AERWINS Technologies (AWIN) - 2024 Q1 - Quarterly Report

FORM 10-Q Filing Information Registrant Information Details AERWINS TECHNOLOGIES INC.'s identification, Nasdaq securities, and non-accelerated/emerging growth status - Registrant: AERWINS TECHNOLOGIES INC., a Delaware corporation[1] Registered Securities | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------------------------------------------------------------------------------------------ | :---------------- | :---------------------------------------- | | Common Stock, $0.000001 par value per share | AWIN | The Nasdaq Stock Market LLC | | Redeemable Warrants, each whole warrant exercisable for one-hundredth of a share of Common Stock at an exercise price of $1,150 per share | AWINW | The Nasdaq Stock Market LLC | - Filing Status: Non-accelerated filer and an emerging growth company[4] Market Value and Shares Outstanding Non-affiliate common equity market value was $16.75 million, with 924,890 shares outstanding Market Value and Shares Outstanding Metrics | Metric | Value | | :------------------------------------------------------------------ | :------------- | | Aggregate market value of common equity held by non-affiliates | $16,752,613 | | Common stock outstanding as of May 24, 2024 | 924,890 shares | Cautionary Statement Regarding Forward-Looking Statements Forward-looking statements are subject to risks, actual results may differ, and the company disclaims update obligations - Forward-looking statements are based on current expectations, estimates, and projections, and are not guarantees of future performance[8] - Actual results may differ materially due to difficult-to-predict risks, uncertainties, and assumptions[8] - The company disclaims any obligation to publicly release updates or revisions to forward-looking statements, except as required by federal securities laws[8] PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presents AERWINS Technologies Inc.'s unaudited financial statements and notes, covering balance sheets, income, equity, and cash flows Balance Sheets Balance sheets show decreased total liabilities and improved stockholders' deficit from A.L.I. deconsolidation Balance Sheet Summary | Metric | March 31, 2024 (Unaudited) | December 31, 2023 (Audited) | | :----------------------------------------- | :------------------------- | :-------------------------- | | Total Assets | $999,033 | $1,066,659 | | Total Liabilities | $8,966,839 | $19,547,304 | | Stockholders' Deficit | $(7,967,806) | $(18,480,645) | | Cash and cash equivalents | $163,275 | $2,072 | - Total Liabilities decreased significantly from $19,547,304 to $8,966,839, largely due to the deconsolidation of A.L.I. Technologies Inc[9][10] - Accumulated deficit improved from $(72,411,375) to $(63,484,844) during the quarter[9] Statements of Operations and Comprehensive Income (Loss) Q1 2024 saw net income of $8,926,531, a turnaround from prior-year net loss, driven by A.L.I. deconsolidation gain Income Statement Summary | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Total operating expenses | $620,380 | $3,574,882 | | Loss from operations | $(620,380) | $(3,574,882) | | Total other income | $9,546,911 | $86,251 | | Net income (loss) from continuing operations | $8,926,531 | $(3,488,631) | | Loss from discontinued operations | $- | $(4,312,913) | | Net Income (Loss) | $8,926,531 | $(7,801,544) | | Basic EPS from continuing operations | $12.12 | $(6.58) | | Diluted EPS from continuing operations | $12.12 | $(6.58) | - Net income for Q1 2024 was $8,926,531, a significant turnaround from a net loss of $7,801,544 in Q1 2023[15] - The substantial increase in 'Total other income' to $9,546,911 (from $86,251 in Q1 2023) was largely due to a $10,014,482 gain on deconsolidation[15] Statements of Changes in Shareholders' Deficiency Shareholders' deficiency improved from $(18.48 million) to $(7.97 million), driven by net income and other comprehensive income Shareholders' Deficiency Changes | Metric | January 1, 2024 | March 31, 2024 | | :-------------------------------------- | :-------------- | :------------- | | Total Stockholders' Deficit | $(18,480,645) | $(7,967,806) | | Net income | - | $8,926,531 | | Other comprehensive income | - | $1,044,308 | | Issuance of common shares for services | - | $542,000 | - Shareholders' Deficit decreased by over $10 million, from $(18,480,645) to $(7,967,806), driven by net income and other comprehensive income[21] - Common shares outstanding increased from 626,890 to 886,012, reflecting issuances for services and other adjustments[21] Statements of Cash Flows Q1 2024 saw a net increase in cash of $161,203, from financing activities offsetting operating activities Cash Flow Summary | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by (used) operating activities | $(380,797) | $(3,230,216) | | Net cash used by investing activity | $- | $(45,559) | | Net cash provided by financing activities | $542,000 | $3,066,717 | | Net increase (decrease) in cash | $161,203 | $(209,058) | | Cash and cash equivalents at end of period | $163,275 | $30,333 | - Cash and cash equivalents increased to $163,275 at March 31, 2024, from $2,072 at the beginning of the period[23] - Operating activities used $380,797 in cash, a significant reduction from $3,230,216 used in the prior year, partly due to the deconsolidation of A.L.I[23] Notes to Financial Statements The notes provide detailed explanations of the company's financial statements, covering its organization, significant accounting policies, going concern issues, debt instruments, related party transactions, and the deconsolidation of A.L.I. Technologies Inc. due to bankruptcy proceedings NOTE 1 – Organization and Description of Business AERWINS is redesigning its MAV and completed a reverse recapitalization merger, with A.L.I. Technologies Inc. deconsolidated due to bankruptcy - AERWINS Technologies Inc. is focused on redesigning its single-seat optionally Manned Air Vehicle (MAV) to meet FAA Powered Ultra-Light Air Vehicle Category requirements[25] - The company completed a reverse recapitalization merger with Pono Capital Corp. on February 3, 2023, with AERWINS being the accounting acquirer[26][27] - A.L.I. Technologies Inc., a wholly-owned indirect subsidiary, was deconsolidated as of January 10, 2024, following its voluntary bankruptcy petition filed on December 27, 2023[31] NOTE 2 - Going Concern Accumulated deficit of $63.48 million and A.L.I. bankruptcy raise substantial doubt about going concern - Accumulated deficit of $63,484,844 as of March 31, 2024, and the A.L.I. bankruptcy raise substantial doubt about the company's ability to continue as a going concern[33] - Management plans to raise additional funds via debt or equity and generate revenue from MAV production, but success is not assured[34] - Total liabilities were $8,966,839 as of March 31, 2024, and the A.L.I. bankruptcy triggered an event of default on $4,200,000 in secured convertible notes with Lind Global[36] NOTE 3 – Summary of Significant Accounting Policies Outlines significant accounting policies for financial statements, covering U.S. GAAP, estimates, assets, liabilities, revenue, and other key areas - Financial statements are prepared in accordance with U.S. GAAP and are unaudited interim statements[38][39] - Key estimates include valuation of warrant and derivative liabilities, useful lives of assets, impairment, and revenue recognition[40] - Warrants are classified as liabilities and remeasured at fair value each period, with changes recognized in operations[49] - The conversion feature of convertible promissory notes is bifurcated and accounted for as an embedded derivative at fair value[51] NOTE 4 – Prepaid Expenses Prepaid expenses decreased from $983,255 to $835,758, largely due to prepaid stock-based compensation Prepaid Expenses Summary | Metric | March 31, 2024 | December 31, 2023 | | :--------------- | :------------- | :---------------- | | Total Prepaid Expenses | $835,758 | $983,255 | - Prepaid expenses decreased by $147,497 during the quarter[72] - Of the total prepaid expenses, $753,407 as of March 31, 2024, is related to prepaid stock-based compensation[72] NOTE 5 – Loans Payable Notes payable of $1.48 million are in default, plus short-term loans of $272,835 at 15% interest - Notes payable balance was $1,480,000 as of March 31, 2024, and is in default, with $288,243 recognized as accrued interest expenses[75] - The company also has short-term loans totaling $272,835 from third parties, bearing 15% interest per annum[75] NOTE 6 — Related Party Transactions Related party transactions include a debt guarantee, a defaulted loan from a former CEO to A.L.I., and payables to directors - A.L.I.'s Representative Director, Daisuke Katano, provided a debt guarantee for a building lease agreement, valued at $5,961[76] - A loan from former CEO Shuhei Komatsu to A.L.I. of 200,000,000 yen (approx. $1,384,370) resulted in the enforcement of a pledge and derecognition of investment and debt due to default[77][78] - As of March 31, 2024, $313,428 was outstanding to director Kiran Sidhu and $9,935 to former director Daisuke Katano for payments made on behalf of the company[79] NOTE 7 – Convertible Promissory Notes, Net Convertible promissory notes with Lind Global total $4.2 million principal, amended to $3.5 million contingent on a public offering, which failed, allowing Lind Global to demand payment or convert at penalty - The company issued two tranches of convertible promissory notes to Lind Global Fund II LP with an aggregate principal amount of $4,200,000[82][83] - Amendments in January 2024 reduced the principal to $3,500,000 and set conditions for mandatory prepayment and conversion linked to a $13,500,000 public offering by April 15, 2024[84] - Failure to complete the public offering by April 15, 2024, means Lind Global is not obligated to the amended terms and can demand 120% of outstanding principal or convert at a lower price with cash payment[36][86] Convertible Promissory Notes Summary | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------------- | :------------- | :---------------- | | Principal | $4,200,000 | $4,200,000 | | Debt discount | $(2,089,150) | $(2,680,597) | | Net Carrying Balance | $2,110,850 | $1,519,403 | NOTE 8 – Derivative Liability Derivative liability decreased to $1.29 million from $1.37 million, stemming from convertible notes and remeasured using a Monte Carlo simulation model - Derivative liability decreased to $1,293,276 at March 31, 2024, from $1,367,140 at December 31, 2023[90] - The liability is derived from the debt conversion option features and valued using a Monte Carlo simulation model[90] Derivative Liability Movement | Metric | Amount | | :-------------------------------------- | :------------- | | Ending Balance, December 31, 2023 | $1,367,140 | | Adjustments | $(452,549) | | Change in fair value | $378,685 | | Ending Balance, March 31, 2024 | $1,293,276 | NOTE 9 – Warrant Liability Warrant liabilities decreased to $257,764 from $400,924, with Public Warrants as Level 1 and other warrants as Level 2 using Black-Scholes - Total warrant liability decreased to $257,764 at March 31, 2024, from $400,924 at December 31, 2023[93] Warrant Liability Summary | Warrant Type | March 31, 2024 | December 31, 2023 | | :---------------- | :------------- | :---------------- | | Public Warrants | $107,812 | $117,300 | | Placement Warrants| $7,155 | $7,648 | | Debt Warrants | $142,797 | $275,976 | | Total | $257,764 | $400,924 | - Public Warrants are Level 1 (quoted market prices), while Placement and Debt Warrants are Level 2 (Black-Scholes model with observable inputs)[123] NOTE 10 – Deconsolidation of A.L.I. A.L.I. Technologies Inc. filed for bankruptcy, leading to its deconsolidation and a gain on deconsolidation of $10.01 million - A.L.I. Technologies Inc. filed for voluntary bankruptcy on December 27, 2023, and was deconsolidated from the company's financial statements as of January 10, 2024[100][102] - The deconsolidation resulted in a gain of $10,014,482[104] A.L.I. Deconsolidated Balances | A.L.I. Deconsolidated Balances (January 10, 2024) | :------------- | | :------------------------------------------------ | :------------- | | Total Assets | $81,332 | | Total Liabilities | $11,140,122 | | Net Liabilities deconsolidated | $(11,058,790) | NOTE 11 – Income Taxes No income tax provision was reported for Q1 2024 or 2023, and no significant uncertain tax positions are expected Income Tax Provision | Income Tax Provision | March 31, 2024 | March 31, 2023 | | :------------------- | :------------- | :------------- | | Federal Current | $- | $- | | Federal Deferred | $- | $- | | State Current | $- | $- | | State Deferred | $- | $- | | Foreign Current | $- | $- | | Foreign Deferred | $- | $- | | Total | $- | $- | - No income tax provision was recognized for the periods presented[106] - The company does not expect significant unrecognized uncertain tax benefits within 12 months and has not incurred interest or penalties[107] NOTE 12 – Contingencies The company faces potential liabilities from lawsuits, and the A.L.I. bankruptcy triggered an event of default on $4.2 million convertible notes, allowing Lind Global to demand payment or convert at penalty - The company faces potential liabilities from various lawsuits and claims in the ordinary course of business[109] - The A.L.I. bankruptcy triggered an event of default on $4,200,000 in convertible notes with Lind Global[110] - Lind Global can demand 120% of the outstanding principal or convert notes into common stock at a lower conversion price (80% of the average of the three lowest VWAPs during the 20 trading days prior to conversion, or the Floor Price of $18.176)[110] NOTE 13 – Shareholders' Deficit Authorized shares include 400 million common and 20 million preferred, with common shares outstanding increasing by 259,097 due to issuances, adjusted for a 1-for-100 consolidation - Authorized shares: 400,000,000 common shares and 20,000,000 preferred shares[111] - Common shares outstanding increased by 259,097 during Q1 2024, reaching 885,987 shares[115] - The company issued 135,500 unregistered shares for $542,000 in cash to accredited investors in February and March 2024[111] - All share figures are retrospectively adjusted for a 1-for-100 share consolidation effective April 2, 2024[115] NOTE 14 – Earnings (Loss) Per Share Basic and diluted EPS from continuing operations improved to $12.12 in Q1 2024 from $(6.58), with loss per share from discontinued operations at $0.00 Earnings Per Share Summary | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income (loss) from continuing operations | $8,926,531 | $(3,488,631) | | Weighted average common shares outstanding | 736,765 | 529,844 | | Basic EPS from continuing operations | $12.12 | $(6.58) | | Diluted EPS from continuing operations | $12.12 | $(6.58) | | Basic EPS from discontinued operations | $0.00 | $(8.14) | - Basic and diluted EPS from continuing operations improved to $12.12 in Q1 2024 from $(6.58) in Q1 2023[117] - Weighted average common shares outstanding increased to 736,765 in Q1 2024 from 529,844 in Q1 2023[117] NOTE 15 – Stock-Based Compensation Stock options for 41,424 shares were issued to directors, with 11,732 options outstanding at March 31, 2024, and fair value estimated at $0.005 using the Binomial Option Pricing Model - Stock options for 41,424 shares were issued to directors on July 27, 2022, with an exercise price of $0.015 per share[118] - As of March 31, 2024, 11,732 options were outstanding, with a weighted average contractual life of 8.33 years[120] - The fair value of stock-based compensation was estimated at $0.005 using the Binomial Option Pricing Model[121] NOTE 16 – Fair Value Measurement Fair value measurements are categorized into Level 1 (Public Warrants) and Level 2 (Placement, Debt Warrants, and Derivative Liability), valued using Black-Scholes or Monte Carlo models Fair Value Measurements by Level | Liability Type | Fair Value (March 31, 2024) | Level 1 | Level 2 | | :------------------- | :-------------------------- | :---------- | :---------- | | Public Warrants | $107,812 | $107,812 | $- | | Placement Warrants | $7,155 | $- | $7,155 | | Debt Warrants | $142,797 | $- | $142,797 | | Subtotal: Warrant liabilities | $257,764 | $107,812 | $149,952 | | Derivative Liability | $1,293,276 | $- | $1,293,276 | - Public Warrants are classified as Level 1 due to quoted market prices[123] - Placement Warrants, Debt Warrants, and Derivative Liability are classified as Level 2, valued using Black-Scholes or Monte Carlo simulation models with observable inputs[123] NOTE 17 – Discontinued Operations Drone solution service and A.L.I. operations were discontinued as part of a strategic shift to MAV development in Los Angeles, classifying A.L.I.'s businesses as discontinued - Drone solution service discontinued as of June 30, 2023[125] - Remaining operations of A.L.I. Technologies Inc. discontinued on December 27, 2023, and classified as discontinued operations[125] Discontinued Operations Financials | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :----------------------------------------- | :-------------------------------- | :-------------------------------- | | Revenues | $- | $1,265,883 | | Cost of revenues | $- | $955,071 | | Gross profit | $- | $310,812 | | Total operating expenses | $- | $4,778,170 | | Net loss from discontinued operations | $- | $(4,312,913) | NOTE 18 – Subsequent Events Subsequent events include a 1-for-100 share consolidation, authorization of 38,878 shares for consultants, and $240,000 in aggregate advances - A 1-for-100 share consolidation was completed on April 2, 2024[130] - 38,878 shares with a fair value of $180,000 were authorized for issuance to consultants[130] - The company received $100,000 in non-interest bearing, unsecured advances and $140,000 in unsecured advances with 3% compounded interest from third parties[130] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Management discusses Q1 2024 financial condition and results, highlighting the strategic shift to MAV development, A.L.I. deconsolidation, and their impact on performance and liquidity Overview AERWINS is redesigning its MAV to meet FAA requirements, following discontinued non-core operations and A.L.I. bankruptcy, with financials reflecting a reverse recapitalization merger - AERWINS is focused on redesigning its MAV to comply with FAA Powered Ultra-Light Air Vehicle Category standards[133] - Non-core operations of A.L.I. Technologies Inc. were discontinued, and A.L.I. filed for voluntary bankruptcy on December 27, 2023[133] - The company's financial statements reflect a reverse recapitalization merger with Pono Capital Corp. on February 3, 2023, with AERWINS as the accounting acquirer[134] Business Overview AERWINS, via Aerwin Development, is redesigning its MAV for an 'Air Mobility Society,' shifting focus to FAA-compliant MAV development after A.L.I.'s deconsolidation due to bankruptcy - The company's mission is to realize an 'Air Mobility Society' by redesigning its MAV to meet FAA Powered Ultra-Light Air Vehicle Category requirements[139] - A.L.I. was acquired in August 2022 but deconsolidated on January 10, 2024, following its bankruptcy[138] - The company has established AERWIN Development Company LLC in Los Angeles, California, for MAV development[139] Discontinued Operations Drone photography and A.L.I.'s remaining operations, including XTURISMO hoverbike and drone businesses, were discontinued and classified as discontinued operations due to strategic shift and bankruptcy - Drone photography services and joint R&D services were discontinued as of June 30, 2023[140] - All remaining operations of A.L.I. were discontinued on December 27, 2023, and classified as discontinued operations[140] - A.L.I.'s discontinued operations included the XTURISMO hoverbike, COSMOS platform, computing power-sharing, and drone businesses[141] Key Factors that Affect Our Results of Operations Key factors include completing MAV development and manufacturing, establishing a dealer distribution network, and controlling costs for efficient mass production - Ability to complete development and manufacture of the MAV according to FAA requirements is crucial[143] - Success depends on developing a dealer distribution network and marketing/selling MAVs in sufficient quantities to achieve profitability, targeting sales in the US, China, and Europe by 2027[143] - Controlling costs and improving operating efficiency to establish a highly profitable structure for MAV mass production is a key factor[144] Results of Operations Q1 2024 saw net income of $8,926,531, a significant improvement from prior-year net loss, driven by A.L.I. deconsolidation gain and reduced general and administrative expenses Comparative Results of Operations | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | Variance ($) | Variance (%) | | :----------------------------------------- | :---------------------------- | :---------------------------- | :----------- | :----------- | | Total operating expenses | $620,380 | $3,574,882 | $(2,954,502) | (82.6)% | | Loss from operations | $(620,380) | $(3,574,882) | $2,954,502 | 82.6% | | Total other income | $9,546,911 | $86,251 | $9,460,660 | 10,968.8% | | Net income (loss) from continuing operations | $8,926,531 | $(3,488,631) | $12,415,162 | (355.9)% | | Loss from discontinued operations | $- | $(4,312,913) | $4,312,913 | (100.0)% | | Net income (loss) | $8,926,531 | $(7,801,544) | $16,728,075 | (214.4)% | - Net income for Q1 2024 was $8,926,531, a significant improvement from a net loss of $7,801,544 in Q1 2023[146] - General and administrative expenses decreased by 82.6% to $620,380, primarily due to reduced consulting and professional service fees related to the Pono business combination[152] - Total other income increased by 10,968.8% to $9,546,911, mainly due to the gain on deconsolidation of A.L.I[153] Liquidity and Capital Resources As of March 31, 2024, the company had $163,275 in cash and a working capital deficit of $4,305,916, raising substantial doubt about its going concern due to liquidity challenges and indebtedness Liquidity and Capital Metrics | Metric | March 31, 2024 | December 31, 2023 | | :---------------------- | :------------- | :---------------- | | Cash | $163,275 | $2,072 | | Working Capital Deficit | $(4,305,916) | N/A | - The company's accumulated deficit of $63,484,844 and A.L.I.'s bankruptcy raise substantial doubt about its ability to continue as a going concern[166] - Total liabilities were $8,966,839 as of March 31, 2024, and the A.L.I. bankruptcy triggered an event of default on $4,200,000 in secured convertible notes with Lind Global[168] - The company raised $542,000 in cash from the sale of common stock and received shareholder advances to meet liquidity needs[163][165] Critical Accounting Policies and Estimates Financial statements rely on significant estimates for warrant and derivative liabilities, accounts receivable, asset useful lives, impairment, and revenue recognition - Significant estimates include valuation of warrant liabilities and derivative liabilities, accounts receivable, useful lives of property and equipment, impairment of long-lived assets, and revenue recognition[198][202] - Warrant liabilities are classified as liabilities and adjusted to fair value at each reporting period using models like Black-Scholes[206] - Convertible promissory notes' conversion features are bifurcated and accounted for as embedded derivatives at fair value, remeasured each period[209] Item 3. Quantitative and Qualitative Disclosure About Market Risk No applicable quantitative and qualitative disclosures about market risk for the company - The company has no applicable quantitative and qualitative disclosures about market risk[210] Item 4. Controls and Procedures Disclosure controls and procedures were ineffective due to administrative delays and A.L.I. bankruptcy, with no material changes in internal control over financial reporting - Disclosure controls and procedures were not effective as of March 31, 2024, due to administrative delays and issues from the A.L.I. bankruptcy[212] - A material weakness exists due to these administrative delays and issues[212] - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2024[213] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is involved in legal proceedings, with A.L.I. Technologies Inc.'s voluntary bankruptcy leading to deconsolidation and no prospect of distribution to general creditors - A.L.I. Technologies Inc. filed a voluntary bankruptcy petition on December 27, 2023, with a trustee appointed on January 10, 2024[217] - The company concluded it no longer controls A.L.I. for accounting purposes as of January 10, 2024, leading to deconsolidation[219] - The bankruptcy trustee reported no prospect of distribution to general creditors at this time[218] Item 1A. Risk Factors No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes in risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[220] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company completed unregistered sales of 135,500 common shares to accredited investors for $542,000 in cash, under Section 4(a)(2) or Regulation D/S, with piggyback registration rights - The company sold 135,500 unregistered shares of common stock to two accredited investors for $542,000 in cash[221] - Sales were made on February 27, 2024 (100,000 shares) and March 22, 2024 (35,500 shares) at $4.00 per share[221] - The shares were issued in reliance on exemptions from registration under Section 4(a)(2) of the Securities Act, or Regulation D or Regulation S[222] Item 3. Defaults Upon Senior Securities A.L.I. bankruptcy triggered an event of default on $4.2 million convertible notes with Lind Global; failed public offering means Lind Global can demand payment or convert at penalty - The A.L.I. bankruptcy constitutes an event of default on the $4,200,000 secured convertible notes with Lind Global[223] - January 2024 amendments reduced the principal to $3,500,000 and required a $1,750,000 prepayment by April 15, 2024, contingent on a $13,500,000 public offering[224] - Failure to complete the public offering by April 15, 2024, means Lind Global is not bound by the amended terms and can demand 120% of the outstanding principal or convert at a penalty rate[226] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[227] Item 5. Other Information Information from Item 3 of this report is incorporated by reference - Information from Item 3 of this report is incorporated by reference[227] Item 6. Exhibits Lists exhibits filed with Form 10-Q, including certifications from Principal Executive Officer and Principal Financial Officer, and XBRL documents - Exhibits include Rule 13a-14(a) Certifications, Certification Pursuant to 18 U.S.C. Section 1350, and Inline XBRL documents[229][230][231][232][233][234] Signatures Report signed by Kiran Sidhu, Chief Executive Officer, and Yinshun (Sue) He, Chief Financial Officer, on May 28, 2024, confirming due authorization - Signed by Kiran Sidhu, Chief Executive Officer, and Yinshun (Sue) He, Chief Financial Officer[236][237] - Report dated May 28, 2024[236][237]