Financial Performance - Total revenues for the three months ended March 31, 2024, were $259,757, a decrease of 95.4% compared to $5,633,944 for the same period in 2023[13]. - Gross profit for the three months ended March 31, 2024, was $196,561, compared to a gross profit of $147,962 for the same period in 2023, representing a 33% increase[13]. - Operating expenses for the three months ended March 31, 2024, totaled $2,616,410, significantly higher than $954,326 for the same period in 2023, marking a 174% increase[13]. - The net loss for the three months ended March 31, 2024, was $2,429,417, compared to a net loss of $805,649 for the same period in 2023, reflecting a 201% increase in losses[13]. - Financial services revenue for the six months ended March 31, 2024, was $702,148, down from $1,410,332 in the same period of 2023, reflecting a 50% decrease[60]. - The company reported a comprehensive loss of $(2,402,835) for the three months ended March 31, 2024, compared to $(808,370) for the same period in 2023[13]. Stockholder Equity and Deficit - Total stockholders' deficit as of March 31, 2024, was $(11,524,752), an increase from $(6,193,230) as of December 31, 2023[14]. - As of March 31, 2023, total stockholders' equity was $9,141,848, down from $10,890,580 as of October 1, 2022, reflecting a decrease of approximately 16%[16]. Cash Flow and Liquidity - The company experienced a net cash used in operating activities of $1,878,608 for the year 2024, compared to $1,882,501 for 2023, showing a slight improvement[17]. - Cash at the end of the period was $651,220, an increase from $486,946 at the end of the previous year[18]. - The company’s liquidity is under substantial doubt, as the current cash balance cannot cover operating expenses for the next twelve months[29]. - The company reported negative cash flow from operating activities of approximately $1,879,000 for the six months ended March 31, 2024[29]. Debt and Financial Obligations - The company converted related party debts into common stock amounting to $2,997,624, reflecting a significant restructuring of its financial obligations[18]. - The company issued promissory notes totaling $916,000 to related parties during the six months ended March 31, 2024, with an outstanding principal balance of $916,000 as of that date[109]. - Interest expense related to related parties' loans amounted to $10,348 for the three months and $17,770 for the six months ended March 31, 2024[110]. Customer Assets and Liabilities - As of March 31, 2024, customer digital currency assets and liabilities were valued at $8,100, reflecting the company's obligation to safeguard customers' digital assets[44]. - Customer custodial cash represented cash maintained in company bank accounts for the benefit of customers, with liabilities classified as current[38]. - Customer custodial cash decreased from $672,501 as of September 30, 2023, to $345,631 as of March 31, 2024, representing a decline of approximately 48.7%[77]. Business Operations and Strategy - Nukkleus has terminated its General Services Agreement with Triton Capital Markets Ltd. effective January 1, 2024, due to non-payment, which required a minimum payment of $1,600,000 per month[22]. - The company is focused on providing software and technology solutions for the retail foreign exchange trading industry, primarily servicing Triton Capital Markets Ltd.[21]. - The company operates in two reportable business segments: general support services and financial services, reflecting different service offerings[118]. Shareholder Transactions - The company issued a total of 627,997 shares of common stock for services valued at $2,765,601 during the six months ended March 31, 2024[83]. - A Debt Conversion Agreement resulted in the conversion of $2,727,061 of related party debt into 757,678 shares of common stock, with a fair market value exceeding the debt by $3,900,255[83]. Impairment and Allowances - The company has not recorded any impairment charges for long-lived assets for the three and six months ended March 31, 2024, as no impairment indicators were noted[57]. - As of March 31, 2024, the company had established an allowance for doubtful accounts of $0 for its note receivable from related parties, down from $637,072 as of September 30, 2023[51]. Miscellaneous - The company entered into a Settlement Agreement on May 28, 2024, issuing 1,889,550 shares of common stock to settle claims owed to Silverback Capital Corporation[124]. - The company plans to negotiate the sale of its wholly owned subsidiary, Digital RFQ Ltd., to its current management team, subject to board and shareholder approval[125].
Nukkleus(NUKK) - 2024 Q1 - Quarterly Report