| Summary of significant accounting policies | Note 2 – Summary of significant accounting policies Principles
of Consolidation The consolidated financial statements include
accounts of the Company and its wholly owned subsidiaries, Fat Shark and Rotor Riot since the acquisitions on February 16, 2024. Intercompany
transactions and balances have been eliminated upon consolidation. Unaudited interim financial information The consolidated condensed financial statements
of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in
accordance with GAAP have been condensed or omitted from this Quarterly Report, as is permitted by such rules and regulations. Accordingly,
these condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s
Annual Report on Form 10-K. The results for any interim period are not necessarily indicative of results for any future period. Use of Estimates The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures
of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during
the reporting period. Accordingly, actual results could differ from those estimates, and such results could be material. The financial statements include some amounts
that are based on management's best estimates and judgments. Significant estimates reflected in these financial statements include those
used to (i) determine stock-based compensation, (ii) the fair value of assets acquired and liabilities assumed in business
combinations and the value of shares issued as consideration, (iii) reserves and allowances related
to accounts receivable, inventory and sales, (iv) the evaluation of long-term assets, including goodwill, for impairment, (v) the fair
value of lease liabilities and related right of use assets, and (vi) the warranty liability. Cash and Cash Equivalents The Company considers all highly liquid debt
instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents. The
Company maintains cash deposits in multiple commercial banks and financial services companies. These financial institutions are
insured by the Federal Deposit Insurance Corporation up to $ 250,000 2.8 0.6 Accounts Receivable, net The Company carries its accounts receivable
at invoiced amounts. Upon the closing of the acquisitions in February 2024 when we acquired accounts receivable, the Company adopted ASC 326, Financial Instruments
– Credit Losses, which the Company evaluates all credit losses as of the reporting date. On a periodic basis, the Company
evaluates its accounts receivable and establishes an allowance for doubtful accounts based on a history of past write-offs and
collections and current credit conditions. Accounts are written-off as uncollectible at the discretion of management. At March 31,
2024 and December 31, 2023, the Company considers accounts receivable to be fully collectible; accordingly, no Inventory Inventories, which consist of finished goods, are stated at the lower
of cost or net realizable value, and are measured using the first-in, first-out method. Cost components include direct materials and direct
labor, as well as in-bound freight. At each balance sheet date, the Company evaluates the net realizable value of its inventory using
various reference measures including current product selling prices, as well as evaluating for excess quantities and obsolescence. Deferred offering costs The Company deferred direct incremental costs
associated with its IPO. The Company capitalized $ 127,687 70,268 512,758 640,445 Property and equipment, net Property and equipment is stated at cost, net
of accumulated depreciation. Depreciation is provided utilizing the straight-line method over the estimated useful lives for owned assets,
ranging from two to five years Leases The Company has adopted Accounting Standards Codification
(ASC) 842, “Leases” which requires the recognition of assets and liabilities associated with lease agreements. As of February
16, 2024, the date of the acquisition, the Company recognized a lease liability obligation of $ 378,430 The Company determines if a contract is a
lease or contains a lease at inception. Operating lease liabilities are measured, on each reporting date, based on the present
value of the future minimum lease payments over the remaining lease term. The Company's leases do not provide an implicit
rate. Therefore, the Company used an effective discount rate of 11.49 Goodwill and Long-lived Assets Goodwill represents the future economic benefit
arising from other assets acquired in an acquisition that are not individually identified and separately recognized. The Company tests
goodwill for impairment in accordance with the provisions of ASC 350, Intangibles – Goodwill and Other, (“ASC 350”).
Goodwill is tested for impairment at least annually at the reporting unit level or whenever events or changes in circumstances indicate
that goodwill might be impaired. ASC 350 provides that an entity has the option to first assess qualitative factors to determine whether
the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit
is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely
than not that the fair value of a reporting unit is less than its carrying amount, then additional impairment testing is not required.
However, if an entity concludes otherwise, then it is required to perform an impairment test. The impairment test involves comparing the
estimated fair value of a reporting unit with its book value, including goodwill. If the estimated fair value exceeds book value, goodwill
is considered not to be impaired. If, however, the fair value of the reporting unit is less than book value, then an impairment loss is
recognized in an amount equal to the amount that the book value of the reporting unit exceeds its fair value, not to exceed the total
amount of goodwill allocated to the reporting unit. The estimate of fair value of a reporting unit
is computed using either an income approach, a market approach, or a combination of both. Under the income approach, we utilize the discounted
cash flow method to estimate the fair value of a reporting unit. Significant assumptions inherent in estimating the fair values include
the estimated future cash flows, growth assumptions for future revenues (including gross margin, operating expenses, and capital expenditures),
and a rate used to discount estimated future cash flow projections to their present value based on estimated weighted average cost of
capital (i.e., the selected discount rate). Management’s assumptions are based on historical data, supplemented by current and anticipated
market conditions, estimated growth rates, and management’s plans. Under the market approach, fair value is derived from metrics
of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is
based on the markets in which the reporting units operate and consider risk profiles, size, geography, and diversity of products and services. The Company reviews long-lived assets, including
tangible assets and other intangible assets with definitive lives, for impairment whenever events or changes in circumstances indicate
that the asset’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance
with ASC 360, “Impairment or Disposal of Long-Lived Assets”. ASC 360 requires the Company to group assets and liabilities at
the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate
the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount
of the asset group is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds
its fair value based on discounted cash flow analysis or appraisals. Fair Values, Inputs and Valuation Techniques
for Financial Assets and Liabilities, and Related Disclosures The fair value measurements and disclosure guidance
defines fair value and establishes a framework for measuring fair value. Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement
date. In accordance with this guidance, the Company has categorized its recurring basis financial assets and liabilities into a three-level
fair value hierarchy based on the priority of the inputs to the valuation technique. The fair value hierarchy gives the highest priority
to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level
3). The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the
fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input
that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input
to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The guidance establishes
three levels of the fair value hierarchy as follows: Level 1 Level 2 Level 3 Disclosures for Non-Financial Assets Measured
at Fair Value on a Non-Recurring Basis The Company's financial instruments mainly consist
of cash, receivables, current assets, accounts payable, accrued expenses and debt. The carrying amounts of cash, receivables, current
assets, accounts payable, accrued expenses and current debt approximates fair value due to the short-term nature of these instruments. Warranty Liability Fat Shark products are warranted against defects in materials and workmanship
for a period of two years from the date of shipment. If a defect arises during the warranty period, Fat Shark will either (i) repair the
affected product at no charge using new parts or parts that are equivalent to new in performance and reliability; (ii) exchange the affected
product with a functionally equivalent product; or (iii) refund the original purchase price for the affected product .
Allowances for estimated warranty costs are recorded during the period of sale. The determination of such allowances requires the Company
to make estimates of product warranty claim rates and expected costs to repair or to replace the products under warranty. The Company
currently establishes warranty reserves based on historical warranty costs for each product line combined with liability estimates based
on the prior 24 months’ sales activities. If actual return rates and/or repair and replacement costs differ significantly from the
Company’s estimates, adjustments to recognize additional cost of sales may be required in future periods. Historically the warranty
accrual and the expense amounts have been immaterial. The warranty liability is included in accrued expenses on the accompanying consolidated
balance sheets and amounted $ 66,025 Rotor Riot does not provide any
warranty of any kind for any of the equipment it sells or otherwise distributes. Consumers assume all risk for any products purchased
or received from Rotor Riot. Revenue Recognition The Company recognizes revenue in accordance with
ASC 606, “Revenue from Contracts with Customers”, issued by the Financial Accounting Standards Board (“FASB”).
This standard includes a comprehensive evaluation of factors to be considered regarding revenue recognition including: Step 1: Identify the contract with a customer; Step 2: Identify the performance obligations in
the contract; Step 3: Determine the transaction price; Step 4: Allocate the transaction price to the performance
obligations in the contract; and Step 5: Recognize revenue when (or as) the Company
satisfies a performance obligation at a point in time. The Company receives revenues from the sale of
products from both retail distributers and individual consumers. Sales revenue is recognized when the products are shipped and the price
is fixed or determinable, no other significant obligations of the Company exist and collectability is probable. Revenue is recognized
when the title to the products has been passed to the customer, which is the date the products are shipped to the customer. This is the
date the performance obligation has been met. Deferred Revenue Deferred revenue relates to (i) orders placed, but not yet fulfilled
and (ii) customer tickets purchased related to the Company’s Rampage event, in which tickets are sold in advance and recognized
when the event takes place. All deferred revenue is expected to be recognized within one year. Deferred revenue related to orders placed,
but not yet fulfilled totaled $ 82,943 0 93,325 0 Cost of Goods Sold Cost of goods sold includes inventory costs, direct
packaging costs and production related depreciation, if any. Shipping and Handling Costs Shipping and handling costs incurred for
product shipped to customers are included in general and administrative expenses and amounted to $ 23,475 no Research and Development Research and development expenses include payroll,
employee benefits, and other headcount-related expenses associated with product development. Research and development expenses also include
third-party development costs, materials, and a proportionate share of overhead costs. Income Taxes The Company accounts for income taxes using an
asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences
of events. A valuation allowance is established to reduce deferred tax assets to their estimated realizable value when, in the opinion
of management, it is more likely than not that some portion or all of the deferred income tax assets will not be realizable in the future. The Company recognizes benefits of uncertain tax
positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits,
as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. The Company’s policy
is to recognize interest and penalties related to unrecognized tax benefits as a part of income tax expense. The Company’s current provision for the
three months ending March 31, 2024 and 2023 consisted of a tax benefit against which we applied a full valuation allowance, resulting
in no current provision for income taxes. Since the Company has not generated an operating profit since inception, there are no Stock-Based Compensation Stock options are valued using the estimated grant-date
fair value method of accounting in accordance with ASC Topic 718, Compensation – Stock Compensation. Fair value is determined based
on the Black-Scholes Model using inputs reflecting our estimates of expected volatility, term and future dividends. The Company recognizes
forfeitures as they occur. The fair value of restricted stock is based on our quoted stock price on the date of grant. Compensation cost
is recognized on a straight-line basis over the service period which is the vesting term. Warrants The Company accounts for warrants to purchase
shares of its common stock in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity Derivatives and Hedging For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of equity at the time of issuance. For issued or modified warrants
that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial
fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants classified
as liabilities are recognized as a non-cash gain or loss in the consolidated statements of operations and comprehensive loss. Net Loss per Share Basic and diluted net loss per share is calculated
based on the weighted-average of common shares outstanding in accordance with FASB ASC Topic 260, Earnings per Share Segment Reporting Since the acquisitions of Fat Shark and Rotor
Riot, the Company operates with one reportable segment. The Company bases its reportable segment based on how our Chief Operating Decision
Maker manages the business, makes resource allocations and operating decisions, and evaluates operating performance. Recent Accounting Pronouncements In November 2023, new accounting guidance was issued that updates reportable
segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the
Chief Operating Decision Maker (the “CODM”) and included within each reported measure of a segment's profit or loss. This
new guidance also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the
CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.
The new guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning
after December 15, 2024. The new guidance is required to be applied retrospectively to all prior periods presented in the financial statements.
Early adoption is also permitted. On January 1, 2024, the Company adopted ASC 280, Segment Reporting. The Company currently operates a
single segment and the Company does not anticipate any net effect related to the adoption. In December 2023, new accounting guidance was
issued related to income tax disclosures. The new guidance requires disaggregated information about a reporting entity’s effective
tax rate reconciliation as well as additional information on income taxes paid. The new guidance is effective on a prospective basis for
annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been
issued or made available for issuance. This new guidance will likely not result in additional required disclosures when adopted. |
