000 Product Warranty The Company warrants the products that it manufactures for a warranty period equal to the lesser of 12 months from start-up or 18 months from shipment. The Company’s warranty provides for the repair, rework, or replacement of products (at the Company’s option) that fail to perform within stated specification. The Company’s third-party suppliers also warrant their products under similar terms, which are passed through to the Company’s customers. The Company assesses the historical warranty claims on its manufactured products and, since 2016, warranty claims have been approximately 1% of annual revenue generated on these products. Based on the Company’s warranty policy, an accrual is established at 1% of the trailing 18 months revenue 194,031 180,457 Accounting for Share-Based Compensation The Company recognizes the cost resulting from all share-based compensation arrangements, including stock options, restricted stock awards and restricted stock units that the Company grants under its equity incentive plan in its condensed consolidated financial statements based on their grant date fair value. The expense is recognized over the requisite service period or performance period of the award. Awards with a graded vesting period based on service are expensed on a straight-line basis for the entire award. Awards with performance-based vesting conditions, which require the achievement of a specific company financial performance goal at the end of the performance period and required service period, are recognized over the performance period. Each reporting period, the Company reassesses the probability of achieving the respective performance goal. If the goals are not expected to be met, no compensation cost is recognized and any previously recognized amount recorded is reversed. If the award contains market-based vesting conditions, the compensation cost is based on the grant date fair value and expected achievement of market condition and is not subsequently reversed if it is later determined that the condition is not likely to be met or is expected to be lower than initially expected. The grant date fair value of stock options is based on the Black-Scholes Option Pricing Model (the “Black-Scholes Model”). The Black-Scholes Model requires judgmental assumptions including volatility and expected term, both based on historical experience. The risk-free interest rate is based on U.S. Treasury interest rates whose term is consistent with the expected term of the option. The Company determines the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, the Company may use different assumptions for options granted throughout the year. During the nine months ended September 30, 2023, the valuation assumptions used to determine the fair value of each option award on the date of grant were: expected stock price volatility of 152.23 10 3.48 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) The grant date fair value of restricted stock and restricted stock units is based on the closing price of the underlying stock on the date of the grant. The Company has elected to reduce share-based compensation expense for forfeitures as the forfeitures occur since the Company does not have historical data or other factors to appropriately estimate the expected employee terminations and to evaluate whether particular groups of employees have significantly different forfeiture expectations. The following is a summary of share-based compensation expenses included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and September 30, 2022: Schedule of Share-based Compensation Costs 2023 2022 2023 2022 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Share-based compensation expense included in: Cost of revenue $ - $ 3,956 $ 4,898 $ 9,851 Advertising and marketing expenses - 2,457 1,113 9,299 Product development costs - 2,481 3,570 7,442 Selling, general and administrative expenses 15,166 69,637 167,846 240,083 Total share-based compensation expense included in consolidated statement of operations $ 15,166 $ 78,531 $ 177,427 $ 266,675 Included in the expense for the three and nine months ended September 30, 2022, is an accrual for $ 23,187 69,561 No Concentrations Four customers accounted for 29 19 16 12 38 20 12 53 24 28 25 13 Two customers accounted for 78 12 57 43 Recently Issued Accounting Pronouncements In March 2023, the FASB issued ASU 2023-01 to require entities to classify and account for leases with related parties on the basis of legally enforceable terms and conditions of the arrangement. The amendments are effective in periods beginning after December 15, 2023, including interim periods within those fiscal years. The Company does not expect this ASU to have a material impact on its consolidated results of operations, cash flows and financial position. In December 2022, the FASB issued ASU No. 2022-06, which defers the sunset date of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) In September 2022, the FASB issued Update 2022-04, “Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”. The update was issued in response to requests from financial statement users for increased transparency surrounding the use of supplier finance programs. The amendments in Update 2022-04 require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The amendments in this update do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company does not expect this ASU to have a material impact on its consolidated results of operations, cash flows and financial position. In October 2021, the FASB issued ASU 2021-08, “ Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” In March 2020, the FAS issued ASU No. 2020-04 “ Reference Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | Note 2 – Leases In February 2016 the FASB issued ASU 2016-02, Leases (Topic 842) The new standard provides a number of optional practical expedients in transition. The Company has elected to apply the “package of practical expedients” which allow the Company to not reassess: (i) whether existing or expired arrangements contain a lease, (ii) the lease classification of existing or expired leases, or (iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company has also elected to apply the short-term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new lease standard. On July 28, 2021, the Company entered into an agreement to lease 11,491 The New Facility Lease commenced on November 1, 2021 and continues through January 31, 2027 10,055 3 14,747 five years CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Upon commencement of the New Facility Lease, the Company recognized on the balance sheet an operating lease right-of-use asset and lease liability in the amount of $ 582,838 The lease cost, cash flows and other information related to the New Facility Lease were as follows: Schedule of Lease Cost As of September 30, 2023 Operating lease right-of-use asset $ 383,169 Operating lease liability, current $ 124,319 Operating lease liability, long-term $ 290,051 Remaining lease term 3.6 Discount rate 3.63 % For the Nine Months Ended September 30, 2023 Operating cash outflow from operating lease $ 93,206 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Future annual minimum lease payments on the New Facility Lease as of September 30, 2023 are as follows: Schedule of Future Annual Minimum Lease Payments As of September 30, 2023 Years ended December 31, 2023 (excluding the nine months ended September 30, 2023) $ 31,690 2024 128,643 2025 132,503 2026 136,473 Thereafter 11,654 Total minimum lease payments 440,963 Less imputed interest (26,593 ) Present value of minimum lease payments $ 414,370 |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 3 – Inventory Inventory consisted of the following: Schedule of Inventory September 30, December 31, 2023 2022 Finished goods $ 371,689 $ 270,555 Work in progress - 155 Raw materials 125,437 148,608 Allowance for excess & obsolete inventory (182,030 ) (70,907 ) Inventory, net $ 315,096 $ 348,411 Overhead expenses of $ 15,145 12,770 Advance payments on inventory purchases are recorded in prepaid expenses until title for such inventory passes to the Company. Prepaid expenses included approximately $ 36,000 1,176,000 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 4 – Property and Equipment Property and equipment consisted of the following: Schedule of Property and Equipment September 30, December 31, 2023 2022 Furniture and equipment $ 275,994 $ 278,389 Vehicles 15,000 15,000 Property and equipment, gross 290,994 293,389 Accumulated depreciation (245,257 ) (224,876 ) Property and equipment, net $ 45,737 $ 68,513 Depreciation expense was $ 22,476 2,284 571 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Liabilities | Note 5 – Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following: Schedule of Accounts Payable and Accrued Liabilities September 30, December 31, 2023 2022 Accounts payable $ 164,041 $ 311,162 Sales commissions payable 4,018 25,951 Accrued payroll liabilities 146,376 465,094 Product warranty accrual 194,031 180,457 Other accrued expenses 63,419 224,594 Total $ 571,885 $ 1,207,258 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6 – Commitments and Contingencies Litigation On October 20, 2023, Green Ice, LLC and Sweet Cut Grow, LLC (“Claimants”) filed an Arbitration Petition in Denver, Colorado against the Company. The Claimants allege a breach by the Company of two contracts – an Engineering Agreement with Green Ice, dated January 14, 2021 (“Engineering Agreement”), and an Equipment Agreement with Sweet Cut Grow, dated March 29, 2021 (“Equipment Agreement”). The Arbitration Petition alleges causes of action for breach of the Engineering Agreement, Breach of the Equipment Agreement, Breach of the Warranties under the Equipment Agreement, and Unjust Enrichment in the amount of moneys paid by Claimant to CEA to date under the contracts, of $ 1,049,280 Given the Arbitration Petition’s current uncertainty around estimability and success of claims, we have not recorded an accrual for any potential loss related to this matter. Regardless, we intend to generally defend the claims on the basis that we promptly addressed all problems, and that any issues with defective HVAC equipment are the responsibility of our third-party equipment manufacturer. From time to time, in the normal course of its operations, the Company is subject to litigation matters and claims. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a liability for contingent losses when it is both probable that a liability has been incurred and the amount of the loss is known. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company’s operations or its financial position, liquidity or results of operations. Leases The Company has a lease agreement for its manufacturing and office space. Refer to Note 2 Leases CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Other Commitments In the ordinary course of business, the Company enters into commitments to purchase inventory and may also provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers and employees that will require the Company to, among other things, indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and certain of its officers and employees, and former officers, directors, and employees of acquired companies, in certain circumstances. |
Stockholders_ Equity
Stockholders’ Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 7 – Stockholders’ Equity As of September 30, 2023, the Company had 200,000,000 25,000,000 0.00001 As of September 30, 2023, 8,076,372 no Directors Remuneration On January 3, 2022, the Company issued 3,125 4.80 On January 17, 2022, the Company issued an RSU grant of 3,367 1,684 1,683 1,684 1,683 On January 3, 2023, the Company issued an RSU grant of 29,758 119,032 Revised Compensation Plan for Directors On January 17, 2022, the Board of Directors revised the previously adopted compensation plan. This plan superseded the plan adopted on August 20, 2021. The plan was effective retroactively for the then current independent directors and for independent directors elected or appointed after the Effective Date. The plan is divided into two phases: from the Effective Date of the plan until February 9, 2022, the day prior to the listing of the Company securities on Nasdaq. (“Pre-uplist”) and from February 10, 2022, the uplist date forward (“Post-uplist”). In the Pre-uplist phase, the Company paid its independent directors an annual cash fee of $ 15,000 25,000 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) At the time of initial election or appointment, each independent director received an equity retention award in the form of restricted stock units (“RSUs”). The aggregate value of the RSUs at the time of grant was to be $ 25,000 Vesting of the RSUs was as follows: (i) 50% at the time of grant, and (ii) 50% on the first anniversary of the grant date In addition, on the first business day of January each year, each independent director will also receive an equity retention award in the form of RSUs. The aggregate value of the RSUs at the time of grant will be $ 25,000 The Company pays the Audit Committee Chairman an additional annual fee of $ 10,000 The Company pays the Chairmen of any other committees of the Board an additional annual fee of $ 5,000 Directors who are also executive officers of the Company do not receive separate compensation for their Board service. Each independent director is responsible for the payment of any and all income taxes arising with respect to the issuance of any equity awarded under the plan, including the exercise of any non-qualified stock options. Each director is responsible for the payment of any and all income taxes arising with respect to the issuance of common stock and the vesting and settlement of RSUs. The Company reimburses independent directors for out-of-pocket expenses incurred in attending Board and committee meetings and undertaking certain matters on the Company’s behalf. All independent directors, Messrs. Shipley, Etten, Reisner, and Mariathasan are subject to the plan. Reverse Stock Split On January 17, 2022, the Company’s Board of Directors approved a reverse stock split at a ratio of one-for-one hundred and fifty An additional 6,798 As a result of this reverse stock split, the number of the Company’s shares of common stock issued and outstanding at December 31, 2021 was reduced from 240,125,224 1,600,835 Change in Authorized Share Capital In connection with the aforementioned reverse stock split, the Company’s Board of Directors approved the reduction of the authorized capital of the Company to 200,000,000 25,000,000 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Equity Raise On February 10, 2022, the Company signed a firm commitment underwriting agreement for the public offering of shares of common stock and warrants, which closed on February 15, 2022. The Company received net proceeds of approximately $ 22 5,811,138 6,572,808 5.00 290,557 5.1625 February 10, 2027 Warrant Exercise On June 21, 2022, the Company issued 169,530 170,382 |
Equity Incentive Plans
Equity Incentive Plans | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity Incentive Plans | Note 8 – Equity Incentive Plans 2017 Equity Incentive Plan Under the Company’s 2017 Equity Incentive Plan, as may be modified and amended by the Company from time to time (the “2017 Equity Plan”), the Board of Directors (the “Board”) (or the compensation committee of the Board, if one is established) may award stock options, stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), restricted stock unit awards (“RSUs”), shares granted as a bonus or in lieu of another award, and other stock-based performance awards. The 2017 Equity Plan allocates 333,333 During the nine months ended September 30, 2023, no shares or options were issued and 1,665 As of September 30, 2023, of the 333,333 163,692 145,512 24,129 2021 Equity Incentive Plan On March 22, 2021, the Board approved the 2021 Equity Incentive Plan (the “2021 Equity Plan”), which was approved by the stockholders on July 22, 2021. The 2021 Equity Plan permits the Board to grant awards of up to 666,667 i.e. During the nine months ended September 30, 2023: - The Company issued 122,398 - 138,489 0.8955 89,970 32,376 - 16,631 333 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) As of September 30, 2023, of the 666,667 132,568 182,728 40,816 310,555 There was $ 15,586 18 Non-Qualified and Incentive Stock Options A summary of the non-qualified stock options and incentive stock options granted to employees and consultants under the 2017 and 2021 Equity Plans during the nine months ended September 30, 2023, are presented in the table below: Schedule of Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding, December 31, 2022 192,073 $ 8.94 7.6 $ - Granted 138,489 $ 0.90 6.4 $ - Exercised - $ - - $ - Forfeited (18,629 ) $ 2.63 9.2 $ - Expired - $ - - $ - Outstanding, September 30, 2023 311,933 $ 5.74 6.6 $ - Exercisable, September 30, 2023 286,843 $ 5.78 6.5 $ - A summary of non-vested non-qualified stock options activity for employees and consultants under the 2017 and 2021 Equity Plans for the nine months ended September 30, 2023, are presented in the table below: Summary of Non-Vested qualified Stock Option Activity Number of Options Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Grant-Date Fair Value Nonvested, December 31, 2022 28,756 $ 4.73 $ - $ 136,016 Granted 138,489 $ 0.88 $ - $ 121,870 Vested (141,822 ) $ 0.92 $ - $ (130,476 ) Forfeited (333 ) $ 6.67 $ - $ (2,222 ) Expired - $ - $ - $ - Nonvested, September 30, 2023 25,090 $ 4.98 $ - $ 124,948 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) For the nine months ended September 30, 2023 and September 30, 2022, the Company recorded $ 76,110 129,733 A summary of the non-qualified stock options granted to directors under the 2017 and 2021 Equity Plans, during the nine months ended September 30, 2023, are presented in the table below: Schedule of Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding, December 31, 2022 57,122 $ 9.44 6.0 $ - Granted - - - $ - Exercised - - - $ - Forfeited/Cancelled - - - $ - Expired - - - $ - Outstanding, September 30, 2023 57,122 $ 9.44 5.3 $ - Exercisable, September 30, 2023 57,122 $ 9.44 5.3 $ - There were no non-vested, non-qualified stock options issued to directors under the 2017 Equity Plan and the 2021 Equity Plan, for the nine months ended September 30, 2023. During the nine months ended September 30, 2023 and September 30, 2022, the Company incurred $ 0 29,656 0 6,250 Restricted Stock Units Effective January 3, 2023, the Company issued a total of 119,032 Effective January 17, 2023, the Company settled 3,366 During the nine months ended September 30, 2023 and September 30, 2022, the Company recorded $ 101,316 42,413 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Schedule of Restricted Units Activity Number of Units Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Outstanding, December 31, 2022 3,366 $ 7.42 $ - Granted 119,032 $ 0.84 $ - Vested and settled with share issuance (122,398 ) $ 1.02 $ - Forfeited/canceled - $ - $ - Outstanding, September 30, 2023 - $ - $ - |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2023 | |
Warrants | |
Warrants | Note 9 - Warrants The following table summarizes information with respect to outstanding warrants to purchase common stock during the nine months ended September 30, 2023: Schedule of Outstanding Warrants to purchase Common Stock Weighted Weighted Average Warrants Average Exercise Remaining Life Aggregate Intrinsic Outstanding Exercisable Price In Months Value Outstanding at December 31, 2022 7,623,772 7,623,772 $ 5.14 49 - Granted - - - - - Exercised - - - - - Expired - - - - - Outstanding at September 30, 2023 7,623,772 7,623,772 $ 5.14 40 - The following table summarizes information about warrants outstanding at September 30, 2023: Schedule of Warrants Outstanding Warrants Weighted Average Exercise price Outstanding Exercisable Months Outstanding $ 9.45 192,982 192,982 12 $ 10.40 34,737 34,737 13 $ 5.00 7,105,496 7,105,496 41 $ 5.16 290,557 290,557 41 7,623,772 7,623,772 40 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10 – Income Taxes As of September 30, 2023, the Company has U.S. federal and state net operating losses (“NOLs”) of approximately $ 27,873,000 11,196,000 2034 through 2037 80 In addition, pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, use of the Company’s NOLs carryforwards may be limited in the event of cumulative changes in ownership of more than 50 three-year period 50 The Company must assess the likelihood that its net deferred tax assets will be recovered from future taxable income, and to the extent the Company believes that recovery is not likely, the Company establishes a valuation allowance. Management’s judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against the net deferred tax assets. The Company recorded a full valuation allowance as of September 30, 2023 and December 31, 2022. Based on the available evidence, the Company believes it is more likely than not that it will not be able to utilize its net deferred tax assets in the foreseeable future. The Company intends to maintain valuation allowances until sufficient evidence exists to support the reversal of such valuation allowances. The Company makes estimates and judgments about its future taxable income that are based on assumptions that are consistent with the Company’s plans. Should the actual amounts differ from the Company’s estimates, the carrying value of the Company’s deferred tax assets could be materially impacted. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 11 – Related Party Transactions The Company entered into a manufacturer representative agreement with RSX Enterprises (“RSX”) in March 2021 to become a non-exclusive representative for the Company to assist in marketing and soliciting orders. James R. Shipley, one of our independent directors, has a significant ownership interest in RSX. Under the manufacturer representative agreement, RSX will act as a non-exclusive representative for the Company within the United States, Canada and Mexico and may receive a commission for qualified customer leads. The agreement had an initial term through December 31, 2021 with automatic one-year renewal terms unless notice is given 90 days prior to each annual expiration. During the nine months ended September 30, 2023 and September 30, 2022, the Company paid $ 18,273 9,884 On October 13, 2022, the Company entered into an agreement with Lone Star Bioscience, Inc. (Lone Star) to provide engineering design services. Nicholas Etten, one of our independent directors, is the Chief Executive Officer of Lone Star. The balance due under this agreement totaled $ 2,500 with $ 1,250 received as a deposit in 2022. Another agreement for engineering services was signed on December 20, 2022, in the amount of $ 10,900 . We entered into positive change orders in March 2023 of $ 3,577 increasing the total of the second sales order to $ 14,477 . Revenue of $ 16,977 14,035 in cash payments for these contracts. A receivable of $ 1,692 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12 – Subsequent Events In accordance with ASC 855, Subsequent Events On October 20, 2023, Green Ice, LLC and Sweet Cut Grow, LLC (“Claimants”) filed an Arbitration Petition against the Company in Denver, Colorado. The Claimants allege a breach by the Company of two contracts – an Engineering Agreement with Green Ice, dated January 14, 2021 (“Engineering Agreement”), and an Equipment Agreement with Sweet Cut Grow, dated March 29, 2021 (“Equipment Agreement”). The Arbitration Petition alleges causes of action for breach of the Engineering Agreement, Breach of the Equipment Agreement, Breach of the Warranties under the Equipment Agreement, and Unjust Enrichment in the amount of moneys paid by Claimant to CEA to date under the contracts, of $ 1,049,280 Given the Arbitration Petition’s current uncertainty around estimability and success of claims, we have not recorded an accrual for any potential loss related to this matter. Regardless, we intend to generally defend the claims on the basis that we promptly addressed all problems, and that any issues with defective HVAC equipment are the responsibility of our third-party equipment manufacturer. |
Nature of Operations and Sign_2
Nature of Operations and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business CEA Industries Inc., formerly Surna Inc. (the “Company”), was incorporated in Nevada on October 15, 2009. We design, engineer and sell environmental control and other technologies for the Controlled Environment Agriculture (“CEA”) industry. The CEA industry is one of the faster-evolving sectors of the United States’ economy. From leafy greens (kale, Swiss chard, mustard, cress), microgreens (leafy greens harvested at the first true leaf stage), ethnic vegetables, ornamentals, and small fruits (such as strawberries, blackberries and raspberries) to bell peppers, cucumbers, and tomatoes and cannabis and hemp, more and more producers consider or act to grow crops indoors in response to market dynamics or as part of their preferred farming practice. In service of the CEA industry, we provide: (i) architectural design and licensed engineering of commercial scale thermodynamic systems specific to cultivation facilities, (ii) liquid-based process cooling systems and other climate control systems, (iii) air handling equipment and systems, (iv) air sanitation products, (v) LED lighting, (vi) benching and racking solutions for indoor cultivation, (vii) proprietary and third party controls systems and technologies used for environmental, lighting, and climate control, and (viii) preventive maintenance services, through our partnership with a certified service contractor network, for CEA facilities. Our customers include commercial, state- and provincial-regulated CEA growers in the U.S. and Canada. Customers are those growers building new facilities and those expanding or retrofitting existing facilities. Currently, our revenue stream is derived primarily from supplying our products, services, and technologies to commercial indoor facilities ranging from several thousand to more than 100,000 square feet. Headquartered in Louisville, Colorado, we leverage our experience in this space to bring value-added climate control solutions to our customers that help improve their overall crop quality and yield, optimize energy and water efficiency, and satisfy the evolving state and local codes, permitting and regulatory requirements. Although most of our customers do, we neither produce nor sell cannabis or its related products. |
Impact of the COVID-19 Pandemic on Our Business | Impact of the COVID-19 Pandemic on Our Business The impact of the government and the business economic response to the COVID-19 pandemic affected demand across the majority of our markets and disrupted workflow and completion schedules on projects. We believe we continue to see adverse effects on our sales, project implementation, supply chain infrastructure, operating margins, costs, and working capital. Due to this uncertainty, we continue to monitor costs and continue to take actions to reduce costs in order to mitigate the long-term impact of the COVID-19 pandemic to the best of our ability. However, these actions may not be sufficient in the long run to avoid reduced sales, increased losses, and reduced operating cash flows in our business. During the year ended December 31, 2022, and continuing into the current fiscal quarter, the Company experienced delays in the receipt of equipment it had ordered to meet its customer orders due to disruption and delays in its supply chain. Consequently, our revenue recognition of some customer sales has been delayed until future periods when the shipment of orders can be completed. |
Impact of Ukrainian Conflict | Impact of Ukrainian Conflict Currently, we believe that the conflict between Ukraine and Russia does not have any direct impact on our operations, financial condition, or financial reporting. We believe the conflict will have only a general impact on our operations in the same manner as it has a general impact on all businesses that have their operations limited to North America resulting from international sanction and embargo regulations, possible shortages of goods and goods incorporating parts that may be supplied from the Ukraine or Russia, supply chain challenges, and the international and US domestic inflationary results of the conflict and government spending for and funding of our country’s response. As our operations are related only to the North American controlled environment agricultural industry, largely within the cannabis space, we do not believe we will be targeted for cyber-attacks related to this conflict. We have no operations in the countries directly involved in the conflict or are specifically impacted by any of the sanctions and embargoes, as we principally operate in the United States and Canada. We do not believe that the conflict will have any impact on our internal control over financial reporting. Other than general securities market trends, we do not have reason to believe that investors will evaluate the company as having special risks or exposures related to the Ukrainian conflict. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) |
Inflation | Inflation Our operations are being influenced by the inflation existent in the larger economy and in the industries related to building renovations, retrofitting and new build CEA facilities in which we operate. We believe that we will continue to face inflationary increases in the cost of products and our operations, which will adversely affect our margins and financial results and the pricing of our service and product supply contracts. Inflation is reflected in higher wages, increased pricing of equipment, delivery and transportation costs, and general operational expenses. As we move forward, we plan to continuously monitor our various contract terms and may decide to add clauses that will permit us to adjust pricing if inflation and price increase pressures on us will impact our ability to perform our contracts and maintain our margins. |
Financial Statement Presentation | Financial Statement Presentation The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect reported amounts and related disclosures. |
Interim Financial Statements | Interim Financial Statements The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023. The balance sheet information as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2022. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its controlled and wholly owned subsidiaries, Hydro Innovations, LLC (“Hydro”) and Surna Cultivation Technologies LLC (“SCT”). Intercompany transactions, profit, and balances are eliminated in consolidation. |
Use of Estimates | Use of Estimates Management makes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Key estimates include: allocation of transaction prices to performance obligations under contracts with customers, standalone selling prices, timing of expected revenue recognition on remaining performance obligations under contracts with customers, valuation of intangible assets and goodwill, valuation of equity-based compensation, valuation of deferred tax assets and liabilities, warranty accruals, accounts receivable and inventory allowances, and legal contingencies. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) |
Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash All highly liquid investments with original maturities of three months or less at the date of purchase are considered to be cash equivalents. The Company may, from time to time, have deposits in financial institutions that exceed the federally insured amount of $ 250,000 13,343,000 13,093,000 |
Income (Loss) Per Common Share | Income (Loss) Per Common Share Basic income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding during the period without consideration of common stock equivalents. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding and potentially dilutive common stock equivalents, including stock options, warrants and restricted stock units and other equity-based awards, except in cases where the effect of the common stock equivalents would be antidilutive. Potential common stock equivalents consist of common stock issuable upon exercise of stock options and warrants and the vesting of restricted stock units using the treasury method. As of September 30, 2023 and 2022, there were respectively, 7,992,829 7,881,160 7,623,772 369,057 257,388 |
Goodwill | Goodwill The Company recorded goodwill in connection with its acquisition of Hydro Innovations, LLC in July 2014. Goodwill is reviewed for impairment annually or more frequently when events or changes in circumstances indicate that fair value of the reporting unit has been reduced to less than its carrying value. The Company performs a quantitative impairment test annually on December 31 by comparing the fair value of the reporting unit with its carrying amount, including goodwill. The Company’s fair value is calculated using a market valuation technique whereby an appropriate control premium is applied to the Company’s market capitalization as calculated by applying its publicly quoted share price to the number of its common shares issued and outstanding. If the fair value of the reporting unit exceeds its carrying amount, goodwill is considered not impaired. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company determined that it has one reporting unit. As of June 30, 2022, the Company experienced a triggering event due to a drop in its stock price and performed a quantitative analysis for potential impairment of its goodwill. Based on this analysis, the Company determined that its carrying value exceeded its fair value. As a result, the Company recorded a non-cash goodwill impairment charge of $ 631,064 |
Temporary Equity | Temporary Equity Shares of preferred stock that are redeemable for cash or other assets are classified as temporary equity if they are redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the Company. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, net of issuance costs, which is subsequently adjusted to redemption value (including the amount for dividends earned but not yet declared or paid) at each balance sheet date if the instrument is currently redeemable or if it is probable that the instrument will become redeemable. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) |
Revenue Recognition | Revenue Recognition The following table sets forth the Company’s revenue by source: Schedule of Revenue by Source 2023 2022 2023 2022 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Equipment and systems sales $ 647,870 $ 4,941,380 $ 5,944,445 $ 9,375,093 Engineering and other services 235,301 104,434 462,943 382,559 Shipping and handling 1,000 17,265 18,335 64,739 Forfeited non-refundable customer deposits 29,400 - 234,135 - Total revenue $ 913,571 $ 5,063,079 $ 6,659,858 $ 9,822,391 Revenue Recognition Accounting Policy Summary The Company accounts for revenue in accordance with ASC 606. Under the revenue standard, a performance obligation is a promise in a contract with a customer to transfer a distinct good or service to the customer. Most of the Company’s contracts contain multiple performance obligations that include engineering and technical services as well as the delivery of a diverse range of climate control system equipment and components, which can span multiple phases of a customer’s project life cycle from facility design and construction to equipment delivery and system installation and start-up. The Company does not provide construction services or system installation services. Some of the Company’s contracts with customers contain a single performance obligation, typically engineering only services contracts. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. When there are multiple performance obligations within a contract, the Company allocates the transaction price to each performance obligation based on the standalone selling price. When estimating the selling price, the Company uses various observable inputs. The best observable input is the Company’s actual selling price for the same good or service, however, this input is generally not available for the Company’s contracts containing multiple performance obligations. For engineering services, the Company estimates the standalone selling price by reference to certain physical characteristics of the project, such as facility size and mechanical systems involved, which are indicative of the scope and complexity of the mechanical engineering services to be provided. For equipment sales, the standalone selling price is determined by forecasting the expected costs of the equipment and components and then adding an appropriate margin, based on a range of acceptable margins established by management. Depending on the nature of the performance obligations, the Company may use a combination of different methods and observable inputs if certain performance obligations have highly variable or uncertain standalone selling prices. Once the selling prices are determined, the Company applies the relative values to the total contract consideration and estimates the amount of the transaction price to be recognized as each promise is fulfilled. Generally, satisfaction occurs when control of the promised goods is transferred to the customer or as services are rendered or completed in exchange for consideration in an amount for which the Company expects to be entitled. The Company recognizes revenue for the sale of goods when control transfers to the customer, which primarily occurs at the time of shipment. The Company’s historical rates of return are insignificant as a percentage of sales and, as a result, the Company does not record a reserve for returns at the time the Company recognizes revenue. The Company has elected to exclude from the measurement of the transaction price all taxes (e.g., sales, use, value added, and certain excise taxes) that are assessed by a governmental authority in connection with a specific revenue-producing transaction and collected by the Company from the customer. Accordingly, the Company recognizes revenue net of sales taxes. The revenue and cost for freight and shipping is recorded when control over the sale of goods passes to the Company’s customers. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) The Company also has performance obligations to perform certain engineering services that are satisfied over a period of time. Revenue is recognized from this type of performance obligation as services are rendered based on the percentage completion towards certain specified milestones. The Company offers assurance-type warranties for its products and products manufactured by others to meet specifications defined by the contracts with customers and does not have any material separate performance obligations related to these warranties. The Company maintains a warranty reserve based on historical warranty costs. Disaggregation of Revenue In accordance with ASC 606-10-50-5 through 6, the Company considered the appropriate level of disaggregated revenue information that depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. Additionally, per the implementation guidance in ASC 606-10-55-90 through 91, the Company also considered (a) disclosures presented outside of the financial statements such as earnings releases and investor presentations, (b) information regularly reviewed by the Chief Operating Decision Maker for evaluating the financial performance of operating segments and (c) other information that is similar to the types of information identified in (a) and (b) and that is used by the Company or users of the Company’s financial statements to evaluate financial performance or make resource allocation decisions. Finally, we considered the examples of categories found in the guidance that might be appropriate, including: (a) type of good or service (major product lines), (b) geographical region (country or region), (c) market or type of customer (government or non-government customers), (d) type of contract (fixed-price or time-and-materials), (e) contract duration (short- or long-term), (f) timing of transfer of goods or services (point-in-time or over time) and (g) sales channels (direct to customers or through intermediaries). Based on the aforementioned guidance and considerations, the Company determined that disaggregation of revenue by sales, services, shipping and handling, and miscellaneous was required. Other Judgments and Assumptions The Company typically receives customer payments in advance of its performance of services or transfers of goods. Applying the practical expedient in ASC 606-10-32-18, which the Company has elected, the Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Accordingly, the remaining performance obligations related to customer contracts does not consider the effects of the time value of money. Applying the practical expedient in ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred since the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs include certain sales commissions and incentives, which are included in selling, general and administrative expenses, and are payable only when associated revenue has been collected and earned by the Company. Contract Assets and Contract Liabilities Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billing. Contract liabilities relate to payments received in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on the terms established in its contracts. CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) Contract assets include unbilled amounts where revenue recognized exceeds the amount billed to the customer and the right of payment is conditional, subject to completing a milestone, such as a phase of a project. The Company typically does not have material amounts of contract assets since revenue is recognized as control of goods are transferred or as services are performed. As of September 30, 2023 and December 31, 2022, the Company had no contract assets. Contract liabilities consist of advance payments in excess of revenue recognized. The Company’s contract liabilities are recorded as a current liability in deferred revenue in the consolidated balance sheets since the Company generally expects to recognize revenue in less than one year. Non-refundable customer deposits are recognized as revenue when previously abandoned customer contracts have been forfeited and a period of three years has passed. As of September 30, 2023, and December 31, 2022, deferred revenue, which was classified as a current liability, was $ 474,888 4,338,570 For the three and nine months ended September 30, 2023, the Company recognized revenue of $ 12,461 3,911,083 125,731 2,318,935 Remaining Performance Obligations Remaining performance obligations, or backlog, represents the aggregate amount of the transaction price allocated to the remaining obligations that the Company has not performed under its customer contracts. The Company has elected not to use the optional exemption in ASC 606-10-50-14, which exempts an entity from such disclosures if a performance obligation is part of a contract with an original expected duration of one year or less. Accordingly, the information disclosed about remaining performance obligations includes all customer contracts, including those with an expected duration of one year or less. Industry uncertainty, project financing concerns, and the licensing and qualification of our prospective customers, which are out of the Company’s control, make it difficult for the Company to predict when it will recognize revenue on its remaining performance obligations. There are risks that the Company may not realize the full contract value on customer projects in a timely manner or at all, and completion of a customer’s cultivation facility project is dependent upon the customer’s ability to secure funding and real estate, obtain a license and then build their cultivation facility so they can take possession of the equipment. Accordingly, the time it takes for customers to complete a project, which corresponds to when the Company is able to recognize revenue, is driven by numerous factors including: (i) the large number of first-time participants interested in the indoor cannabis cultivation business; (ii) the complexities and uncertainties involved in obtaining state and local licensure and permitting; (iii) local and state government delays in approving licenses and permits due to lack of staff or the large number of pending applications, especially in states where there is no cap on the number of cultivators; (iv) the customer’s need to obtain cultivation facility financing; (v) the time needed, and coordination required, for our customers to acquire real estate and properly design and build the facility (to the stage when climate control systems can be installed); (vi) the large price tag and technical complexities of the climate control and air sanitation system; (vii) the availability of power; and (viii) delays that are typical in completing any construction project. Further, based on the current economic climate, t and the Company’s recent cost cutting measures, there is no assurance that the Company will be able to fulfill its backlog, and the Company may experience contract cancellations, project scope reductions and project delays. As of September 30, 2023, the Company’s remaining performance obligations, or backlog, was approximately $ 548,000 353,000 65,000 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) The remaining performance obligations expected to be recognized through 2024 are as follows: Schedule of Remaining Performance Obligations Expected to be Recognized 2023 2024 Total Remaining performance obligations related to engineering only paid contracts $ - $ - $ - Remaining performance obligations related to partial equipment paid contracts 195,000 353,000 548,000 Total remaining performance obligations $ 195,000 $ 353,000 $ 548,000 |
Product Warranty | Product Warranty The Company warrants the products that it manufactures for a warranty period equal to the lesser of 12 months from start-up or 18 months from shipment. The Company’s warranty provides for the repair, rework, or replacement of products (at the Company’s option) that fail to perform within stated specification. The Company’s third-party suppliers also warrant their products under similar terms, which are passed through to the Company’s customers. The Company assesses the historical warranty claims on its manufactured products and, since 2016, warranty claims have been approximately 1% of annual revenue generated on these products. Based on the Company’s warranty policy, an accrual is established at 1% of the trailing 18 months revenue 194,031 180,457 |
Accounting for Share-Based Compensation | Accounting for Share-Based Compensation The Company recognizes the cost resulting from all share-based compensation arrangements, including stock options, restricted stock awards and restricted stock units that the Company grants under its equity incentive plan in its condensed consolidated financial statements based on their grant date fair value. The expense is recognized over the requisite service period or performance period of the award. Awards with a graded vesting period based on service are expensed on a straight-line basis for the entire award. Awards with performance-based vesting conditions, which require the achievement of a specific company financial performance goal at the end of the performance period and required service period, are recognized over the performance period. Each reporting period, the Company reassesses the probability of achieving the respective performance goal. If the goals are not expected to be met, no compensation cost is recognized and any previously recognized amount recorded is reversed. If the award contains market-based vesting conditions, the compensation cost is based on the grant date fair value and expected achievement of market condition and is not subsequently reversed if it is later determined that the condition is not likely to be met or is expected to be lower than initially expected. The grant date fair value of stock options is based on the Black-Scholes Option Pricing Model (the “Black-Scholes Model”). The Black-Scholes Model requires judgmental assumptions including volatility and expected term, both based on historical experience. The risk-free interest rate is based on U.S. Treasury interest rates whose term is consistent with the expected term of the option. The Company determines the assumptions used in the valuation of option awards as of the date of grant. Differences in the expected stock price volatility, expected term or risk-free interest rate may necessitate distinct valuation assumptions at those grant dates. As such, the Company may use different assumptions for options granted throughout the year. During the nine months ended September 30, 2023, the valuation assumptions used to determine the fair value of each option award on the date of grant were: expected stock price volatility of 152.23 10 3.48 CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) The grant date fair value of restricted stock and restricted stock units is based on the closing price of the underlying stock on the date of the grant. The Company has elected to reduce share-based compensation expense for forfeitures as the forfeitures occur since the Company does not have historical data or other factors to appropriately estimate the expected employee terminations and to evaluate whether particular groups of employees have significantly different forfeiture expectations. The following is a summary of share-based compensation expenses included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and September 30, 2022: Schedule of Share-based Compensation Costs 2023 2022 2023 2022 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Share-based compensation expense included in: Cost of revenue $ - $ 3,956 $ 4,898 $ 9,851 Advertising and marketing expenses - 2,457 1,113 9,299 Product development costs - 2,481 3,570 7,442 Selling, general and administrative expenses 15,166 69,637 167,846 240,083 Total share-based compensation expense included in consolidated statement of operations $ 15,166 $ 78,531 $ 177,427 $ 266,675 Included in the expense for the three and nine months ended September 30, 2022, is an accrual for $ 23,187 69,561 No |
Concentrations | Concentrations Four customers accounted for 29 19 16 12 38 20 12 53 24 28 25 13 Two customers accounted for 78 12 57 43 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2023, the FASB issued ASU 2023-01 to require entities to classify and account for leases with related parties on the basis of legally enforceable terms and conditions of the arrangement. The amendments are effective in periods beginning after December 15, 2023, including interim periods within those fiscal years. The Company does not expect this ASU to have a material impact on its consolidated results of operations, cash flows and financial position. In December 2022, the FASB issued ASU No. 2022-06, which defers the sunset date of Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting CEA Industries Inc. Notes to Condensed Consolidated Financial Statements September 30, 2023 (in US Dollars except share numbers) (Unaudited) In September 2022, the FASB issued Update 2022-04, “Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations”. The update was issued in response to requests from financial statement users for increased transparency surrounding the use of supplier finance programs. The amendments in Update 2022-04 require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude. The amendments in this update do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company does not expect this ASU to have a material impact on its consolidated results of operations, cash flows and financial position. In October 2021, the FASB issued ASU 2021-08, “ Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” In March 2020, the FAS issued ASU No. 2020-04 “ Reference Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Nature of Operations and Sign_3
Nature of Operations and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Revenue by Source | The following table sets forth the Company’s revenue by source: Schedule of Revenue by Source 2023 2022 2023 2022 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Equipment and systems sales $ 647,870 $ 4,941,380 $ 5,944,445 $ 9,375,093 Engineering and other services 235,301 104,434 462,943 382,559 Shipping and handling 1,000 17,265 18,335 64,739 Forfeited non-refundable customer deposits 29,400 - 234,135 - Total revenue $ 913,571 $ 5,063,079 $ 6,659,858 $ 9,822,391 |
Schedule of Remaining Performance Obligations Expected to be Recognized | The remaining performance obligations expected to be recognized through 2024 are as follows: Schedule of Remaining Performance Obligations Expected to be Recognized 2023 2024 Total Remaining performance obligations related to engineering only paid contracts $ - $ - $ - Remaining performance obligations related to partial equipment paid contracts 195,000 353,000 548,000 Total remaining performance obligations $ 195,000 $ 353,000 $ 548,000 |
Schedule of Share-based Compensation Costs | The following is a summary of share-based compensation expenses included in the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and September 30, 2022: Schedule of Share-based Compensation Costs 2023 2022 2023 2022 For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Share-based compensation expense included in: Cost of revenue $ - $ 3,956 $ 4,898 $ 9,851 Advertising and marketing expenses - 2,457 1,113 9,299 Product development costs - 2,481 3,570 7,442 Selling, general and administrative expenses 15,166 69,637 167,846 240,083 Total share-based compensation expense included in consolidated statement of operations $ 15,166 $ 78,531 $ 177,427 $ 266,675 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Schedule of Lease Cost | Schedule of Lease Cost As of September 30, 2023 Operating lease right-of-use asset $ 383,169 Operating lease liability, current $ 124,319 Operating lease liability, long-term $ 290,051 Remaining lease term 3.6 Discount rate 3.63 % For the Nine Months Ended September 30, 2023 Operating cash outflow from operating lease $ 93,206 |
Schedule of Future Annual Minimum Lease Payments | Schedule of Future Annual Minimum Lease Payments As of September 30, 2023 Years ended December 31, 2023 (excluding the nine months ended September 30, 2023) $ 31,690 2024 128,643 2025 132,503 2026 136,473 Thereafter 11,654 Total minimum lease payments 440,963 Less imputed interest (26,593 ) Present value of minimum lease payments $ 414,370 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Schedule of Inventory September 30, December 31, 2023 2022 Finished goods $ 371,689 $ 270,555 Work in progress - 155 Raw materials 125,437 148,608 Allowance for excess & obsolete inventory (182,030 ) (70,907 ) Inventory, net $ 315,096 $ 348,411 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Schedule of Property and Equipment September 30, December 31, 2023 2022 Furniture and equipment $ 275,994 $ 278,389 Vehicles 15,000 15,000 Property and equipment, gross 290,994 293,389 Accumulated depreciation (245,257 ) (224,876 ) Property and equipment, net $ 45,737 $ 68,513 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | Schedule of Accounts Payable and Accrued Liabilities September 30, December 31, 2023 2022 Accounts payable $ 164,041 $ 311,162 Sales commissions payable 4,018 25,951 Accrued payroll liabilities 146,376 465,094 Product warranty accrual 194,031 180,457 Other accrued expenses 63,419 224,594 Total $ 571,885 $ 1,207,258 |
Equity Incentive Plans (Tables)
Equity Incentive Plans (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Schedule of Stock Option Activity | Schedule of Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding, December 31, 2022 192,073 $ 8.94 7.6 $ - Granted 138,489 $ 0.90 6.4 $ - Exercised - $ - - $ - Forfeited (18,629 ) $ 2.63 9.2 $ - Expired - $ - - $ - Outstanding, September 30, 2023 311,933 $ 5.74 6.6 $ - Exercisable, September 30, 2023 286,843 $ 5.78 6.5 $ - |
Summary of Non-Vested qualified Stock Option Activity | Summary of Non-Vested qualified Stock Option Activity Number of Options Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Grant-Date Fair Value Nonvested, December 31, 2022 28,756 $ 4.73 $ - $ 136,016 Granted 138,489 $ 0.88 $ - $ 121,870 Vested (141,822 ) $ 0.92 $ - $ (130,476 ) Forfeited (333 ) $ 6.67 $ - $ (2,222 ) Expired - $ - $ - $ - Nonvested, September 30, 2023 25,090 $ 4.98 $ - $ 124,948 |
Schedule of Restricted Units Activity | Schedule of Restricted Units Activity Number of Units Weighted Average Grant-Date Fair Value Aggregate Intrinsic Value Outstanding, December 31, 2022 3,366 $ 7.42 $ - Granted 119,032 $ 0.84 $ - Vested and settled with share issuance (122,398 ) $ 1.02 $ - Forfeited/canceled - $ - $ - Outstanding, September 30, 2023 - $ - $ - |
2017 Equity Plan and 2021 Equity Plan [Member] | Directors [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Schedule of Stock Option Activity | Schedule of Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value ($000) Outstanding, December 31, 2022 57,122 $ 9.44 6.0 $ - Granted - - - $ - Exercised - - - $ - Forfeited/Cancelled - - - $ - Expired - - - $ - Outstanding, September 30, 2023 57,122 $ 9.44 5.3 $ - Exercisable, September 30, 2023 57,122 $ 9.44 5.3 $ - |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Warrants | |
Schedule of Outstanding Warrants to purchase Common Stock | Schedule of Outstanding Warrants to purchase Common Stock Weighted Weighted Average Warrants Average Exercise Remaining Life Aggregate Intrinsic Outstanding Exercisable Price In Months Value Outstanding at December 31, 2022 7,623,772 7,623,772 $ 5.14 49 - Granted - - - - - Exercised - - - - - Expired - - - - - Outstanding at September 30, 2023 7,623,772 7,623,772 $ 5.14 40 - |
Schedule of Warrants Outstanding | Schedule of Warrants Outstanding Warrants Weighted Average Exercise price Outstanding Exercisable Months Outstanding $ 9.45 192,982 192,982 12 $ 10.40 34,737 34,737 13 $ 5.00 7,105,496 7,105,496 41 $ 5.16 290,557 290,557 41 7,623,772 7,623,772 40 |
Schedule of Revenue by Source (
Schedule of Revenue by Source (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Product Information [Line Items] | ||||
Total revenue | $ 913,571 | $ 5,063,079 | $ 6,659,858 | $ 9,822,391 |
Equipment And Systems Sales [Member] | ||||
Product Information [Line Items] | ||||
Total revenue | 647,870 | 4,941,380 | 5,944,445 | 9,375,093 |
Engineering And Other Services [Member] | ||||
Product Information [Line Items] | ||||
Total revenue | 235,301 | 104,434 | 462,943 | 382,559 |
Shipping and Handling [Member] | ||||
Product Information [Line Items] | ||||
Total revenue | 1,000 | 17,265 | 18,335 | 64,739 |
Forfeited Non Refundable Customer Deposits [Member] | ||||
Product Information [Line Items] | ||||
Total revenue | $ 29,400 | $ 234,135 |
Schedule of Remaining Performan
Schedule of Remaining Performance Obligations Expected to be Recognized (Details) | Sep. 30, 2023 USD ($) |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Remaining performance obligations related to engineering only paid contracts | |
Remaining performance obligations related to partial equipment paid contracts | 548,000 |
Total remaining performance obligations | 548,000 |
2023 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Remaining performance obligations related to engineering only paid contracts | |
Remaining performance obligations related to partial equipment paid contracts | 195,000 |
Total remaining performance obligations | 195,000 |
2024 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Remaining performance obligations related to engineering only paid contracts | |
Remaining performance obligations related to partial equipment paid contracts | 353,000 |
Total remaining performance obligations | $ 353,000 |
Schedule of Share-based Compens
Schedule of Share-based Compensation Costs (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Total share-based compensation expense included in consolidated statement of operations | $ 15,166 | $ 78,531 | $ 177,427 | $ 266,675 |
Cost of Sales [Member] | ||||
Total share-based compensation expense included in consolidated statement of operations | 3,956 | 4,898 | 9,851 | |
Advertising And Marketing Expenses [Member] | ||||
Total share-based compensation expense included in consolidated statement of operations | 2,457 | 1,113 | 9,299 | |
Product Development Costs [Member] | ||||
Total share-based compensation expense included in consolidated statement of operations | 2,481 | 3,570 | 7,442 | |
Selling, General and Administrative Expenses [Member] | ||||
Total share-based compensation expense included in consolidated statement of operations | $ 15,166 | $ 69,637 | $ 167,846 | $ 240,083 |
Nature of Operations and Sign_4
Nature of Operations and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Product Information [Line Items] | ||||||
Federal insured amount | $ 250,000 | $ 250,000 | ||||
Cash balance, amount | 13,343,000 | 13,343,000 | ||||
Cash equivalent balance, amount | 13,093,000 | $ 13,093,000 | ||||
Potentially dilutive equity instruments that are convertible into common stock | 7,992,829 | 7,881,160 | ||||
Goodwill and intangible asset impairment | $ 631,064 | $ 631,064 | ||||
Contract with customer liability current | 474,888 | 474,888 | $ 4,338,570 | |||
Revenue recognized | 12,461 | 125,731 | 3,911,083 | 2,318,935 | ||
Revenue remaining performance obligation | 548,000 | $ 548,000 | ||||
Product warranty description | The Company assesses the historical warranty claims on its manufactured products and, since 2016, warranty claims have been approximately 1% of annual revenue generated on these products. Based on the Company’s warranty policy, an accrual is established at 1% of the trailing 18 months revenue | |||||
Accrued warranty reserve amount | $ 194,031 | $ 194,031 | $ 180,457 | |||
Stock price volatility | 152.23% | |||||
Expected Term | 10 years | |||||
Risk-free interest rate | 3.48% | |||||
Accrued Incentive | $ 23,187 | $ 0 | $ 69,561 | |||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer One [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration risk percentage | 29% | 53% | 38% | 28% | ||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer Two [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration risk percentage | 19% | 24% | 20% | 25% | ||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer Three [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration risk percentage | 16% | 12% | 13% | |||
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer Four [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration risk percentage | 12% | |||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer One [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration risk percentage | 78% | 57% | ||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Two [Member] | ||||||
Product Information [Line Items] | ||||||
Concentration risk percentage | 12% | 43% | ||||
2023 [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue remaining performance obligation | $ 195,000 | $ 195,000 | ||||
2023 [Member] | Booked Sales Orders From Three Customers [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue remaining performance obligation | 353,000 | $ 353,000 | ||||
Director And Staff [Member] | ||||||
Product Information [Line Items] | ||||||
Potentially dilutive equity instruments that are convertible into common stock | 369,057 | 257,388 | ||||
One Customer [Member] | ||||||
Product Information [Line Items] | ||||||
Revenue remaining performance obligation | $ 65,000 | $ 65,000 | ||||
Series B Preferred Stock [Member] | ||||||
Product Information [Line Items] | ||||||
Potentially dilutive equity instruments that are convertible into common stock | 7,623,772 | 7,623,772 |
Schedule of Lease Cost (Details
Schedule of Lease Cost (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Leases | ||
Operating lease right-of-use asset | $ 383,169 | $ 462,874 |
Operating lease liability, current | 124,319 | 118,235 |
Operating lease liability, long-term | $ 290,051 | $ 376,851 |
Remaining lease term | 3 years 7 months 6 days | |
Discount rate | 3.63% | |
Operating cash outflow from operating lease | $ 93,206 |
Schedule of Future Annual Minim
Schedule of Future Annual Minimum Lease Payments (Details) | Sep. 30, 2023 USD ($) |
Leases | |
2023 (excluding the nine months ended September 30, 2023) | $ 31,690 |
2024 | 128,643 |
2025 | 132,503 |
2026 | 136,473 |
Thereafter | 11,654 |
Total minimum lease payments | 440,963 |
Less imputed interest | (26,593) |
Present value of minimum lease payments | $ 414,370 |
Leases (Details Narrative)
Leases (Details Narrative) | Jul. 28, 2021 USD ($) ft² | Sep. 30, 2023 USD ($) |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Lease renew term | 5 years | |
Operating lease liability | $ 414,370 | |
New Facility Lease [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Area of land | ft² | 11,491 | |
Operating lease term description | The New Facility Lease commenced on November 1, 2021 and continues through January 31, 2027 | |
Lease rental expense | $ 10,055 | |
Increase in rent percent | 3% | |
Security deposit | $ 14,747 | |
Operating lease liability | $ 582,838 |
Schedule of Inventory (Details)
Schedule of Inventory (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 371,689 | $ 270,555 |
Work in progress | 155 | |
Raw materials | 125,437 | 148,608 |
Allowance for excess & obsolete inventory | (182,030) | (70,907) |
Inventory, net | $ 315,096 | $ 348,411 |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | ||
Overhead expenses | $ 15,145 | $ 12,770 |
Prepaid inventory expenses | $ 36,000 | $ 1,176,000 |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 290,994 | $ 293,389 |
Accumulated depreciation | (245,257) | (224,876) |
Property and equipment, net | 45,737 | 68,513 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 275,994 | 278,389 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 15,000 | $ 15,000 |
Property and Equipment (Details
Property and Equipment (Details Narrative) | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Property, Plant and Equipment [Line Items] | |
Depreciation expenses | $ 22,476 |
Property, Plant and Equipment [Member] | Cost of Sales [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation expenses | 2,284 |
Property, Plant and Equipment [Member] | Inventory [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation expenses | $ 571 |
Schedule of Accounts Payable an
Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 164,041 | $ 311,162 |
Sales commissions payable | 4,018 | 25,951 |
Accrued payroll liabilities | 146,376 | 465,094 |
Product warranty accrual | 194,031 | 180,457 |
Other accrued expenses | 63,419 | 224,594 |
Total | $ 571,885 | $ 1,207,258 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Oct. 20, 2023 | Sep. 30, 2023 | Dec. 31, 2022 |
Subsequent Event [Line Items] | |||
Amount paid | $ 164,041 | $ 311,162 | |
Subsequent Event [Member] | Engineering Agreement [Member] | |||
Subsequent Event [Line Items] | |||
Amount paid | $ 1,049,280 |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - USD ($) | 9 Months Ended | |||||||||||
Jan. 17, 2023 | Jan. 03, 2023 | Jun. 21, 2022 | Feb. 15, 2022 | Jan. 17, 2022 | Jan. 03, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 30, 2021 | Mar. 22, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | ||||||||||
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | ||||||||||
Common stock par value | $ 0.00001 | $ 0.00001 | ||||||||||
Common stock, shares issued | 8,076,372 | 7,953,974 | ||||||||||
Common stock, shares outstanding | 8,076,372 | 7,953,974 | 1,600,835 | 240,125,224 | ||||||||
Preferred stock, shares issued | 0 | 0 | ||||||||||
Preferred stock, shares outstanding | 0 | 0 | ||||||||||
Reverse stock split | one-for-one hundred and fifty | |||||||||||
Reverse stock split | 6,798 | |||||||||||
Net proceeds from sale of common stock | $ 22,000,000 | |||||||||||
Exercise price | $ 5.14 | $ 5.14 | ||||||||||
Number of shares issued | 169,530 | |||||||||||
Prefunded conversion warrants | 170,382 | |||||||||||
Common Stock [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Number of shares sold | 5,811,138 | |||||||||||
Number of shares issued | 5,811,138 | |||||||||||
Warrant [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Number of shares sold | 6,572,808 | |||||||||||
Exercise price | $ 5 | |||||||||||
Director [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Management fee expense | $ 15,000 | $ 25,000 | ||||||||||
Audit Committee Chairman [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Management fee expense | 10,000 | |||||||||||
Committee Chairman [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Management fee expense | $ 5,000 | |||||||||||
Board of Directors Chairman [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Common stock, shares authorized | 200,000,000 | |||||||||||
Preferred stock, shares authorized | 25,000,000 | |||||||||||
Underwriters [Member] | Warrant [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Exercise price | $ 5.1625 | |||||||||||
Stock issued during period, shares, issued for services | 290,557 | |||||||||||
Warrants maturity date | Feb. 10, 2027 | |||||||||||
2021 Equity Incentive Plan [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Exercise price | $ 4.80 | |||||||||||
2021 Equity Plan [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Number of stock options issued | 666,667 | |||||||||||
Number of shares issued | 122,398 | |||||||||||
Non-Qualified Stock Options [Member] | 2021 Equity Incentive Plan [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Number of stock options issued | 3,125 | |||||||||||
Restricted Stock Units (RSUs) [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Vesting rights description | Vesting of the RSUs was as follows: (i) 50% at the time of grant, and (ii) 50% on the first anniversary of the grant date | |||||||||||
Restricted Stock Units (RSUs) [Member] | Director [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Share based compensation arrangement payment | $ 25,000 | |||||||||||
Restricted Stock Units (RSUs) [Member] | 2021 Equity Incentive Plan [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Number of stock options issued | 29,758 | 3,367 | ||||||||||
Restricted Stock Units (RSUs) [Member] | 2021 Equity Incentive Plan [Member] | January 17, 2022 [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Number of stock options issued | 1,684 | |||||||||||
Shares, vested | 1,684 | |||||||||||
Restricted Stock Units (RSUs) [Member] | 2021 Equity Incentive Plan [Member] | January 17, 2022 [Member] | Two New Directors [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Shares, vested | 1,683 | |||||||||||
Restricted Stock Units (RSUs) [Member] | 2021 Equity Incentive Plan [Member] | January 17, 2023 [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Number of stock options issued | 1,683 | |||||||||||
Restricted Stock Units (RSUs) [Member] | 2021 Equity Plan [Member] | Directors [Member] | ||||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||||
Number of shares vested in period | 119,032 |
Schedule of Stock Option Activi
Schedule of Stock Option Activity (Details) - 2017 Equity Plan and 2021 Equity Plan [Member] | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Employees And Consultants [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options, Granted | 138,489 |
Employees And Consultants [Member] | Non-Qualified Stock Options [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options, Outstanding Beginning | 192,073 |
Weighted Average Exercise Price, Outstanding Beginning | $ / shares | $ 8.94 |
Weighted Average Remaining Contractual Term, Beginning | 7 years 7 months 6 days |
Aggregate Intrinsic Value, Outstanding Beginning | $ | |
Number of Options, Granted | 138,489 |
Weighted Average Exercise Price, Granted | $ / shares | $ 0.90 |
Weighted Average Remaining Contractual Term, Granted | 6 years 4 months 24 days |
Number of Options, Exercised | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Number of Options, Forfeited/Cancelled | (18,629) |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | $ 2.63 |
Weighted Average Remaining Contractual Term, Forfeited | 9 years 2 months 12 days |
Number of Options, Expired | |
Weighted Average Exercise Price, Expired | $ / shares | |
Number of Options, Outstanding Ending | 311,933 |
Weighted Average Exercise Price, Outstanding Ending | $ / shares | $ 5.74 |
Weighted Average Remaining Contractual Term, Outstanding Ending | 6 years 7 months 6 days |
Aggregate Intrinsic Value, Outstanding Ending | $ | |
Number of Options, Exercisable Ending | 286,843 |
Weighted Average Exercise Price, Exercisable Ending | $ / shares | $ 5.78 |
Weighted Average Remaining Contractual Term, Exercisable Ending | 6 years 6 months |
Aggregate Intrinsic Value, Exercisable Ending | $ | |
Directors [Member] | Non-Qualified Stock Options [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options, Outstanding Beginning | 57,122 |
Weighted Average Exercise Price, Outstanding Beginning | $ / shares | $ 9.44 |
Weighted Average Remaining Contractual Term, Beginning | 6 years |
Aggregate Intrinsic Value, Outstanding Beginning | $ | |
Number of Options, Granted | |
Weighted Average Exercise Price, Granted | $ / shares | |
Number of Options, Exercised | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Number of Options, Forfeited/Cancelled | |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | |
Number of Options, Expired | |
Weighted Average Exercise Price, Expired | $ / shares | |
Number of Options, Outstanding Ending | 57,122 |
Weighted Average Exercise Price, Outstanding Ending | $ / shares | $ 9.44 |
Weighted Average Remaining Contractual Term, Outstanding Ending | 5 years 3 months 18 days |
Aggregate Intrinsic Value, Outstanding Ending | $ | |
Number of Options, Exercisable Ending | 57,122 |
Weighted Average Exercise Price, Exercisable Ending | $ / shares | $ 9.44 |
Weighted Average Remaining Contractual Term, Exercisable Ending | 5 years 3 months 18 days |
Aggregate Intrinsic Value, Exercisable Ending | $ |
Summary of Non-Vested qualified
Summary of Non-Vested qualified Stock Option Activity (Details) - Employees And Consultants [Member] - 2017 Equity Plan and 2021 Equity Plan [Member] | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Options Nonvested, Beginning | shares | 28,756 |
Weighted Average Grant-Date Fair Value, Nonvested, Beginning | $ / shares | $ 4.73 |
Aggregated Intrinsic Value, Nonvested Beginning | |
Grant Date Fair Value Nonvested, Beginning | $ 136,016 |
Number of Options Nonvested, Granted | shares | 138,489 |
Weighted Average Grant-Date Fair Value, Nonvested, Granted | $ / shares | $ 0.88 |
Grant Date Fair Value Nonvested, Granted | $ 121,870 |
Number of Options Nonvested, Vested | $ (141,822) |
Weighted Average Grant-Date Fair Value, Nonvested, Vested | $ / shares | $ 0.92 |
Grant Date Fair Value Nonvested, Vested | $ (130,476) |
Number of Options Nonvested, Forfeited | shares | (333) |
Weighted Average Grant-Date Fair Value, Nonvested, Forfeited | $ / shares | $ 6.67 |
Grant Date Fair Value Nonvested, Forfeited | $ (2,222) |
Number of Options Nonvested, Expired | shares | |
Weighted Average Grant-Date Fair Value, Nonvested, Expired | $ / shares | |
Grant Date Fair Value Nonvested, Expired | |
Number of Options Nonvested, Ending | shares | 25,090 |
Weighted Average Grant-Date Fair Value, Nonvested, Beginning | $ / shares | $ 4.98 |
Aggregated Intrinsic Value, Nonvested Ending | |
Grant Date Fair Value Nonvested, Ending | $ 124,948 |
Schedule of Restricted Units Ac
Schedule of Restricted Units Activity (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Aggregate Intrinsic Value Outstanding, Granted | |
Aggregate Intrinsic Value Outstanding, ending | |
2017 Equity Incentive Plan [Member] | Employees, Directors and Consultants [Member] | Restricted Stock Units (RSUs) [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Units Outstanding, beginning | shares | 3,366 |
Weighted Average Grant-Date Fair Value Outstanding, Beginning | $ / shares | $ 7.42 |
Aggregate Intrinsic Value Outstanding, Beginning | |
Number of Units, Granted | shares | 119,032 |
Weighted Average Grant-Date Fair Value, Granted | $ / shares | $ 0.84 |
Aggregate Intrinsic Value Outstanding, Granted | |
Number of Units, Vested and settled with share issuance | shares | (122,398) |
Weighted Average Grant-Date Fair Value, Vested and settled with share issuance | $ / shares | $ 1.02 |
Aggregate Intrinsic Value Outstanding, Vested and settled with share issuance | |
Number of Units, Forfeited/canceled | shares | |
Weighted Average Grant-Date Fair Value, Forfeited/Canceled | $ / shares | |
Aggregate Intrinsic Value Outstanding, Forfeited/canceled | |
Number of Units Outstanding, ending | shares | |
Weighted Average Grant-Date Fair Value Outstanding,ending | $ / shares | |
Aggregate Intrinsic Value Outstanding, ending |
Equity Incentive Plans (Details
Equity Incentive Plans (Details Narrative) - USD ($) | 9 Months Ended | ||||||||
Jan. 17, 2023 | Jan. 03, 2023 | Jun. 21, 2022 | Jan. 03, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Jan. 17, 2022 | Mar. 22, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares issued during the period | 169,530 | ||||||||
Accrued equity compensation | $ 89,970 | ||||||||
Additional expense | 32,376 | ||||||||
Share based compensation | 177,427 | $ 280,739 | |||||||
Restricted Stock Units (RSUs) [Member] | Employees, Directors and Consultants [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Share based compensation | $ 101,316 | 42,413 | |||||||
2017 Equity Incentive Plan [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of options to purchase shares | 333,333 | ||||||||
Number of option remain forfeited | 1,665 | ||||||||
Number of shares authorized | 333,333 | ||||||||
2017 Equity Incentive Plan [Member] | Director [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Share based compensation | $ 0 | $ 29,656 | |||||||
Number of options to purchase shares | 0 | 6,250 | |||||||
2017 Equity Incentive Plan [Member] | Non Qualified Stock Option [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of option remain outstanding | 145,512 | ||||||||
Shares available for future equity awards | 24,129 | ||||||||
2017 Equity Incentive Plan [Member] | Restricted Stock [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of shares issued | 163,692 | ||||||||
2017 Equity Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Employees, Directors and Consultants [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of shares vested in period | 122,398 | ||||||||
Number of shares granted | 119,032 | ||||||||
2021 Equity Plan [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Shares available for future equity awards | 310,555 | ||||||||
Number of shares grant in period | 666,667 | ||||||||
Shares issued during the period | 122,398 | ||||||||
Number of shares authorized | 666,667 | ||||||||
Unrecognized compensation expense | $ 15,586 | ||||||||
Weighted Average Remaining Contractual Term | 18 months | ||||||||
2021 Equity Plan [Member] | Non Qualified Stock Option [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of option remain forfeited | 333 | ||||||||
Number of option remain outstanding | 182,728 | ||||||||
Number of option remain cancelled | 16,631 | ||||||||
2021 Equity Plan [Member] | Incentive Stock Option [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of option remain outstanding | 40,816 | ||||||||
2021 Equity Plan [Member] | Restricted Stock [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of shares issued | 132,568 | ||||||||
2021 Equity Plan [Member] | Restricted Stock Units (RSUs) [Member] | Directors [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of shares vested in period | 119,032 | ||||||||
Number of shares granted | 3,366 | ||||||||
2021 Equity Incentive Plan [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Exercise price per share | $ 4.80 | ||||||||
2021 Equity Incentive Plan [Member] | Five Employees [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of share awards granted | 138,489 | ||||||||
Exercise price per share | $ 0.8955 | ||||||||
2021 Equity Incentive Plan [Member] | Non-Qualified Stock Options [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of shares issued | 3,125 | ||||||||
2021 Equity Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of shares grant in period | 29,758 | 3,367 | |||||||
2017 Equity Plan and 2021 Equity Plan [Member] | Non-Qualified Stock Options [Member] | Employees And Consultants [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Share based compensation | $ 76,110 | $ 129,733 | |||||||
2017 Equity Plan and 2021 Equity Plan [Member] | Non-Qualified Stock Options [Member] | Directors [Member] | |||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||
Number of option remain forfeited | |||||||||
Number of option remain outstanding | 57,122 | 57,122 | |||||||
Number of share awards granted | |||||||||
Exercise price per share | |||||||||
Number of option remain cancelled | |||||||||
Weighted Average Remaining Contractual Term | 6 years |
Schedule of Outstanding Warrant
Schedule of Outstanding Warrants to purchase Common Stock (Details) | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Warrants | |
Warrants Outstanding, Beginning Balance | 7,623,772 |
Warrants Exercisable, Beginning Balance | 7,623,772 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 5.14 |
Weighted Average Life of Outstanding Warrants in Months, Beginning Balance | 49 months |
Aggregate Intrinsic Value, Beginning Balance | $ | |
Warrants Outstanding. Granted | |
Warrants Exercisable, Granted | |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Life of Outstanding Warrants in Months, Granted | |
Aggregate Intrinsic Value, Granted | $ | |
Warrants Outstanding, Exercised | |
Warrants Exercisable, Exercised | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Remaining Life, Exercised | |
Aggregate Intrinsic Value, Exercised | $ | |
Warrants Outstanding, Expired | |
Warrants Exercisable, Expired | |
Weighted Average Exercise Price, Expired | $ / shares | |
Weighted Average Life of Outstanding Warrants in Months, Granted | |
Aggregate Intrinsic Value, Expired | $ | |
Warrants Outstanding, Ending Balance | 7,623,772 |
Warrants Exercisable, Ending Balance | 7,623,772 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 5.14 |
Weighted Average Life of Outstanding Warrants in Months, Ending Balance | 40 months |
Aggregate Intrinsic Value Outstanding, ending | $ |
Schedule of Warrants Outstandin
Schedule of Warrants Outstanding (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 5.14 | $ 5.14 |
Warrants Outstanding | 7,623,772 | 7,623,772 |
Warrants Exercisable | 7,623,772 | 7,623,772 |
Weighted Average Life of Outstanding Warrants in Months | 40 months | |
Warrants Range [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 9.45 | |
Warrants Outstanding | 192,982 | |
Warrants Exercisable | 192,982 | |
Weighted Average Life of Outstanding Warrants in Months | 12 months | |
Warrants Range One [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 10.40 | |
Warrants Outstanding | 34,737 | |
Warrants Exercisable | 34,737 | |
Weighted Average Life of Outstanding Warrants in Months | 13 months | |
Warrants Range Two [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 5 | |
Warrants Outstanding | 7,105,496 | |
Warrants Exercisable | 7,105,496 | |
Weighted Average Life of Outstanding Warrants in Months | 41 months | |
Warrants Range Three [Member] | ||
Share-Based Payment Arrangement, Option, Exercise Price Range [Line Items] | ||
Exercise price | $ 5.16 | |
Warrants Outstanding | 290,557 | |
Warrants Exercisable | 290,557 | |
Weighted Average Life of Outstanding Warrants in Months | 41 months |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Operating loss carryforward | $ 27,873,000 |
Net operating loss carry forward expected to expire amount | $ 11,196,000 |
Net operating loss expiration term | 2034 through 2037 |
NOLs usage against taxable income, percentage | 80% |
NOLs carryforwards term | three-year period |
Ownership [Member] | |
Percentage of ownership change | 50% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Dec. 20, 2022 | Oct. 13, 2022 | Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Payments for commissions | $ 18,273 | $ 9,884 | ||||
Payments for Deposits | 14,035 | |||||
Outstanding receivable | 1,692 | |||||
Consulting Agreement [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
[custom:ProceedsFomDeposit] | $ 10,900 | |||||
Consulting Agreement [Member] | Lone Star Bioscience Inc [Member] | Chief Executive Officer [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
[custom:ProceedsFomDeposit] | $ 2,500 | $ 3,577 | $ 1,250 | |||
[custom:ProceedsFomSales] | $ 14,477 | |||||
Revenue | $ 16,977 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Oct. 20, 2023 | Sep. 30, 2023 | Dec. 31, 2022 |
Subsequent Event [Line Items] | |||
Amount paid | $ 164,041 | $ 311,162 | |
Subsequent Event [Member] | Engineering Agreement [Member] | |||
Subsequent Event [Line Items] | |||
Amount paid | $ 1,049,280 |