Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | May 04, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q/A | |
Amendment Flag | true | |
Amendment Description | to correct share information on the cover and an inadvertently omitted signature | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-40867 | |
Entity Registrant Name | Volcon, Inc. | |
Entity Central Index Key | 0001829794 | |
Entity Tax Identification Number | 84-4882689 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 3121 Eagles Nest Street | |
Entity Address, Address Line Two | Suite 120 | |
Entity Address, City or Town | Round Rock | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78665 | |
City Area Code | (512) | |
Local Phone Number | 400-4271 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | VLCN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 24,615,119 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 4,220,884 | $ 10,986,592 |
Restricted cash | 551,250 | 551,250 |
Accounts receivable, net of allowance for doubtful accounts of $43,265 and $62,451 at March 31, 2023 and December 31, 2022, respectively | 710,271 | 864,957 |
Inventory | 6,120,748 | 5,645,883 |
Inventory deposits | 1,206,318 | 427,662 |
Prepaid expenses and other current assets | 1,829,040 | 1,850,666 |
Total current assets | 14,638,511 | 20,327,010 |
Long term assets: | ||
Property and equipment, net | 897,599 | 601,766 |
Intangible assets, net | 4,360 | 5,813 |
Other long-term assets | 285,037 | 285,037 |
Right-of-use assets - operating leases | 1,415,930 | 1,505,987 |
Total assets | 17,241,437 | 22,725,613 |
Current liabilities: | ||
Accounts payable | 557,411 | 1,036,628 |
Accrued liabilities | 1,589,050 | 2,045,239 |
Accrued purchase commitments | 0 | 28,600 |
Current portion of notes payable | 14,200 | 18,670 |
Convertible notes, net of issuance costs | 19,130,384 | 17,353,748 |
Right-of- use operating lease liabilities, short-term | 401,553 | 391,117 |
Customer deposits | 3,144 | 23,471 |
Total current liabilities | 21,695,742 | 20,897,472 |
Notes payable, net of current portion | 81,172 | 50,116 |
Right-of-use operating lease liabilities, long-term | 1,046,544 | 1,143,011 |
Total liabilities | 22,823,458 | 22,090,599 |
COMMITMENTS AND CONTINGENCIES | ||
Stockholders' (deficit) equity: | ||
Preferred stock: $0.00001 par value, 5,000,000 shares authorized, no shares outstanding | 0 | 0 |
Common stock: $0.00001 par value, 100,000,000 shares authorized, 24,615,119 shares issued and outstanding at March 31, 2023 and 24,426,260 shares issued and outstanding as of December 31, 2022 | 200 | 198 |
Additional paid-in capital | 77,452,175 | 76,369,742 |
Accumulated deficit | (83,034,396) | (75,734,927) |
Total stockholders’ (deficit) equity | (5,582,021) | 635,013 |
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | $ 17,241,437 | $ 22,725,613 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 43,265 | $ 62,451 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 24,615,119 | 24,426,260 |
Common stock, shares outstanding | 24,615,119 | 24,426,260 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 1,170,458 | $ 1,184,502 |
Cost of goods sold | (1,229,981) | (3,527,715) |
Gross margin | (59,523) | (2,343,213) |
Operating expenses: | ||
Sales and marketing | 1,789,370 | 1,014,906 |
Product development | 1,786,351 | 2,495,712 |
General and administrative expenses | 1,890,091 | 2,794,940 |
Total operating expenses | 5,465,812 | 6,305,558 |
Loss from operations | (5,525,335) | (8,648,771) |
Other income | 5,885 | 41,117 |
Interest expense | (1,780,019) | (4,691) |
Total other expense | (1,774,134) | 36,426 |
Loss before provision for income taxes | (7,299,469) | (8,612,345) |
Provision for income taxes | 0 | 0 |
Net loss | $ (7,299,469) | $ (8,612,345) |
Net loss per common share – basic | $ (0.30) | $ (0.40) |
Net loss per common share – diluted | $ (0.30) | $ (0.40) |
Weighted average common shares outstanding – basic | 24,535,131 | 21,745,089 |
Weighted average common shares outstanding – diluted | 24,535,131 | 21,745,089 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2021 | $ 128 | $ 47,803,643 | $ (41,499,522) | $ 6,304,249 |
Shares, Outstanding, Beginning Balance at Dec. 31, 2021 | 17,309,187 | |||
Issuance of common stock for public offering, net of issuance costs of $1,910,816 | $ 67 | 18,089,117 | 18,089,184 | |
Issuance of common stock for public offering, net of issuance costs, shares | 6,666,667 | |||
Issuance of common stock for exercise of warrants | ||||
Issuance of common stock for exercise of warrants, shares | 6,247 | |||
Issuance of common stock for exercise of stock options and restricted shares | 15,000 | 15,000 | ||
Issuance of common stock for exercise of stock options and restricted shares, shares | 82,520 | |||
Stock-based compensation | 1,575,165 | 1,575,165 | ||
Stock-based compensation, shares | 44,623 | |||
Net loss | (8,612,345) | (8,612,345) | ||
Ending balance, value at Mar. 31, 2022 | $ 195 | 67,482,925 | (50,111,867) | 17,371,253 |
Shares, Outstanding, Ending Balance at Mar. 31, 2022 | 24,109,244 | |||
Beginning balance, value at Dec. 31, 2022 | $ 198 | 76,369,742 | (75,734,927) | 635,013 |
Shares, Outstanding, Beginning Balance at Dec. 31, 2022 | 24,426,260 | |||
Issuance of common stock for exercise of stock options and restricted shares | $ 1 | 24,999 | 25,000 | |
Issuance of common stock for exercise of stock options and restricted shares, shares | 50,000 | |||
Stock-based compensation | $ 1 | 1,057,434 | 1,057,435 | |
Stock-based compensation, shares | 138,859 | |||
Net loss | (7,299,469) | (7,299,469) | ||
Ending balance, value at Mar. 31, 2023 | $ 200 | $ 77,452,175 | $ (83,034,396) | $ (5,582,021) |
Shares, Outstanding, Ending Balance at Mar. 31, 2023 | 24,615,119 |
CONSOLIDATED STATEMENT OF CHA_2
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||
Payments of Stock Issuance Costs | $ 1,910,816 | $ 1,910,816 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flow from operating activities: | ||
Net loss | $ (7,299,469) | $ (8,612,345) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 1,057,435 | 1,575,165 |
Loss on write down of inventory and inventory deposits | 14,843 | 0 |
Gain on sale of property and equipment | (5,578) | 0 |
Write-off of intangible assets | 0 | 6,427 |
Non-cash interest expense | 1,776,636 | 0 |
Amortization of right-of-use assets | 90,057 | 158,672 |
Depreciation and amortization | 51,841 | 112,980 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 154,686 | (82,397) |
Inventory | (489,708) | (1,519,431) |
Inventory deposits | (778,656) | 393,741 |
Prepaid assets and other current assets | 21,625 | (656,709) |
Other assets | 0 | (9,453) |
Accounts payable | (479,216) | 35,097 |
Accrued liabilities | (484,789) | 483,830 |
Right-of-use liabilities - operating leases | (86,031) | (116,716) |
Customer deposits | (20,327) | (1,216,883) |
Net cash provided by (used in) operating activities | (6,476,651) | (9,448,022) |
Cash flow from investing activities: | ||
Purchase of property and equipment | (333,619) | (223,632) |
Proceeds from sale of property and equipment | 89,000 | 0 |
Net cash used by investing activities | (244,619) | (223,632) |
Cash flow from financing activities: | ||
Repayment of notes payable | (69,438) | (4,764) |
Proceeds from issuance of common stock from public offering, net of issuance costs of $1,910,816 | 0 | 18,089,184 |
Proceeds from exercise of stock options | 25,000 | 15,000 |
Net cash (used) provided by financing activities | (44,438) | 18,099,420 |
NET CHANGE IN CASH AND RESTRICTED CASH | (6,765,708) | 8,427,766 |
CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD | 11,537,842 | 5,572,199 |
CASH AND RESTRICTED CASH AT END OF PERIOD | 4,772,134 | 13,999,965 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 2,294 | 3,060 |
Cash paid for income taxes | 0 | 0 |
Non-cash transactions: | ||
Acquisition of property and equipment with notes payable | $ 96,024 | $ 0 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Cash Flows [Abstract] | ||
Payments of Stock Issuance Costs | $ 1,910,816 | $ 1,910,816 |
ORGANIZATION, NATURE OF OPERATI
ORGANIZATION, NATURE OF OPERATIONS AND GOING CONCERN | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
ORGANIZATION, NATURE OF OPERATIONS AND GOING CONCERN | NOTE 1 – ORGANIZATION, NATURE OF OPERATIONS AND GOING CONCERN Organization and Nature of Operations Volcon, Inc. (“Volcon” or the “Company”) was formed on February 21, 2020, as a Delaware corporation, under the name Frog ePowersports, Inc. The Company was renamed Volcon, Inc. on October 1, 2020. Volcon designs and sells all-electric off-road powersport vehicles. On January 5, 2021, the Company created Volcon ePowersports, LLC (“Volcon LLC”), a Colorado wholly-owned subsidiary of the Company, to sell Volcon vehicles and accessories in the United States. Volcon LLC is no longer used for selling vehicles and accessories. Going Concern The accompanying interim consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has recurring losses and has generated negative cash flows from operations since inception. In August 2022, the Company ceased manufacturing the Grunt motorcycle in Round Rock, Texas and has outsourced all manufacturing of its vehicles to third-parties. Further, the Company has, or plans to, outsource the manufacturing of all its future vehicles to third-parties for the foreseeable future. The Company has also outsourced certain design and prototype services of its vehicles to third-parties. In September 2022, management reduced headcount and employee related costs in its product development and administrative departments to reduce operating costs. Also in August 2022, the Company received net proceeds of approximately $ 22.3 million Management anticipates that our cash on hand as of March 31, 2023 plus the cash expected to be generated from operations will not be sufficient to fund planned operations and maintain required cash balances for the Convertible Notes beyond one year from the date of the issuance of the financial statements as of and for the three months ended March 31, 2023. There can be no assurance that such additional funding, if needed, would be available to the Company on acceptable terms, or at all. These factors raise substantial doubt regarding our ability to continue as a going concern. Due to these conditions, this raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that may result should the Company be unable to continue as a going concern. Impact of COVID-19 The outbreak of the 2019 novel coronavirus disease (“COVID-19”), which was declared a global pandemic by the World Health Organization on March 11, 2020, and the related responses by public health and governmental authorities to contain and combat its outbreak and spread, has severely impacted the U.S. and world economies. Economic recessions, including those brought on by the COVID-19 outbreak, may have a negative effect on the demand for the Company’s products and the Company’s operating results. The range of possible impacts on the Company’s business from the coronavirus pandemic could include: (i) changing demand for the Company’s products; (ii) potential disruption to the Company’s supply chain and distribution network; and (iii) disruption in the production of the Company’s vehicles by third parties due to employee illness or government regulations regarding social distancing and workplace requirements. Impact of Russia and Ukraine Conflict |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Unaudited Financial Information The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission ("SEC") on March 7, 2023. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been omitted from this report on Form 10-Q pursuant to the rules and regulations of the SEC. Results for the interim periods in this report are not necessarily indicative of future financial results and have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly our interim consolidated financial statements as of March 31, 2023, and for the three ended March 31, 2023 and 2022. These adjustments are of a normal recurring nature and consistent with the adjustments recorded to prepare the annual audited consolidated financial statements as of December 31, 2022. Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts, transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities as of the dates of the financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, actual results could differ significantly from those estimates. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include short-term investments with original maturities of 90 days or less at the date of purchase. The recorded value of our cash and cash equivalents approximates their fair value. There were no cash equivalents as of March 31, 2023 or December 31, 2022. Restricted cash includes cash restricted as collateral for the Company’s corporate credit cards and a letter of credit with the Company’s bank. Cash at March 31, 2023 is $ 4,220,884 551,250 Revenue Recognition For sales of the Grunt motorcycle directly to consumers, revenue was recognized when the Company transferred control of the product to the customer and the 14-day acceptance period had expired, or earlier acceptance had been received from the customer. Sales directly to consumers were completed as of June 1, 2022. Beginning in February 2023 the Company began selling the Brat EBike directly to consumers in addition to dealers, revenue for direct to consumer sales is recognized when transfer of control of the product is made to the consumer. For sales to dealers or distributors revenue is recognized when transfer of control of the product is made as there is no acceptance period or right of return. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring control of vehicles, parts, and accessories. Consideration that is received in advance of the transfer of goods is recorded as customer deposits until delivery has occurred or the customer cancels their order and the consideration is returned to the customer. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. The Company’s sales do not have a financing component. Sales promotions and incentives. Shipping and handling charges and costs. Product Warranties The Company provides a one-year warranty on vehicles, and a two-year warranty on the battery pack. The Company accrues warranty reserves at the time revenue is recognized. Warranty reserves include the Company’s best estimate of the projected cost to repair or to replace any items under warranty, based on actual warranty experience as it becomes available and other known factors that may impact the evaluation of historical data. The Company reviews its reserves quarterly to ensure that the accruals are adequate to meet expected future warranty obligations and will adjust estimates as needed. Factors that could have an impact on the warranty reserve include the following: changes in manufacturing quality, shifts in product mix, changes in warranty coverage periods, product recalls and changes in sales volume. Warranty expense is recorded as a component of cost of goods sold in the statement of operations and is recognized as a current liability. Inventory and Inventory Deposits Inventories and prepaid inventory deposits are stated at the lower of cost (first-in, first-out method) or net realizable value. Certain vendors require the Company to pay an upfront deposit before they will manufacture and ship our parts or accessories. These payments are classified as prepaid inventory deposits on the balance sheet until title and risk of loss transfers to the Company, at which time they are classified as inventory. Raw materials inventory costs include the cost of parts, including duties, tariffs and shipping. Work in process and finished goods include the cost of parts, labor and manufacturing overhead costs associated with the assembly of the vehicle. Finished goods also include accessories for the vehicle and branded merchandise such as hats and shirts. Through August 2022 the Company assembled the Grunt motorcycle in a leased facility. The Company ceased assembly operations at the end of August and outsourced the assembly of the Grunt to a third-party. Subsequent March 31, 2023, the Company transferred substantially all of its raw materials and work-in-process inventory for the Grunt to the third-party manufacturer. Title to the inventory transferred to the third-party manufacturer and it will provide the Company with a credit towards future purchases of finished goods once it begins production of the Grunt EVO. Property and Equipment Property and equipment are valued at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows: Schedule of estimated useful lives for property, plant and equipment Category Estimated Machinery, tooling and equipment 3-7 years Vehicles 5 years Internal use manufactured vehicles 1 year Furniture & Fixtures 5 years Computers 3 years Leasehold improvements are depreciated over the shorter period of their estimated useful life or term of the lease. Intangible Assets Long-Lived Assets The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the historical carrying cost value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to the carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Leases Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component. ASC 842 defines initial direct costs as only the incremental costs of signing a lease. Initial direct costs related to leasing that are not incremental are expensed as general and administrative expenses in our statements of operations. The Company’s operating lease agreements primarily consist of leased real estate and are included within ROU assets – operating leases and ROU lease liabilities – operating leases on the balance sheets. The Company’s lease agreements may include options to extend the lease, which are not included in minimum lease payments unless they are reasonably certain to be exercised at lease commencement. The Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Research and Development Expenses The Company records research and development expenses in the period in which they are incurred as a component of product development expenses. Income Taxes Deferred taxes are determined utilizing the "asset and liability" method, whereby deferred tax asset and liability account balances are determined based on the differences between financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, when it's more likely than not that deferred tax assets will not be realized in the foreseeable future. Deferred tax liabilities and assets are classified as current or non-current based on the underlying asset or liability or if not directly related to an asset or liability based on the expected reversal dates of the specific temporary differences. Fair Value of Financial Instruments The Company discloses fair value measurements for financial and non-financial assets and liabilities measured at fair value. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but are corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. Stock-Based Compensation The Company has a stock-based incentive award plan for employees, consultants and directors. The Company measures stock-based compensation at the estimated fair value on the grant date and recognizes the amortization of stock-based compensation expense on a straight-line basis over the requisite service period, or when it is probable criteria will be achieved for performance-based awards. Fair value is determined based on assumptions related to the fair value of the Company common stock, stock volatility and risk-free rate of return. The Company has elected to recognize forfeitures when realized. Concentration Risk The Company outsources certain portions of product design and development for its vehicles to third parties. In addition, the Company has outsourced the manufacturing of all of its vehicles to third-party manufacturers, including one manufacturer for three of its vehicles and this third-party is also performing product design and development services on these vehicles. One supplier provides the battery and drivetrain components for the Company’s utility terrain vehicle, the Stag. The components are critical to the operation of the Stag. Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 effective January 1, 2023. The Company determined that the update applied to trade receivables, but that there was no material impact to the consolidated financial statements from the adoption of ASU 2016-13. From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board or other standard setting bodies that the Company adopts as of the specified effective date. The Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on the Company’s financial position or results of operations upon adoption. |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 3 – INVENTORY Inventory consists of the following: Schedule of inventory March 31, 2023 December 31, 2022 Raw materials $ 2,827,402 $ 3,060,160 Work in process 460,031 439,839 Finished goods 2,833,315 2,145,884 Total inventory $ 6,120,748 $ 5,645,883 The Company has purchase commitments for future payments due for inventory where initial deposits were paid as of March 31, 2023. The total additional payments due subsequent to March 31, 2023 are $ 679,646 . |
LONG _ LIVED ASSETS
LONG – LIVED ASSETS | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
LONG – LIVED ASSETS | NOTE 4 – LONG – LIVED ASSETS Property and Equipment Property and equipment consist of the following: Schedule of property and equipment March 31, 2023 December 31, 2022 Machinery, tooling and equipment $ 525,728 $ 352,137 Vehicles 213,528 156,648 Internal use manufactured vehicles 274,385 274,385 Fixtures & furniture 90,768 50,768 Leasehold improvements 44,663 44,663 Computers 234,898 228,671 1,383,970 1,107,272 Less: Accumulated depreciation (486,371 ) (505,506 ) Total property and equipment $ 897,599 $ 601,766 Depreciation expense for the three months ended March 31, 2023 and 2022 wa s $ 50,388 111,527 |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 5 – NOTES PAYABLE Notes Payable In December 2020, the Company entered into a financing arrangement for $ 75,702 8.64 1,211 72 30,942 7.64 753 48 In the three months ended March 31, 2023, the Company entered into two financing arrangements to purchase two vehicles. The total principal of these arrangements is $ 96,057 11.44 8.63 1,923 60 72 The following table provides the maturities of notes payable as of March 31, 2023: Schedule of maturities for notes payable Remainder of 2023 $ 17,304 2024 23,073 2025 23,073 2026 23,073 2027 23,073 2028 11,913 2029 1,816 Total future payments 123,325 Less: Interest (27,953 ) Total notes payable 95,372 Less current portion (14,200 ) Long-term notes payable $ 81,172 |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 3 Months Ended |
Mar. 31, 2023 | |
Convertible Notes | |
CONVERTIBLE NOTES | NOTE 6 - CONVERTIBLE NOTES 27,173,913 2.25 12,077,295 8.0 10 9,057,971 2.85 22,300,321 The Convertible Note and Note Warrant holders (collectively the “Holders”) do not have voting rights to the extent they have not converted their notes or exercised their warrants. The Holders do participate in any dividends or distributions of assets made by the Company to common stockholders based on the number of shares their notes can convert into or the number of shares they would receive if all warrants were exercised. The Convertible Notes contain certain conversion limitations, providing that no conversion may be made if, after giving effect to the conversion, the holder, together with any of its affiliates, would own in excess of 9.99% of the Company’s outstanding shares of common stock after giving effect to such conversion. The Company can force conversion of the Convertible Notes at any time if the weighted average price of the Company’s common stock for ten consecutive trading days equals or exceeds $3.50, subject to the share limitations described above. In addition to default interest of 10% accruing on the Convertible Notes, the holders may require the Company to redeem a portion or all of the outstanding Convertible Notes. Events of default for the Convertible Notes are defined in the note agreements and include the following: · Failure of the Company to file a registration statement, and have declared effective to register the shares of the Company’s common stock within a specified period (the Company has met this requirement as of September 26, 2022) · Suspension of trading, or failure to be listed, of the Company’s common stock on an eligible market, as defined, for a period of two consecutive trading days or an aggregate of ten trading days in a 365 day period · Failure to deliver shares of the Company’s common stock within five days following a conversion notification · Failure to reserve shares of the Company’s common stock for the conversion of the Convertible Notes and Note Warrants · Any acceleration prior to maturity of any indebtedness of the Company, declaration of bankruptcy, or court ordered bankruptcy · Final judgment or judgments for payment aggregating in excess of $ 250,000 · Breach of any representation, warranty or covenant by the Company to the transaction documents of the Convertible Notes and Note Warrants · Any material damage to, or loss, theft or destruction of a material amount of the property of the Company · Failure to remove any restrictive legends on any shares of the Company’s common stock issued to the holders of the Convertible Notes · Electronic transfer of shares of the Company’s common stock is not available As of March 31,2023, the Company is in compliance with all covenants. The Convertible Notes require the Company to have unrestricted and unencumbered cash on deposit of $10,000,000 if the outstanding principal (and interest, if any) of the Convertible Notes is $15,000,000 or greater as of September 30, 2023 and December 31, 2023. The cash on deposit requirement is reduced dollar for dollar to the extent that the outstanding principal (and interest, if any) of the Convertible Notes is less than $15,000,000 on each of these dates. The Note Warrants expire on August 24, 2027. The Note Warrants contain certain conversion limitations, providing that a holder thereof may not exercise such Note Warrant to the extent that, if after giving effect to such conversion, the holder or any of its affiliates would beneficially own in excess of 4.99% of the outstanding shares of the Company’s common stock immediately after giving effect to such exercise. The Note Warrants provide the holders the right to exercise the warrants on a non-cash basis if the Company does not have an effective registration statement for the underlying shares of common stock. The Company evaluated the provisions of the Note Warrants and concluded that they should be classified as equity. The Company incurred debt issuance costs of $ 3,316,409 616,730 15,122,345 6,561,247 27,173,913 39.6 The following is a summary of the Convertible Notes as of March 31, 2023: Summary of convertible notes Principal amount $ 27,173,913 Unamortized discount and issuance costs (8,043,529 ) Net carrying amount $ 19,130,384 Fair value (Level 2) $ 24,889,879 Interest expense recorded for the three months ended March 31, 2023 was $ 1,776,636 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 – RELATED PARTY TRANSACTIONS During 2022, the Company issued purchase orders and made prepayments for prototype parts of $ 21,860 In November 2020, the Company entered into an operating lease with an entity controlled by the Company’s two founders for its future headquarters and production facility in Liberty Hill, Texas. The lease had a lease term of 5 years, and monthly payments ranging from approximately $15,000 per month to $17,000 per month over the lease term and gave the Company access to the land for use in testing its vehicles prior to the construction of any facilities. In February 2021, the Company entered into an amendment of the lease related to its future headquarters to expand the leased premises. The Company paid an additional security deposit of $139,230 and additional prepaid rent of $315,588. The total minimum lease payments under the amended lease totaled approximately $3,930,170. In October 2021, the Company began discussions for an additional amendment to the lease, in anticipation of manufacturing the Stag at this location, which would have resulted in the monthly payment increasing to $100,000 for the first year of the lease and increasing annually throughout the term of the lease to $107,000 in the final year. Monthly payments for the initial lease and the amended agreement would have begun at the time a certificate of occupancy was received by the landlord. The Company evaluated the cost of this facility in relation to other lower cost options, including having a third-party manufacturer the Stag, and determined that it would be in the best interest of the Company to terminate this lease. On April 27, 2022, the Company informed the landlord that we would be terminating the lease. On May 27, 2022, the landlord notified the Company that the landlord would refund $85,756 of the prepaid rent and security deposit balance of $601,818 paid by the Company. This refund would be paid to the Company once the landlord has sold the land and the landlord will release the Company from any remaining obligations under the lease and amendments. The unrefunded portion of the prepaid rent and security deposit relates to some survey, architecture and construction design costs that were incurred by the landlord prior to the Company terminating the lease. The Company has recognized a loss on the termination of this lease of $ 247,525 Total amortization expense for the right-of-use asset recorded for the initial lease for the three months ended March 31, 2022 $ 27,212 In June 2021, the Company entered into an agreement with a company controlled by the Company’s Chairman and co-founder to lease office space for $2,000 per month for a period of one year. In May 2022, the Company informed the landlord that it would terminate this lease, and the landlord confirmed that the lease terminated effective September 1, 2022. Total expense recorded for this lease for the three months ended March 31, 2022 was $6,000. On August 28, 2020, the Company entered into consulting agreements with Pink Possum, LLC (“Pink Possum”) an entity controlled by Mr. Okonsky, and Highbridge Consultants, LLC (“Highbridge”), an entity controlled by Mr. Adrian James, a co-founder of the Company, pursuant to which Messrs. Okonsky and James provide the Company with services. In consideration for entering into the consulting agreements, the Company issued the two entities ten-year warrants to purchase the Company’s common stock at an exercise price of $0.004 per share. The number of shares of common stock issuable pursuant to the warrants was based on the number of shares of the Company’s common stock outstanding at the time of exercise and provided that Pink Possum and Highbridge would receive 18.75% and 25%, respectively, of the Company’s shares of common stock outstanding at the time of exercise on a fully diluted basis. On March 26, 2021 and March 25, 2021, respectively, Pink Possum and Highbridge entered into amendments to the consulting agreements agreeing to exchange the original warrants for new ten-year warrants to purchase 4,750,000 6,250,000 0.98 5,507,575 In addition, pursuant to the consulting agreements, upon the occurrence of a Fundamental Transaction (as defined below) for an aggregate gross sales price of $100.0 million or more, each entity will receive a cash payment equal to 1% of such gross sales price. For the purposes of the consulting agreements, “Fundamental Transaction” means any of the following: (i) a consolidation or merger involving the Company if the holders of the voting securities of the Company that are outstanding immediately prior to the consummation of such consolidation or merger do not, immediately after the consummation of such consolidation or merger, hold voting securities that collectively possess at least a majority of the voting power of all the outstanding securities of the surviving entity of such consolidation or merger or such surviving entity’s parent entity; (ii) a transfer or issuance (in a single transaction or series of related transactions) by one or more of the Company and its stockholders to one person or to any group of persons acting in concert, of shares of the Company’s capital stock then collectively possessing 50% or more of the voting power of all then outstanding shares of the Company’s capital stock (computed on an as-converted to common stock basis); or (iii) any sale, license, lease, assignment or other disposition of all or substantially all of the assets of the Company. Furthermore, commencing upon the completion of the Company’s initial public offering of the shares of our common stock, if the Company’s market capitalization exceeds $300.0 million for a period of 21 consecutive trading days, each of the entities will receive an additional cash payment equal to $15.0 million; provided that the Company will have the right, in its sole discretion, to make the foregoing $15.0 million payment by the issuance of shares of the Company’s common stock. The foregoing amounts will be payable to the entities if the above milestones occur any time prior to the ten-year anniversary of the original consulting agreements, or August 28, 2030. In December 2022, the Company entered into an employment agreement with Mr. Okonsky whereby Mr. Okonsky became an employee on January 2, 2023 and the consulting agreement with Pink Possum was terminated. However, the warrants to Pink Possum, and the provisions for a Fundamental Transaction and the market capitalization thresholds and related payments owed to Pink Possum if these were to occur remain in effect subsequent to the employment agreement. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY The Company is authorized to issue up to 100,000,000 0.00001 250,000,000 5,000,000 0.00001 Common Stock On February 1, 2022, the Company sold 6,666,667 18,089,117 1,910,816 333,334 As discussed in Note 6 above, the Company issued the Convertible Notes and Note Warrants, along with the warrants to the placement agent in August 2022. The Company received consent from the underwriter to issue such securities. In addition, the Company was required to reserve 21,135,267 603,864 Warrants As discussed in Note 6, the Company issued the Note Warrants, which are fully vested, to purchase 9,057,971 2.85 603,864 3.5625 February 24, 2028 The Company valued all of these warrants using the closing price of the Company’s common stock on August 24, 2022 of $2.44, volatility of 79.81% based on peer companies, risk free interest rate of 3.03%, no dividends and an estimated life of 2.5 years. During three months ended March 31, 2023 and 2022, the Company recognized expense of $ 0 7,302 The following is the activity related to common stock warrants during the three months ended March 31, 2023: Schedule of warrant activity Common Stock Warrants Shares Weighted Weighted Intrinsic Value Outstanding at January 1, 2023 15,085,618 $ 2.33 Granted – $ – Canceled – $ – Expired – $ – Exercised – $ – Outstanding at March 31, 2023 15,085,618 $ 2.33 5.55 $ 2,593,084 Exercisable at March 31, 2023 15,085,618 $ 2.33 5.55 $ 2,593,084 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 9 – STOCK-BASED COMPENSATION In January 2021, the Company’s board of directors adopted the Volcon, Inc. 2021 Stock Plan, (the “2021 Plan”). The 2021 Plan is a stock-based compensation plan that provides for discretionary grants of stock options, stock awards, and restricted stock unit awards to employees, members of the board of directors and consultants (including restricted stock units issued prior to the adoption of the plan as further discussed below). The Company initially reserved a total of 3,000,000 4,000,000 2,826,282 Restricted Stock Units The following is the restricted stock unit activity for the three months ended March 31,2023 Schedule of restricted stock unit activity Outstanding January 1, 2023 75,000 Granted – Vested (1) (25,000 ) Canceled – Outstanding March 31, 2023 50,000 (1) 25,000 RSUs were subject to cancellation due to termination of employment. However, the Company entered into a modification to allow the employee to fully vest in these RSUs as part of a severance agreement. The Company recorded additional expense of $31,487 during the three months ended March 31, 2023 related to this modification. In January 2022, the Company modified the vesting terms of 100,000 RSUs that had vested as of December 31, 2021 to extend the vesting through May 15, 2022. The Company granted an additional 25,000 1,126,250 For the three months ended March 31, 2023 and 2022, the Company recognized expenses for RSUs of $ 53,773 316,887 67,902 Performance Shares On March 1, 2022, the Compensation Committee of the board of directors approved a grant of 44,623 82,050 2,876 In 2022 the compensation committee approved reserving 250,000 154,983 138,859 661 15,463 257,717 In addition, the compensation committee also approved reserving 250,000 Stock Options The following summarizes activity relating to common stock options to employees and consultants for services during the three months ended March 31, 2023: Schedule of stock option activity Common Stock Options Shares Weighted Weighted Intrinsic Value Outstanding at January 1, 2023 3,288,830 $ 3.08 Granted 238,000 $ 1.46 Forfeited (96,334 ) $ 2.96 Exercised (25,000 ) $ 1.00 Outstanding at March 31,2023 3,405,496 $ 2.99 8.96 $ 351,239 Exercisable at March 31, 2023 1,143,083 $ 3.10 8.78 $ 155,000 The Company valued the options using the closing stock price of the Company’s common stock on the date of grant, an estimated volatility between 78.5% - 79.5% based on peer companies, risk free interest rate between 3.64% - 3.94%, no dividends and an estimated life of 6 745,943 1,168,926 3,034,245 Total stock-based compensation recorded for the three ended March 31, 2023 and 2022 for all stock based compensation awards, including warrants, has been recorded as follows: Schedule of stock-based compensation expense Three Months March 31, 2023 Three Months March 31, 2022 Cost of Goods Sold $ 206,477 $ 222,507 Sales and Marketing 311,759 273,326 Product Development 208,594 346,144 General and Administrative 303,605 733,188 Total $ 1,057,435 $ 1,575,165 |
LOSS PER COMMON SHARE
LOSS PER COMMON SHARE | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
LOSS PER COMMON SHARE | NOTE 10 – LOSS PER COMMON SHARE The basic net loss per common share is calculated by dividing the Company’s net loss available to common stockholders by the weighted average number of common shares during the year. The diluted net loss per common share is calculated by dividing the Company’s net loss available to common stockholders by the diluted weighted average number of common shares outstanding during the year. The diluted weighted average number of common shares outstanding is the basic weighted number of common shares adjusted for any potentially dilutive debt or equity. Diluted net loss per common share is equal to basic net loss per share due to the Company’s net loss and any potentially issuable shares are anti-dilutive. Schedule of earnings per share Three Months Ended Three Months Ended March 31, 2023 March 31, 2022 Numerator: Net loss $ (7,299,469 ) $ (8,612,345 ) Denominator: Denominator for basic and diluted net loss per common share - weighted average of common shares 24,535,131 21,745,089 Basic and diluted net loss per common share $ (0.30 ) $ (0.40 ) Common shares consisting of shares potentially dilutive as of three month ended March 31, 2023 and 2022 are as follows: Schedule of anti-dilutive shares 2023 2022 Convertible Notes 12,077,295 – Warrants 15,085,618 5,501,293 Stock options 3,405,497 2,369,729 Restricted stock units 50,000 335,000 Total 30,618,410 8,206,022 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11 – INCOME TAXES Deferred taxes are determined by applying the provisions of enacted tax laws and rates for the jurisdictions in which the Company operates to the estimated future tax effects of the differences between the tax basis of assets and liabilities and their reported amounts in the Company's financial statements. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized. Due to losses since inception and for all periods presented, no income tax benefit or expense has been recognized as a full valuation allowance has been established for any tax benefit that would have been recognized for the loss in any period presented. Significant components of the Company's deferred tax assets and liabilities at March 31, 2023 and December 31, 2022 are as follows: Schedule of deferred tax assets and liabilities March 31, 2023 December 31, 2022 Deferred tax assets Net operating losses $ 10,206,155 $ 9,106,430 Depreciation and intangible assets 1,763,042 1,502,868 Research & development credit 1,457,766 1,308,956 Lease liability 304,100 322,167 Inventory 1,283,975 1,290,968 Stock-based compensation 3,196,761 3,103,037 Accrued expenses 416,063 233,284 Capital loss carryover 276,522 261,922 Other 11,962 177,074 Total 18,916,346 17,306,705 Valuation allowance (18,223,498 ) (16,661,612 ) Net deferred tax asset 692,848 645,093 Deferred tax liabilities Prepaid expenses (395,503 ) (328,836 ) Right-of-use assets (297,345 ) (316,257 ) Total net deferred taxes deferred tax liabilities $ – $ – Management currently believes that since the Company has a history of losses it is more likely than not that the deferred tax regarding the loss carry forwards and other temporary differences will not be realized in the foreseeable future. The Company believes that carryforward limitations will be applied to the historical net operating losses due to the recent change of control transition. The Company's cumulative net operating loss carry forward of approximately $ 48.6 million The Company has recorded no liability for income taxes associated with unrecognized tax benefits at the date of adoption and has not recorded any liability associated with unrecognized tax benefits. Accordingly, the Company has not recorded any interest or penalty in regard to any unrecognized benefit. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
LEASES | NOTE 12 – LEASES The components of lease cost for operating leases for the three months ended March 31, 2023 and 2022 were as follows: Schedule of lease cost for operating leases Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Lease Cost Operating lease cost $ 117,249 $ 158,672 Short-term lease cost 59,790 17,120 Variable lease cost – – Sublease income – – Total lease cost $ 177,039 $ 175,792 Supplemental cash flow information related to leases for the three months ended March 31, 2023 and 2022, was as follows: Schedule of supplemental cash flow information related to leases March 31, 2023 March 31, 2022 Other Lease Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 86,031 $ 116,716 Amortization of right of use assets $ 90,057 $ 158,672 The following table summarizes the lease-related assets and liabilities recorded on the balance sheet at March 31, 2023 and December 31, 2022: Schedule of lease-related assets and liabilities March 31, 2023 December 31, 2022 Lease Position Operating Leases: Operating lease right-of-use assets $ 1,415,930 $ 1,505,987 Right-of-use liabilities operating leases short-term 401,553 391,117 Right-of-use liabilities operating leases long-term 1,046,544 1,143,011 Total operating lease liabilities $ 1,448,097 $ 1,534,128 The Company utilizes the incremental borrowing rate in determining the present value of lease payments unless the implicit rate is readily determinable. Schedule of right of use asset and lease liability Lease Term and Discount Rate March 31, 2023 Weighted-average remaining lease term (years): Operating leases 3.4 Weighted-average discount rate: Operating leases 6.05 The following table provides the maturities of lease liabilities at March 31, 2023: Schedule of maturities of lease liabilities Operating Leases Remainder of 2023 $ 345,348 2024 471,638 2025 485,702 2026 340,591 Total future undiscounted lease payments 1,643,279 Less: Interest (195,183 ) Present value of lease liabilities $ 1,448,096 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Interim Unaudited Financial Information | Interim Unaudited Financial Information The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the Securities and Exchange Commission ("SEC") on March 7, 2023. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been omitted from this report on Form 10-Q pursuant to the rules and regulations of the SEC. Results for the interim periods in this report are not necessarily indicative of future financial results and have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly our interim consolidated financial statements as of March 31, 2023, and for the three ended March 31, 2023 and 2022. These adjustments are of a normal recurring nature and consistent with the adjustments recorded to prepare the annual audited consolidated financial statements as of December 31, 2022. |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts, transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of any contingent assets and liabilities as of the dates of the financial statements and the reported amounts of expenses during the reporting periods. Making estimates requires management to exercise judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, actual results could differ significantly from those estimates. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include short-term investments with original maturities of 90 days or less at the date of purchase. The recorded value of our cash and cash equivalents approximates their fair value. There were no cash equivalents as of March 31, 2023 or December 31, 2022. Restricted cash includes cash restricted as collateral for the Company’s corporate credit cards and a letter of credit with the Company’s bank. Cash at March 31, 2023 is $ 4,220,884 551,250 |
Revenue Recognition | Revenue Recognition For sales of the Grunt motorcycle directly to consumers, revenue was recognized when the Company transferred control of the product to the customer and the 14-day acceptance period had expired, or earlier acceptance had been received from the customer. Sales directly to consumers were completed as of June 1, 2022. Beginning in February 2023 the Company began selling the Brat EBike directly to consumers in addition to dealers, revenue for direct to consumer sales is recognized when transfer of control of the product is made to the consumer. For sales to dealers or distributors revenue is recognized when transfer of control of the product is made as there is no acceptance period or right of return. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring control of vehicles, parts, and accessories. Consideration that is received in advance of the transfer of goods is recorded as customer deposits until delivery has occurred or the customer cancels their order and the consideration is returned to the customer. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. The Company’s sales do not have a financing component. Sales promotions and incentives. Shipping and handling charges and costs. |
Product Warranties | Product Warranties The Company provides a one-year warranty on vehicles, and a two-year warranty on the battery pack. The Company accrues warranty reserves at the time revenue is recognized. Warranty reserves include the Company’s best estimate of the projected cost to repair or to replace any items under warranty, based on actual warranty experience as it becomes available and other known factors that may impact the evaluation of historical data. The Company reviews its reserves quarterly to ensure that the accruals are adequate to meet expected future warranty obligations and will adjust estimates as needed. Factors that could have an impact on the warranty reserve include the following: changes in manufacturing quality, shifts in product mix, changes in warranty coverage periods, product recalls and changes in sales volume. Warranty expense is recorded as a component of cost of goods sold in the statement of operations and is recognized as a current liability. |
Inventory and Inventory Deposits | Inventory and Inventory Deposits Inventories and prepaid inventory deposits are stated at the lower of cost (first-in, first-out method) or net realizable value. Certain vendors require the Company to pay an upfront deposit before they will manufacture and ship our parts or accessories. These payments are classified as prepaid inventory deposits on the balance sheet until title and risk of loss transfers to the Company, at which time they are classified as inventory. Raw materials inventory costs include the cost of parts, including duties, tariffs and shipping. Work in process and finished goods include the cost of parts, labor and manufacturing overhead costs associated with the assembly of the vehicle. Finished goods also include accessories for the vehicle and branded merchandise such as hats and shirts. Through August 2022 the Company assembled the Grunt motorcycle in a leased facility. The Company ceased assembly operations at the end of August and outsourced the assembly of the Grunt to a third-party. Subsequent March 31, 2023, the Company transferred substantially all of its raw materials and work-in-process inventory for the Grunt to the third-party manufacturer. Title to the inventory transferred to the third-party manufacturer and it will provide the Company with a credit towards future purchases of finished goods once it begins production of the Grunt EVO. |
Property and Equipment | Property and Equipment Property and equipment are valued at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows: Schedule of estimated useful lives for property, plant and equipment Category Estimated Machinery, tooling and equipment 3-7 years Vehicles 5 years Internal use manufactured vehicles 1 year Furniture & Fixtures 5 years Computers 3 years Leasehold improvements are depreciated over the shorter period of their estimated useful life or term of the lease. |
Intangible Assets | Intangible Assets |
Long-Lived Assets | Long-Lived Assets The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the historical carrying cost value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to the carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. |
Leases | Leases Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company does not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease component associated with that lease component as a single lease component. ASC 842 defines initial direct costs as only the incremental costs of signing a lease. Initial direct costs related to leasing that are not incremental are expensed as general and administrative expenses in our statements of operations. The Company’s operating lease agreements primarily consist of leased real estate and are included within ROU assets – operating leases and ROU lease liabilities – operating leases on the balance sheets. The Company’s lease agreements may include options to extend the lease, which are not included in minimum lease payments unless they are reasonably certain to be exercised at lease commencement. The Company's leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. |
Research and Development Expenses | Research and Development Expenses The Company records research and development expenses in the period in which they are incurred as a component of product development expenses. |
Income Taxes | Income Taxes Deferred taxes are determined utilizing the "asset and liability" method, whereby deferred tax asset and liability account balances are determined based on the differences between financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, when it's more likely than not that deferred tax assets will not be realized in the foreseeable future. Deferred tax liabilities and assets are classified as current or non-current based on the underlying asset or liability or if not directly related to an asset or liability based on the expected reversal dates of the specific temporary differences. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company discloses fair value measurements for financial and non-financial assets and liabilities measured at fair value. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets but are corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
Stock-Based Compensation | Stock-Based Compensation The Company has a stock-based incentive award plan for employees, consultants and directors. The Company measures stock-based compensation at the estimated fair value on the grant date and recognizes the amortization of stock-based compensation expense on a straight-line basis over the requisite service period, or when it is probable criteria will be achieved for performance-based awards. Fair value is determined based on assumptions related to the fair value of the Company common stock, stock volatility and risk-free rate of return. The Company has elected to recognize forfeitures when realized. |
Concentration Risk | Concentration Risk The Company outsources certain portions of product design and development for its vehicles to third parties. In addition, the Company has outsourced the manufacturing of all of its vehicles to third-party manufacturers, including one manufacturer for three of its vehicles and this third-party is also performing product design and development services on these vehicles. One supplier provides the battery and drivetrain components for the Company’s utility terrain vehicle, the Stag. The components are critical to the operation of the Stag. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 effective January 1, 2023. The Company determined that the update applied to trade receivables, but that there was no material impact to the consolidated financial statements from the adoption of ASU 2016-13. From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board or other standard setting bodies that the Company adopts as of the specified effective date. The Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on the Company’s financial position or results of operations upon adoption. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of estimated useful lives for property, plant and equipment | Schedule of estimated useful lives for property, plant and equipment Category Estimated Machinery, tooling and equipment 3-7 years Vehicles 5 years Internal use manufactured vehicles 1 year Furniture & Fixtures 5 years Computers 3 years |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Schedule of inventory March 31, 2023 December 31, 2022 Raw materials $ 2,827,402 $ 3,060,160 Work in process 460,031 439,839 Finished goods 2,833,315 2,145,884 Total inventory $ 6,120,748 $ 5,645,883 |
LONG _ LIVED ASSETS (Tables)
LONG – LIVED ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Schedule of property and equipment March 31, 2023 December 31, 2022 Machinery, tooling and equipment $ 525,728 $ 352,137 Vehicles 213,528 156,648 Internal use manufactured vehicles 274,385 274,385 Fixtures & furniture 90,768 50,768 Leasehold improvements 44,663 44,663 Computers 234,898 228,671 1,383,970 1,107,272 Less: Accumulated depreciation (486,371 ) (505,506 ) Total property and equipment $ 897,599 $ 601,766 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of maturities for notes payable | Schedule of maturities for notes payable Remainder of 2023 $ 17,304 2024 23,073 2025 23,073 2026 23,073 2027 23,073 2028 11,913 2029 1,816 Total future payments 123,325 Less: Interest (27,953 ) Total notes payable 95,372 Less current portion (14,200 ) Long-term notes payable $ 81,172 |
CONVERTIBLE NOTES (Tables)
CONVERTIBLE NOTES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Convertible Notes | |
Summary of convertible notes | Summary of convertible notes Principal amount $ 27,173,913 Unamortized discount and issuance costs (8,043,529 ) Net carrying amount $ 19,130,384 Fair value (Level 2) $ 24,889,879 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Schedule of warrant activity | Schedule of warrant activity Common Stock Warrants Shares Weighted Weighted Intrinsic Value Outstanding at January 1, 2023 15,085,618 $ 2.33 Granted – $ – Canceled – $ – Expired – $ – Exercised – $ – Outstanding at March 31, 2023 15,085,618 $ 2.33 5.55 $ 2,593,084 Exercisable at March 31, 2023 15,085,618 $ 2.33 5.55 $ 2,593,084 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Schedule of restricted stock unit activity | Schedule of restricted stock unit activity Outstanding January 1, 2023 75,000 Granted – Vested (1) (25,000 ) Canceled – Outstanding March 31, 2023 50,000 (1) 25,000 RSUs were subject to cancellation due to termination of employment. However, the Company entered into a modification to allow the employee to fully vest in these RSUs as part of a severance agreement. The Company recorded additional expense of $31,487 during the three months ended March 31, 2023 related to this modification. |
Schedule of stock option activity | Schedule of stock option activity Common Stock Options Shares Weighted Weighted Intrinsic Value Outstanding at January 1, 2023 3,288,830 $ 3.08 Granted 238,000 $ 1.46 Forfeited (96,334 ) $ 2.96 Exercised (25,000 ) $ 1.00 Outstanding at March 31,2023 3,405,496 $ 2.99 8.96 $ 351,239 Exercisable at March 31, 2023 1,143,083 $ 3.10 8.78 $ 155,000 |
Schedule of stock-based compensation expense | Schedule of stock-based compensation expense Three Months March 31, 2023 Three Months March 31, 2022 Cost of Goods Sold $ 206,477 $ 222,507 Sales and Marketing 311,759 273,326 Product Development 208,594 346,144 General and Administrative 303,605 733,188 Total $ 1,057,435 $ 1,575,165 |
LOSS PER COMMON SHARE (Tables)
LOSS PER COMMON SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | Schedule of earnings per share Three Months Ended Three Months Ended March 31, 2023 March 31, 2022 Numerator: Net loss $ (7,299,469 ) $ (8,612,345 ) Denominator: Denominator for basic and diluted net loss per common share - weighted average of common shares 24,535,131 21,745,089 Basic and diluted net loss per common share $ (0.30 ) $ (0.40 ) |
Schedule of anti-dilutive shares | Schedule of anti-dilutive shares 2023 2022 Convertible Notes 12,077,295 – Warrants 15,085,618 5,501,293 Stock options 3,405,497 2,369,729 Restricted stock units 50,000 335,000 Total 30,618,410 8,206,022 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets and liabilities | Schedule of deferred tax assets and liabilities March 31, 2023 December 31, 2022 Deferred tax assets Net operating losses $ 10,206,155 $ 9,106,430 Depreciation and intangible assets 1,763,042 1,502,868 Research & development credit 1,457,766 1,308,956 Lease liability 304,100 322,167 Inventory 1,283,975 1,290,968 Stock-based compensation 3,196,761 3,103,037 Accrued expenses 416,063 233,284 Capital loss carryover 276,522 261,922 Other 11,962 177,074 Total 18,916,346 17,306,705 Valuation allowance (18,223,498 ) (16,661,612 ) Net deferred tax asset 692,848 645,093 Deferred tax liabilities Prepaid expenses (395,503 ) (328,836 ) Right-of-use assets (297,345 ) (316,257 ) Total net deferred taxes deferred tax liabilities $ – $ – |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Schedule of lease cost for operating leases | Schedule of lease cost for operating leases Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Lease Cost Operating lease cost $ 117,249 $ 158,672 Short-term lease cost 59,790 17,120 Variable lease cost – – Sublease income – – Total lease cost $ 177,039 $ 175,792 |
Schedule of supplemental cash flow information related to leases | Schedule of supplemental cash flow information related to leases March 31, 2023 March 31, 2022 Other Lease Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 86,031 $ 116,716 Amortization of right of use assets $ 90,057 $ 158,672 |
Schedule of lease-related assets and liabilities | Schedule of lease-related assets and liabilities March 31, 2023 December 31, 2022 Lease Position Operating Leases: Operating lease right-of-use assets $ 1,415,930 $ 1,505,987 Right-of-use liabilities operating leases short-term 401,553 391,117 Right-of-use liabilities operating leases long-term 1,046,544 1,143,011 Total operating lease liabilities $ 1,448,097 $ 1,534,128 |
Schedule of right of use asset and lease liability | Schedule of right of use asset and lease liability Lease Term and Discount Rate March 31, 2023 Weighted-average remaining lease term (years): Operating leases 3.4 Weighted-average discount rate: Operating leases 6.05 |
Schedule of maturities of lease liabilities | Schedule of maturities of lease liabilities Operating Leases Remainder of 2023 $ 345,348 2024 471,638 2025 485,702 2026 340,591 Total future undiscounted lease payments 1,643,279 Less: Interest (195,183 ) Present value of lease liabilities $ 1,448,096 |
ORGANIZATION, NATURE OF OPERA_2
ORGANIZATION, NATURE OF OPERATIONS AND GOING CONCERN (Details Narrative) | 1 Months Ended |
Aug. 31, 2022 USD ($) | |
Convertible Notes And Warrants [Member] | |
Debt Instrument [Line Items] | |
Proceeds from Issuance of Long-Term Debt | $ 22,300,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Machinery Tooling And Equipment [Member] | |
Property and equipment useful life | 3-7 years |
Vehicles [Member] | |
Property and equipment useful life | 5 years |
Internal Use Manufactured Vehicles [Member] | |
Property and equipment useful life | 1 year |
Furniture and Fixtures [Member] | |
Property and equipment useful life | 5 years |
Computers [Member] | |
Property and equipment useful life | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Accounting Policies [Abstract] | ||
Cash | $ 4,220,884 | $ 10,986,592 |
Restricted cash | $ 551,250 | $ 551,250 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,827,402 | $ 3,060,160 |
Work in process | 460,031 | 439,839 |
Finished goods | 2,833,315 | 2,145,884 |
Total inventory | $ 6,120,748 | $ 5,645,883 |
INVENTORY (Details Narrative)
INVENTORY (Details Narrative) | Mar. 31, 2023 USD ($) |
Inventory Disclosure [Abstract] | |
Contractual Obligation | $ 679,646 |
LONG - LIVED ASSETS (Details -
LONG - LIVED ASSETS (Details - Property and Equipment) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | $ 1,383,970 | $ 1,107,272 |
Less: Accumulated depreciation | (486,371) | (505,506) |
Total property, plant and equipment | 897,599 | 601,766 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | 525,728 | 352,137 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | 213,528 | 156,648 |
Internal Use Manufactured Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | 274,385 | 274,385 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | 90,768 | 50,768 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | 44,663 | 44,663 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | $ 234,898 | $ 228,671 |
LONG _ LIVED ASSETS (Details Na
LONG – LIVED ASSETS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 50,388 | $ 111,527 |
NOTES PAYABLE (Details - Debt m
NOTES PAYABLE (Details - Debt maturities) | Mar. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2023 | $ 17,304 |
2024 | 23,073 |
2025 | 23,073 |
2026 | 23,073 |
2027 | 23,073 |
2028 | 11,913 |
2029 | 1,816 |
Total future payments | 123,325 |
Less: Interest | (27,953) |
Total notes payable | 95,372 |
Less current portion | (14,200) |
Long-term notes payable | $ 81,172 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | ||
Apr. 30, 2021 | Dec. 31, 2020 | Mar. 31, 2023 | |
Debt Instrument [Line Items] | |||
Principal amount | $ 27,173,913 | ||
Financing Arrangement [Member] | Vehicles [Member] | |||
Debt Instrument [Line Items] | |||
Monthly payments | 1,923 | ||
Principal amount | $ 96,057 | ||
Financing Arrangement [Member] | Vehicles [Member] | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | 11.44% | ||
Debt payment term | 60 months | ||
Financing Arrangement [Member] | Vehicles [Member] | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Interest rate | 8.63% | ||
Debt payment term | 72 months | ||
Vehicle Financing [Member] | |||
Debt Instrument [Line Items] | |||
Financing lease liability | $ 75,702 | ||
Interest rate | 8.64% | ||
Monthly payments | $ 1,211 | ||
Debt payment term | 72 months | ||
Vehicle Financing 2 [Member] | |||
Debt Instrument [Line Items] | |||
Financing lease liability | $ 30,942 | ||
Interest rate | 7.64% | ||
Monthly payments | $ 753 | ||
Debt payment term | 48 months |
CONVERTIBLE NOTES (Details)
CONVERTIBLE NOTES (Details) | Mar. 31, 2023 USD ($) |
Convertible Notes | |
Principal amount | $ 27,173,913 |
Unamortized discount and issuance costs | (8,043,529) |
Net carrying amount | 19,130,384 |
Fair value (Level 2) | $ 24,889,879 |
CONVERTIBLE NOTES (Details Narr
CONVERTIBLE NOTES (Details Narrative) - USD ($) | 3 Months Ended | |
Aug. 24, 2022 | Mar. 31, 2023 | |
Debt Instrument [Line Items] | ||
Debt Instrument, Face Amount | $ 27,173,913 | |
Interest rate | 10% | |
Aggregate excess amount | 250,000 | |
Interest expense | 1,776,636 | |
Warrant [Member] | ||
Debt Instrument [Line Items] | ||
Debt issuance costs | $ 22,300,321 | |
Senior Convertible Notes [Member] | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Face Amount | $ 27,173,913 | |
Debt Instrument, Convertible, Conversion Price | $ 2.25 | |
Number of shares issued if converted | 12,077,295 | |
Interest rate | 8% | |
Note Warrants [Member] | ||
Debt Instrument [Line Items] | ||
Warrants issued shares | 9,057,971 | |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.85 | |
Convertible Notes [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate | 39.60% | |
Debt Issuance Costs, Gross | $ 3,316,409 | |
Proceeds from Convertible Debt | 15,122,345 | |
Interest Payable | 27,173,913 | |
Convertible Notes [Member] | Note Warrants [Member] | ||
Debt Instrument [Line Items] | ||
Debt Issuance Costs, Gross | 616,730 | |
Proceeds from Convertible Debt | $ 6,561,247 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Dec. 20, 2021 | Mar. 26, 2021 | Mar. 25, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||||||
Amortization expense | $ 27,212 | |||||
Pink Possum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Warrants issued, shares | 4,750,000 | 6,250,000 | ||||
Exercise price | $ 0.98 | $ 0.98 | ||||
Highbridge [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shares issued | 5,507,575 | |||||
Liberty Hill Texas [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Gain (Loss) on Termination of Lease | $ 247,525 | |||||
Pink Possum [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Purchase orders and prepayments | $ 21,860 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - Common Stock Warrants [Member] | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Class of Warrant or Right, Outstanding, Beginning | shares | 15,085,618 |
Weighted average exercise price, outstanding, ,beginning | $ / shares | $ 2.33 |
Granted | shares | 0 |
Weighted average exercise price, granted | $ / shares | $ 0 |
Cancelled | shares | 0 |
Weighted average exercise price, Canceled | $ / shares | $ 0 |
Expired | shares | 0 |
Weighted average exercise price, expired | $ / shares | $ 0 |
Exercised | shares | 0 |
Weighted average exercise price, exercised | $ / shares | $ 0 |
Class of Warrant or Right, Outstanding ,Ending | shares | 15,085,618 |
Weighted average exercise price, outstanding ,ending | $ / shares | $ 2.33 |
Weighted average remaining life in years | 5 years 6 months 18 days |
Intrinsic Value, outstanding | $ | $ 2,593,084 |
Exercisable | shares | 15,085,618 |
Weighted average exercise price, exercisable | $ / shares | $ 2.33 |
Weighted average remaining life in years, Exercisable | 5 years 6 months 18 days |
Intrinsic Value, exercisable | $ | $ 2,593,084 |
STOCKHOLDERS_ EQUITY (Details N
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) | 3 Months Ended | ||||
Feb. 01, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Aug. 24, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | |||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 | |||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |||
Payments of Stock Issuance Costs | $ 1,910,816 | $ 1,910,816 | |||
Other expense | $ 1,057,435 | 1,575,165 | |||
Common Stock Warrants [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.33 | $ 2.33 | |||
Other expense | $ 0 | $ 7,302 | |||
Note Warrants [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Warrants issued shares | 9,057,971 | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.85 | ||||
Note Warrants [Member] | Placement Agent [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Warrants issued shares | 603,864 | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 3.5625 | ||||
Warrants and Rights Outstanding, Maturity Date | Feb. 24, 2028 | ||||
Reserved For Conversion Of Notes And Exercise Of Warrants [Member] | Common Stock [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Number of shares reserved for future issuance | 21,135,267 | ||||
Reserved For Conversion Of Notes And Exercise Of Warrants [Member] | Warrants [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Number of shares reserved for future issuance | 603,864 | ||||
Public Offering [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | 6,666,667 | ||||
Proceeds from Issuance of Common Stock | $ 18,089,117 | ||||
Payments of Stock Issuance Costs | $ 1,910,816 | ||||
Common Stock [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Increase in authorized shares | 250,000,000 | ||||
Stock Issued During Period, Shares, New Issues | 6,666,667 | ||||
Common Stock [Member] | Public Offering [Member] | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Warrants issued shares | 333,334 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details - Restricted stock unit activity) - Restricted Stock Units (RSUs) [Member] - shares | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2022 | Mar. 31, 2023 | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Outstanding, Beginning Balance | 75,000 | ||
Granted | 25,000 | 0 | |
Vested | [1] | (25,000) | |
Cancelled | 0 | ||
Outstanding, Ending Balance | 50,000 | ||
[1]25,000 RSUs were subject to cancellation due to termination of employment. However, the Company entered into a modification to allow the employee to fully vest in these RSUs as part of a severance agreement. The Company recorded additional expense of $31,487 during the three months ended March 31, 2023 related to this modification. |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details - Stock option activity) - Equity Option [Member] | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Outstanding at beginning of period | shares | 3,288,830 |
Outstanding at beginning of period | $ / shares | $ 3.08 |
Granted | shares | 238,000 |
Granted | $ / shares | $ 1.46 |
Forfeited | shares | (96,334) |
Forfeited | $ / shares | $ 2.96 |
Exercised | shares | (25,000) |
Exercised | $ / shares | $ 1 |
Outstanding at end of period | shares | 3,405,496 |
Outstanding at end of period | $ / shares | $ 2.99 |
Weighted average remaining life in years | 8 years 11 months 15 days |
Intrinsic Value | $ | $ 351,239 |
Exercisable at end of period | shares | 1,143,083 |
Weighted average exercise price, Exercisable | $ / shares | $ 3.10 |
Weighted average remaining life in years, exercisable | 8 years 9 months 10 days |
Intrinsic value, exercisable | $ | $ 155,000 |
STOCK-BASED COMPENSATION (Det_3
STOCK-BASED COMPENSATION (Details - Stock based compensation) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stock-based compensation | $ 1,057,435 | $ 1,575,165 |
Cost Of Goods Sold [Member] | ||
Stock-based compensation | 206,477 | 222,507 |
Sales And Marketing [Member] | ||
Stock-based compensation | 311,759 | 273,326 |
Product Development [Member] | ||
Stock-based compensation | 208,594 | 346,144 |
General And Administrative [Member] | ||
Stock-based compensation | $ 303,605 | $ 733,188 |
STOCK-BASED COMPENSATION (Det_4
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||||
Feb. 06, 2023 | Mar. 31, 2022 | Jan. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Jul. 26, 2022 | Jan. 31, 2021 | |
Class of Stock [Line Items] | ||||||||
Stock based compensation | $ 1,057,435 | $ 1,575,165 | ||||||
Estimated life | 6 years | |||||||
Performance Based Shares [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares granted | 44,623 | |||||||
Stock based compensation | $ 82,050 | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 2,876 | |||||||
Restricted Stock Units (RSUs) [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares granted | 25,000 | 0 | ||||||
Stock based compensation | $ 53,773 | 316,887 | ||||||
Share-Based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | 67,902 | |||||||
Restricted Stock Units (RSUs) [Member] | Additional R S Us Vested [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stock based compensation | $ 1,126,250 | |||||||
Equity Option [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Stock based compensation | 745,943 | $ 1,168,926 | ||||||
Stock based compensation | $ 3,034,245 | |||||||
2021 Stock Plan [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock shares reserved | 4,000,000 | 3,000,000 | ||||||
Shares granted to employees | 2,826,282 | |||||||
2021 Stock Plan [Member] | Performance Milestones For 2022 [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares granted | 154,983 | |||||||
Stock based compensation | $ 257,717 | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Forfeited in Period | 661 | |||||||
Deferred Compensation Arrangement with Individual, Common Stock Reserved for Future Issuance | 250,000 | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Shares Issued | 138,859 | |||||||
Share-Based Payment Arrangement, Shares Withheld for Tax Withholding Obligation | 15,463 | |||||||
2021 Stock Plan [Member] | Performance Milestones For 2023 [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Deferred Compensation Arrangement with Individual, Common Stock Reserved for Future Issuance | 250,000 | |||||||
2021 Stock Plan [Member] | Performance Based Shares [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Shares granted to employees | 2,876 |
LOSS PER COMMON SHARE (Details
LOSS PER COMMON SHARE (Details - Earnings Per Share) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net loss | $ (7,299,469) | $ (8,612,345) |
Denominator: | ||
Denominator for basic and diluted net loss per common share - weighted average of common shares | 24,535,131 | 21,745,089 |
Basic and diluted net loss per common share | $ (0.30) | $ (0.40) |
LOSS PER COMMON SHARE (Detail_2
LOSS PER COMMON SHARE (Details - Antidilutive shares) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares | 30,618,410 | 8,206,022 |
Convertible Notes [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares | 12,077,295 | 0 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares | 15,085,618 | 5,501,293 |
Equity Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares | 3,405,497 | 2,369,729 |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive shares | 50,000 | 335,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets | ||
Net operating losses | $ 10,206,155 | $ 9,106,430 |
Depreciation and intangible assets | 1,763,042 | 1,502,868 |
Research & development credit | 1,457,766 | 1,308,956 |
Lease liability | 304,100 | 322,167 |
Inventory | 1,283,975 | 1,290,968 |
Stock-based compensation | 3,196,761 | 3,103,037 |
Accrued expenses | 416,063 | 233,284 |
Capital loss carryover | 276,522 | 261,922 |
Other | 11,962 | 177,074 |
Total | 18,916,346 | 17,306,705 |
Valuation allowance | (18,223,498) | (16,661,612) |
Net deferred tax asset | 692,848 | 645,093 |
Deferred tax liabilities | ||
Prepaid expenses | (395,503) | (328,836) |
Right-of-use assets | 297,345 | 316,257 |
Total net deferred taxes deferred tax liabilities | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | Mar. 31, 2023 USD ($) |
Income Tax Disclosure [Abstract] | |
Operating Loss Carryforwards | $ 48,600,000 |
LEASES (Details - Lease cost)
LEASES (Details - Lease cost) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Lease Cost | ||
Operating lease cost | $ 117,249 | $ 158,672 |
Short-term lease cost | 59,790 | 17,120 |
Variable lease cost | 0 | 0 |
Sublease income | 0 | 0 |
Total lease cost | $ 177,039 | $ 175,792 |
LEASES (Details - Supplemental
LEASES (Details - Supplemental cash flow information related to leases) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 86,031 | $ 116,716 |
Amortization of right of use assets | $ 90,057 | $ 158,672 |
LEASES (Details - Lease-related
LEASES (Details - Lease-related assets and liabilities) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Operating Leases: | ||
Operating lease right-of-use assets | $ 1,415,930 | $ 1,505,987 |
Right-of-use liabilities operating leases short-term | 401,553 | 391,117 |
Right-of-use liabilities operating leases long-term | 1,046,544 | 1,143,011 |
Total operating lease liabilities | $ 1,448,097 | $ 1,534,128 |
LEASES (Details - Other informa
LEASES (Details - Other information) | Mar. 31, 2023 |
Leases | |
Weighted-average remaining lease term Operating leases | 3 years 4 months 24 days |
Weighted-average discount rate Operating leases | 6.05% |
LEASES (Details - Maturities of
LEASES (Details - Maturities of lease liabilities) | Mar. 31, 2023 USD ($) |
Leases | |
Remainder of 2023 | $ 345,348 |
2024 | 471,638 |
2025 | 485,702 |
2026 | 340,591 |
Total future undiscounted lease payments | 1,643,279 |
Less: Interest | (195,183) |
Present value of lease liabilities | $ 1,448,096 |