Inventory and Accounts Payable - As of September 30, 2023, the company's finished goods inventory increased to $371,689 from $270,555 as of December 31, 2022, representing a growth of 37.4%[109] - The company's net inventory decreased to $315,096 as of September 30, 2023, down from $348,411 as of December 31, 2022, reflecting a decline of 9.5%[109] - Total accounts payable decreased significantly to $571,885 as of September 30, 2023, compared to $1,207,258 as of December 31, 2022, indicating a reduction of 52.6%[123] - The company has made advance payments for inventory purchases totaling approximately $36,000 as of September 30, 2023, down from $1,176,000 as of December 31, 2022[121] - Overhead expenses included in the inventory balance were $15,145 as of September 30, 2023, compared to $12,770 as of December 31, 2022, indicating an increase of approximately 18%[138] Lease and Operating Expenses - The company recognized an operating lease right-of-use asset of $383,169 and an operating lease liability of $414,370 as of September 30, 2023[119] - The company’s operating cash outflow from the operating lease was $93,206 for the nine months ended September 30, 2023[136] - The company’s lease payments for the New Facility Lease are set at $10,055 per month, increasing by 3% annually[134] - As of September 30, 2023, the present value of minimum lease payments is $414,370, with total minimum lease payments amounting to $440,963[137] Compensation and Stock Options - The company has $15,586 in unrecognized compensation expense for unvested stock options as of September 30, 2023, which will be recognized over the next 18 months[114] - The company granted 138,489 stock options during the nine months ended September 30, 2023, with a weighted average exercise price of $0.90[131] - For the nine months ended September 30, 2023, the company recorded $76,110 in compensation expense related to vested options, a decrease of 41% from $129,733 for the same period in 2022[182] - Compensation expense related to vested RSUs issued to directors was $101,316 for the nine months ended September 30, 2023, compared to $42,413 for the same period in 2022, reflecting a significant increase[184] - The company incurred $0 in compensation expense related to stock options issued to directors during the nine months ended September 30, 2023, compared to $29,656 in the same period of 2022[191] - A total of 16,631 non-qualified stock options were cancelled and 333 were forfeited under the 2021 Equity Incentive Plan[189] - As of September 30, 2023, there were 25,090 non-vested non-qualified stock options with a weighted average grant-date fair value of $4.98[190] - The company has 310,555 shares remaining available for future equity awards under the 2021 Equity Plan as of September 30, 2023[180] Stock Issuance and Equity - The company issued 122,398 shares of common stock in settlement of restricted stock units under the 2021 Equity Incentive Plan during the nine months ended September 30, 2023[177] - As of September 30, 2023, 8,076,372 shares of common stock were issued and outstanding, with no preferred stock issued[166] - The company has authorized 200,000,000 shares of common stock and 25,000,000 shares of preferred stock[145] - As of September 30, 2023, 163,692 shares have been issued under the 2017 Equity Incentive Plan, with 145,512 options remaining outstanding[187] Financial Performance and Tax - The company recorded a depreciation expense of $22,476 for the nine months ended September 30, 2023[162] - As of September 30, 2023, the company has U.S. federal and state net operating losses (NOLs) of approximately $27,873,000, with $11,196,000 expiring between 2034 and 2037[194] - During the nine months ended September 30, 2023, the company recorded revenue of $16,977 from engineering services agreements, with $14,035 received in cash payments[197] - The company recorded a full valuation allowance against its net deferred tax assets as of September 30, 2023, indicating a belief that recovery is not likely in the foreseeable future[195] - The company intends to maintain valuation allowances until sufficient evidence exists to support their reversal[195] Legal and Compliance - An arbitration demand was filed against the company for $1,049,280 in damages related to breach of contract and warranty claims[314] - The company has not maintained effective controls over financial reporting due to insufficient accounting personnel and inadequate supervisory review[312] - The company has entered into a manufacturer representative agreement with RSX Enterprises to assist in marketing and soliciting orders[196]
CEA Industries(CEAD) - 2023 Q3 - Quarterly Report