Amendment: SEC Form 10-K/A filed by Sidus Space Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
For
the fiscal year ended
For the transition period from ________ to _________
Commission
file number
(Exact name of registrant as specified in charter)
(State or jurisdiction of Incorporation or organization) |
I.R.S. Employer Identification No. |
| (Address of principal executive offices) | (Zip code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
|
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No
The
aggregate market value of the voting and non-voting common equity held by non-affiliates based on a closing sale price of $18.10 per
share, which was the last sale price of the Class A common stock as of June 30, 2023, the last business day of the registrant’s
most recently completed second fiscal quarter, was $
Number of Class A common shares and Class B common shares outstanding as of October 11, 2024 was and , respectively.
Documents
Incorporated by Reference:
Explanatory Note
Except as described above and the inclusion of Exhibits 31.1, 31.2, 32.1 and 32.1, this Amendment No. 1 to the Original Report does not amend, update or change any other items or disclosures in the Original Report and does not purport to reflect information or events subsequent to the filing thereof.
The Company has attached to this Amended 10-K updated certifications executed as of the date of this Amended 10-K by the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes Oxley Act of 2002. These updated certifications are attached as Exhibits 31.1, 31.2, 32.1 and 32.2 to this Amended 10-K.
| 2 |
PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SIDUS SPACE, INC.
| 3 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Sidus Space, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Sidus Space, Inc. (“the Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has continued significant net losses and negative cash flows from operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Revenue Recognition – Refer to Note 2 to the financial statements
Description of the Critical Audit Matter
The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company offers various mission critical hardware manufacturing and engineering services, along with satellite production and other orbital support programs.
Significant judgment is exercised by the Company in determining revenue recognition for these customer agreements, and includes the following:
| ● | Determination of whether products and services are considered distinct performance obligations that should be accounted for separately versus together. | ||
| ● | The pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation. | ||
| ● | Identification and treatment of contract terms that may impact the timing and amount of revenue recognized. |
Given these factors, the related audit effort in evaluating management’s judgments in determining revenue recognition for these customer agreements required a high degree of auditor judgment.
How the Critical Audit Matter Was Addressed in the Audit
Our principal audit procedures related to the Company’s revenue recognition for these customer agreements included the following, among others:
| ● | We evaluated management’s significant accounting policies related to these customer agreements for reasonableness. | ||
| ● | We selected a sample of customer agreements and performed the following procedures: |
| – | Obtained and read contract source documents for each selection, including master agreements, and other documents that were part of the agreement. | ||
| – | Tested management’s identification and treatment of contract terms. | ||
| – | Assessed the terms in the customer agreement and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions. |
| ● | We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements. |
We have served as the Company’s auditor since 2024.
October 11, 2024
| F-1 |
SIDUS SPACE, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Accounts receivable - related parties | ||||||||
| Inventory | ||||||||
| Contract asset | ||||||||
| Contract asset - related party | ||||||||
| Prepaid and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangible asset | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and other current liabilities | $ | $ | ||||||
| Accounts payable and accrued interest - related party | ||||||||
| Contract liability | ||||||||
| Contract liability - related party | ||||||||
| Asset-based loan liability | ||||||||
| Notes payable | ||||||||
| Operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability - non-current | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Equity’ | ||||||||
| Preferred Stock: shares authorized; $ par value; shares issued and outstanding | ||||||||
| Series A convertible preferred stock: shares authorized; and shares issued and outstanding, respectively | ||||||||
| Common stock: authorized; $ par value | ||||||||
| Class A common stock: shares authorized; and shares issued and outstanding, respectively | ||||||||
| Class B common stock: shares authorized; shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
See auditor’s report and notes to the audited financial statements
| F-2 |
SIDUS SPACE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Years Ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenue | $ | $ | ||||||
| Revenue - related parties | ||||||||
| Total - revenue | ||||||||
| Cost of revenue | ||||||||
| Gross profit (loss) | ||||||||
| Operating expenses | ||||||||
| Selling, general and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Net loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Other income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Asset-based loan expense | ( | ) | ( | ) | ||||
| Finance expense | ( | ) | ||||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Dividend on Series A preferred Stock | ( | ) | ||||||
| Net loss attributed to stockholders | ( | ) | ( | ) | ||||
| Basic and diluted loss per common share | $ | ) | $ | ) | ||||
| Basic and diluted weighted average number of common shares outstanding | ||||||||
See auditor’s report and notes to the audited financial statements
| F-3 |
SIDUS SPACE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Series A Preferred Stock | Class A Common Stock | Class B Common Stock | Additional Paid-In | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance - December 31, 2021 | $ | ( | ) | |||||||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||
| Class A common stock issued for cash | - | - | ||||||||||||||||||||||||||||||||||
| Class A common stock issued for service | - | - | ||||||||||||||||||||||||||||||||||
| Debt forgiveness related party | - | - | - | |||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance - December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Series A preferred stock units issued | - | - | ||||||||||||||||||||||||||||||||||
| Class A common stock issued for conversion of Series A preferred stock and dividend | ( | ) | - | |||||||||||||||||||||||||||||||||
| Class A common stock units issued | - | - | ||||||||||||||||||||||||||||||||||
| Class A common stock issued for exercise of warrants | - | - | ||||||||||||||||||||||||||||||||||
| Warrants issued for finance expense | - | |||||||||||||||||||||||||||||||||||
| Vested Board Compensation | - | - | - | |||||||||||||||||||||||||||||||||
| Stock option expense | - | - | ||||||||||||||||||||||||||||||||||
| Dividend on Series A preferred Stock | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Common stock issue for reverse split adjustment | - | - | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance - December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
SIDUS SPACE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Bad debt | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Accounts receivable - related party | ||||||||
| Inventory | ( | ) | ( | ) | ||||
| Contract asset | ( | ) | ( | ) | ||||
| Contract asset - related party | ( | ) | ( | ) | ||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ||||||||
| Accounts payable and accrued liabilities - related party | ||||||||
| Contract liability | ||||||||
| Contract liability - related party | ( | ) | ||||||
| Changes in operating lease assets and liabilities | ( | ) | ( | ) | ||||
| Net Cash used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Cash paid for asset acquisition | ( | ) | ||||||
| Net Cash used in Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from issuance of common stock units | ||||||||
| Proceeds from issuance of Series A preferred stock units | ||||||||
| Proceeds from asset-based loan agreement | ||||||||
| Repayment of asset-based loan agreement | ( | ) | ||||||
| Repayment of notes payable | ( | ) | ||||||
| Payment of lease liabilities | ( | ) | ||||||
| Repayment of notes payable - related party | ( | ) | ||||||
| Dividend paid | ( | ) | ||||||
| Net Cash provided by Financing Activities | ||||||||
| Net change in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Non-cash Investing and Financing transactions: | ||||||||
| Debt forgiveness | $ | $ | ||||||
| Class A common stock issued for conversion of Series A convertible preferred stock | $ | $ | ||||||
| Common stock issue for reverse split adjustment | $ | $ | ||||||
| Modification of right-of-use asset and lease liability | $ | $ | ||||||
| Class A common stock issued for exercised cashless warrant | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
SIDUS SPACE, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
Note 1. Organization and Description of Business
Organization
Sidus Space Inc. (“Sidus”, “we”, “us” or the “Company”), was formed as Craig Technologies Aerospace Solutions, LLC, in the state of Florida, on July 17, 2012. On April 16, 2021, the Company filed a Certificate of Conversion to register and incorporate with the state of Delaware and on August 13, 2021 changed the company name to Sidus Space, Inc.
Description of Business
Founded in 2012, we are a growing U.S. commercial space company with an established manufacturing business who has been trusted to provide mission-critical space hardware to many of the top aerospace businesses for over a decade. We plan to offer on-orbit services as the space economy expands; said services are either in a developmental phase or soon to achieve flight heritage. We have strategically decided to expand our business by moving up the satellite value chain by becoming a provider of responsive and scalable on-orbit infrastructure as well as collecting Space and Earth observational data to capture larger market needs.
To address Commercial and Government customer needs and mission sets, we plan to organize into three core business lines: manufacturing services; space-infrastructure-as-a-service; and space-based data and insights. Our vertically integrated model is complementary across each line of business aiming to expand existing and unlock new potential revenue generating opportunities. Additionally, we look to further transition into a subscription-based model upon the digitization of our manufacturing process as we expand alongside our space-based focus.
Reverse Stock Split
On
December 6, 2023, the Board approved a
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and are presented in US dollars. The Company uses the accrual basis of accounting and has adopted a December 31 fiscal year end.
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. For the full year ended December 31, 2022, the Company has reclassified operating expenses to selling, general and administrative expenses.
Going Concern
For the year ended December 31, 2023 the Company had a net loss of $
Principles of Consolidation
The consolidated financial statements include the variable interest entity (“VIE”), Aurea Alas Limited (“Aurea”), of which we are the primary beneficiary. Aurea is a Limited company organized in the Isle of Man, which entered into a license agreement with a third party vendor, whereby they licensed the rights to use certain available radio frequency spectrum for satellite communications. All intercompany transactions and balances have been eliminated on consolidation.
| F-6 |
For entities determined to be VIEs, an evaluation is required to determine whether the Company is the primary beneficiary. The Company evaluates its economic interests in the entity specifically determining if the Company has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance (“the power”) and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE (“the benefits”). When making the determination on whether the benefits received from an entity are significant, the Company considers the total economics of the entity, and analyzes whether the Company’s share of the economics is significant. The Company utilizes qualitative factors, and, where applicable, quantitative factors, while performing the analysis.
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations,, the fair value of and/or potential impairment of property and equipment; product life cycles; useful lives of our property and equipment; allowances for doubtful accounts; the market value of, and demand for, our inventory; fair value calculation of warrant; and the potential outcome of uncertain tax positions that have been recognized in our consolidated financial statements or tax returns.
Cash and Cash Equivalents
For
purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market
funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company
had
Periodically,
the Company may carry cash balances at financial institutions more than the federally insured limit of $
Accounts Receivable
Accounts
receivable are stated at the amount of consideration from customers of which the Company has an unconditional right to receive plus any
accrued and unpaid interest. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables,
historical collection information and existing economic conditions. The Company sells certain accounts receivable with recourse in order
to accelerate the receipt of cash. Bechtel and L3 make up approximately
Bad Debt and Allowance for Doubtful Accounts
Historically the Company has been able to collect all past due amounts and has not written off past due invoices, therefore there is limited historical data on the company’s historical losses or expected losses at this time. In compliance with GAAP the Company has determined the following policy will be followed regarding outstanding customer invoices.
An allowance for doubtful accounts has been established to reflect the anticipated uncollectible value of the related receivable account. Review procedures have been established to provide a realistic reserve based on past collection experience and anticipated losses on the receivables.
| F-7 |
The company will utilize the allowance method based on accounts receivable aging in order to accrue bad debt expense and the contra balance sheet account, allowance for doubtful accounts. The accounts receivable aging will be reviewed quarterly and necessary adjustments made to the allowance for doubtful accounts account balance. The Company will review their policy annually to determine if adjustments should be made based on more recent accounts receivable trends.
During
the years ended December 31, 2023 and 2022, the Company recorded bad debt of $
The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation.” The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the consolidated statements of operations and comprehensive income based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.
Share-based payments are valued using a Black-Scholes option pricing model. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service.
The expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. The Company uses the simplified method to calculate expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The share price as of the grant date was determined by current market prices for our common stock. Expected volatility is based on the historical stock price volatility of comparable companies’ common stock, as our stock does not have sufficient historical trading activity. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods.
Contract Assets and Contract Liabilities
The amounts included within contract assets and contract liabilities are related to the company’s long-term construction contracts. Retainage for which the company has an unconditional right to payment that is only subject to the passage of time is classified as contracts receivable. Retainage subject to conditions other than the passage of time are included in contract assets and contract liabilities on a net basis at the individual contract level. Contract assets represent revenue recognized in excess of amounts paid or payable (contracts receivable) to the company on uncompleted contracts. Contract liabilities represent the company’s obligation to perform on uncompleted contracts with customers for which the company has received payment or for which contracts receivable are outstanding.
Inventory
Inventory consists of work in progress and consists of estimated revenue calculated on a percentage of completion based on direct labor and materials in relation to the total contract value. The Company does not maintain raw materials.
Property and Equipment
Property
and equipment, consisting mostly of plant and machinery, motor vehicles and computer equipment, is recorded at cost reduced by accumulated
depreciation and impairment, if any. Construction in progress generally involves short-term capital projects and is not depreciated until
the development has reached completion and the asset has been put into service. Depreciation expense is recognized over the assets’
estimated useful lives of to
| F-8 |
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
Fair Value Measurements
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:
| ● | Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; | |
| ● | Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and | |
| ● | Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. |
The Company’s financial instruments, including cash, accounts receivable, prepaid expense and other current assets, accounts payable and accrued liabilities, and loans payable, are carried at historical cost. At December 31, 2023 and 2022, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
Business Combinations
Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred.
Intangible Assets
Intangible assets with an indefinite life are not amortized and are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired.
Intangible assets with finite lives are initially recorded at cost and amortized on a straight-line basis over the estimated economic useful lives of the respective assets.
Acquired intangible assets from business combinations are recognized and measured at fair value at the time of acquisition. The identifiable intangible asset recognized in the Company’s acquisitions is a customer list, which will be tested for impairment annually.
Revenue Recognition
The Company adopted ASC 606 – Revenue from Contracts with Customers using the modified retrospective transition approach. The core principle of ASC 606 is that revenue should be recognized in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled for exchange of those goods or services. The Company’s updated accounting policies and related disclosures are set forth below, including the disclosure for disaggregated revenue. The impact of adopting ASC 606 was not material to the Consolidated Financial Statements.
| F-9 |
Revenue from the Company is recognized under Topic 606 in a manner that reasonably reflects the delivery of its services and products to customers in return for expected consideration and includes the following elements:
| ● | executed contracts with the Company’s customers that it believes are legally enforceable; | |
| ● | identification of performance obligations in the respective contract; | |
| ● | determination of the transaction price for each performance obligation in the respective contract; | |
| ● | Allocation of the transaction price to each performance obligation; and | |
| ● | recognition of revenue only when the Company satisfies each performance obligation. |
These five elements, as applied to each of the Company’s revenue category, is summarized below:
Revenues from fixed price contracts that are still in progress at month end are recognized on the percentage-of-completion method, measured by the percentage of total costs incurred to date to the estimated total costs for each contract. This method is used because management considers total costs to be the best available measure of progress on these contracts. Revenue from fixed price contracts and time-and-materials contracts that are completed in the month the work was started are recognized when the work is shipped. To achieve this core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize revenues when or as the Company satisfies a performance obligation.
Revenues from fixed price service contracts that contain provisions for milestone payments are recognized at the time of the milestone being met and payment received. This method is used because management considers that the payments are nonrefundable unless the entity fails to perform as promised. If the customer terminates the contract, the Company is entitled only to retain any progress payments received from the customer and the Company has no further rights to compensation from the customer. Even though the payments made by the customer are nonrefundable, the cumulative amount of those payments is not expected, at all times throughout the contract, to at least correspond to the amount that would be necessary to compensate the Company for performance completed to date. Accordingly, the Company accounts for the progress under the contract as a performance obligation satisfied at a point in time. To achieve this core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize revenues when or as the Company satisfies a performance obligation.
Cost of revenue
Costs are recognized when incurred. Cost of revenue consists of direct labor, subcontract, materials, depreciation on machinery and equipment, and other direct costs.
The Company has adopted ASC Topic 260, “Earnings per Share” which requires presentation of basic earnings per share on the face of the statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation. In the accompanying financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock and potentially dilutive outstanding shares of common stock during the period to reflect the potential dilution that could occur from common stock issuable through contingent share arrangements, stock options and warrants unless the result would be antidilutive.
| F-10 |
2023 Shares | 2022 Shares | |||||||
| Warrants | ||||||||
| Series A convertible preferred stock | ||||||||
| Total common stock equivalents | ||||||||
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Leases with a lease term of 12 months or less at inception are not recorded on our balance sheet and are expensed on a straight-line basis over the lease term in our statement of operations.
Income Taxes
The Company adopted FASB ASC 740, Income Taxes, at its inception. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. No deferred tax assets or liabilities were recognized as of December 31, 2023 or December 31, 2022.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
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 additional paid-in capital 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 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 are recognized as a non-cash gain or loss on the statements of operations. The fair value of the warrants was estimated using a Black-Scholes pricing model.
| F-11 |
Recent Accounting Pronouncements
In June 2022, the FASB issued ASU 2022-03, ASC Subtopic “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this update are effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements.
The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.
Note 3. Variable Interest Entity
Through a declaration of trust, % of the voting rights of Aurea’s shareholders have been transferred to the Company so that the Company has effective control over Aurea and has the power to direct the activities of Aurea that most significantly impact its economic performance. There are no restrictions on the consolidated VIE’s assets and on the settlement of its liabilities and all carrying amounts of VIE’s assets and liabilities are consolidated with the Company’s financial statements.
If facts and circumstances change such that the conclusion to consolidate the VIE has changed, the Company shall disclose the primary factors that caused the change and the effect on the Company’s financial statements in the periods when the change occurs.
As of December 31, 2023 and 2022, Aurea’s assets and liabilities are as follows:
December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid and other current assets | ||||||||
| $ | $ | |||||||
| Liability | ||||||||
| Accounts payable and other current liabilities | $ | $ | ||||||
For
the years ended December 31, 2023 and 2022, Aurea’s net loss was $
| F-12 |
Note 4. Prepaid expense and Other current assets
As of December 31, 2023 and 2022, prepaid expense and other current assets are as follows:
December 31, 2023 | December 31, 2022 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid components | ||||||||
| Prepaid satellite services & licenses | ||||||||
| Prepaid software | ||||||||
| VAT receivable | ||||||||
| Other current assets | ||||||||
| $ | $ | |||||||
During
the years ended December 31, 2023 and 2022, the Company recorded interest expense of $
Note 5. Inventory
As of December 31, 2023 and 2022, inventory is as follows:
| December 31, 2023 | December 31, 2022 | |||||||
| Work in Process | $ | $ | ||||||
Note 6. Property and Equipment
At December 31, 2023 and 2022, property and equipment consisted of the following:
December 31, 2023 | December 31, 2022 | |||||||
| Office equipment | $ | $ | ||||||
| Computer equipment | ||||||||
| Vehicle | ||||||||
| Software | ||||||||
| Machinery | ||||||||
| Leasehold improvements | ||||||||
| R&D software | ||||||||
| Construction in progress | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net of accumulated depreciation | $ | $ | ||||||
As of December 31, 2023 and 2022, construction in progress represents components to be used in the manufacturing of our satellites.
Depreciation
expense of property and equipment for the years ended December 31, 2023 and 2022 is $
During
the years ended December 31, 2023 and 2022, the Company purchased assets of $
| F-13 |
Note 7. Business Acquisition
On
August 18, 2023, the Company entered into an Asset Conveyance Agreement (the “Purchase Agreement”) with Exo-Space Inc., a
Delaware corporation (“Exo-Space”), and certain shareholders thereof. The Purchase Agreement provided for the acquisition
by the Company of substantially all of the assets of Exo-Space (the “Assets”) which includes the customer contracts and lists
related to Exo-Space’s business of providing analytics services by (i) providing on-orbit data processing services, including satellite
imaging intelligence services, and (ii) the development of artificial intelligence and machine learning technology and software used
for the on-orbit processing of data (the “Business”) from Exo-Space. The purchase price for the Assets was approximately
$
In addition, on August 18, 2023, the Company entered into a Sale of Business Non-Competition and Non-Solicitation Agreement with Exo-Space Inc. and each of Jeremy Allam (“Allam”), Mark Lorden (“Lorden”), Marcel Lariviere (“Lariviere”) and Tate Schaar (“Schaar” and collectively, with Allam, Lorden and Lariviere, the “Sellers”) pursuant to which the Sellers agreed to keep confidential certain information related to the Business and agreed to a five (5) year non-compete and non-solicitation.
On August 21, 2023 (the “Closing Date”), the Company completed its acquisition of the Assets related to Exo-Space (the “Acquisition”). As part of the Acquisition, Jeremy Allam, Marcel Lariviere, Mark Lorden and Tate Schaar entered into employment agreements with the Company which granted non-statutory stock options to Jeremy Allam, Marcel Lariviere, Mark Lorden and Tate Schaar with respect to the following number of shares of the Company’s common stock: (Allam); (Lariviere); (Lorden) and (Schaar). These option awards were made outside of the Company’s 2021 Omnibus Equity Incentive Plan and are made pursuant to the NASDAQ inducement grant exception in connection with such individuals’ commencement of employment with the Company which is August 21, 2023. The option awards have an exercise price of $ which is equal to the fair market value of our stock on August 21, 2023, the date of grant of such options. The options have a five ()-year term and shall vest in four (4) equal installments on each of the first four (4) anniversaries of the date of grant, in each case subject to the optionee continuing to provide services to the Company through the applicable vesting date. Notwithstanding the foregoing vesting conditions, no portion of the options shall be exercisable prior to the second (2nd) anniversary of the date of grant. In the event that the applicable optionee resigns from employment for any reason prior to the second (2nd) anniversary of the date of grant, the option will be immediately cancelled and terminated on the date of such resignation.
Pro
forma results of operations have not been presented because the effects of the Acquisition was not material to our consolidated results
of operations. Acquisition-related costs included legal fees of $
| Cash paid | $ | |||
| Assets Acquired: | ||||
| Accounts receivable | $ | |||
| Inventory | ||||
| Property and equipment | ||||
| Intangible asset | ||||
| Total | $ |
Note 8. Accounts payable and other current liabilities
At December 31, 2023 and 2022, accounts payable and other current liabilities consisted of the following:
December 31, 2023 | December 31, 2022 | |||||||
| Accounts payable | $ | $ | ||||||
| Payroll liabilities | ||||||||
| Credit card liability | ||||||||
| Other payable | ||||||||
| Dividend payable | ||||||||
| Accrued interest - related party | ||||||||
| Insurance payable | ||||||||
| $ | $ | |||||||
| F-14 |
Note 9. Asset-based loan
The
Company is party to a recourse loan and security agreement with an unrelated lender dated November 30, 2022, whereby the lender will
provide loans secured by certain accounts receivable for up to
Note 10. Contract assets and liabilities
At December 31, 2023 and 2022, contract assets and contract liabilities consisted of the following:
| Contract assets | December 31, 2023 | December 31, 2022 | ||||||
| Revenue recognized in excess of amounts paid or payable (contracts receivable) to the company on uncompleted contracts (contract asset), excluding retainage | $ | $ | ||||||
| Retainage included in contract assets due to being conditional on something other than solely passage of time | ||||||||
| Retainage included in contract assets due to being conditional on something other than solely passage of time – related party | ||||||||
| Total contract assets | $ | $ | ||||||
| Contract liabilities | December 31, 2023 | December 31, 2022 | ||||||
| Payments received or receivable (contracts receivable) in excess of revenue recognized on uncompleted contracts (contract liability), excluding retainage | $ | $ | ||||||
| Retainage included in contract liabilities due to being conditional on something other than solely passage of time | ||||||||
| Retainage included in contract liabilities due to being conditional on something other than solely passage of time – related party | ||||||||
| Total contract liabilities | $ | $ | ||||||
| F-15 |
Note 11. Leases
Operating lease
We recognized total lease expense, primarily related to our operating leases, on a straight-line basis in accordance with ASC 842.
As
of December 31, 2023 and 2022, the Company recorded a refundable security deposit of $
The operating lease expense were as follows:
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Operating lease cost | $ | $ | ||||||
Supplemental balance sheet information related to operating leases was as follows:
December 31, 2023 | December 31, 2022 | |||||||
| Operating lease right-of-use assets at inception | $ | $ | ||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Total operating lease right-of-use assets | $ | $ | ||||||
| Operating lease liabilities - current | $ | $ | ||||||
| Operating lease liabilities - non-current | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Weighted-average remaining lease term — operating leases (year) | ||||||||
| Weighted-average discount rate — operating leases | % | % | ||||||
Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at December 31, 2023 were as follows:
| Year Ending December 31, | ||||
| 2024 | $ | |||
| Thereafter | ||||
| Less: Imputed interest | ( | ) | ||
| Operating lease liabilities |
| F-16 |
Finance lease
The
Company leases machinery and office equipment under non-cancellable finance lease arrangements. The term of those capital leases is at
the range from
During
the year ended December 31, 2022, the Company fully paid off the two outstanding finance leases totaling $
During
the years ended December 31, 2023 and 2022, the Company recorded depreciation of finance lease assets of $
Note 12. Notes Payable
Decathlon Note
On
December 3, 2021, we entered into a Loan Assignment and Assumption Agreement, or Loan Assignment, with Decathlon Alpha IV, L.P., or Decathlon
and Craig Technical Consulting, Inc (“CTC”) pursuant to which we assumed the Decathlon Note. In connection with our assumption
of the Decathlon Note, CTC reduced the principal of the Note Payable – related party by $
Management
believes that the assumption of the Decathlon Note from CTC is in our best interests because in connection therewith, Decathlon released
us from a cross-collateralization agreement it was a party to with CTC for a loan of a greater amount. Also in connection with the Loan
Assignment on December 3, 2021, we entered into a Revenue Loan and Security Agreement, or RLSA, with Decathlon and our CEO, Carol Craig,
pursuant to which we pay interest based on a minimum rate of one (1) times the amount advanced and make monthly payments based on a percentage
of our revenue calculated as an amount equal to the product of (i) all revenue for the immediately preceding month multiplied by (ii)
the Applicable Revenue Percentage, defined as
During
the years ended December 31, 2023 and 2022, the Company recorded interest expense of $
Note 13. Related Party Transactions
Revenue and Accounts Receivable
The
Company recognized revenue of $
Accounts Payable
As
of December 31, 2023 and 2022, the Company owed $
Note Payable – Related Party
During
the year ended December 31, 2022, the Company repaid $
| F-17 |
As
of December 31, 2023 and 2022, the Company had note payable – related party current of $
Cost of Revenue
For
the years ended December 31, 2023 and 2022, the Company recorded cost of revenue to Craig Technical Consulting, Inc. of $
Professional Service Agreements
A Professional Services Agreement, effective November 15, 2021, was made, between the Company and Craig Technical Consulting, Inc. The period of performance for this Agreement was December 1, 2021, through November 30, 2022. The agreement was amended and the term of agreement was extended to November 30, 2024.
During
the year ended December 31, 2023 and 2022, the Company recorded professional services of $
Sublease
On
August 1, 2021, the Company entered into a Sublease Agreement with its related party and a principal shareholder (“Sublandlord”),
whereby the Company shall sublease certain offices, rooms and shared use of common spaces located at 150 Sykes Creek Parkway, Merritt
Island, FL. The Lease is a month-to-month lease and may be terminated with 30 day’s notice to the Sublandlord. The monthly rent
shall be $
Note 14. Commitments and Contingencies
Litigation
The Company is currently involved in various civil litigation in the normal course of business none of which is considered material.
License Agreement
The
consolidated financial statements include Aurea Alas Limited, which is a variable interest entity of which we are the primary beneficiary
(see Note 3). On August 18, 2020, Aurea entered into a license agreement with a third-party vendor (the “Vendor”), whereby
they licensed the rights to use certain available radio frequency spectrum for satellite communications. The Company shall pay an annual
Reservation Fee of $
| F-18 |
Note 15. Stockholder’s Equity
Authorized Capital Stock
Effective July 3, 2023, the Company filed Amended and Restated Certificate of Incorporation to amend for authorized capital stock to authorize the Company to issue shares.
The Company has authorized shares of preferred stock with a par value of $.
The
Company has authorized shares of common stock with a par value of $, consisting of shares of Class A Common
Stock and shares of Class B Common Stock.
Series A Convertible Preferred Stock
On
October 11, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional
investors, pursuant to which the Company agreed to issue and sell to such investor, in a registered direct offering (the “Offering”),
an aggregate of shares of the Company’s Series A convertible preferred stock, par value $ per share and stated value
of $ per share (the “Series A Preferred Stock”) at an offering price of $ per share. Each share of Series A Preferred
Stock is convertible into shares of the Company’s Class A Common Stock at an initial conversion price of $
During
the year ended December 31, 2023, shares of Series A convertible preferred stock and a related dividend of $
The Company had and shares of Series A Convertible preferred stock issued and outstanding as of December 31, 2023 and 2022, respectively.
Class A Common Stock
The Company had and shares of Class A common stock issued and outstanding as of December 31, 2023 and 2022, respectively.
Fiscal year 2023
On
January 30, 2023, the Company offered an aggregate of up to shares of our Class A common stock and pre-funded warrants to purchase
up to an aggregate
| F-19 |
On
April 20, 2023, the Company sold an aggregate of shares of our Class A Common Stock and pre-funded warrants to purchase up to
an aggregate
During
the year ended December 31, 2023, Class A Common Stock were issued upon cashless exercise of warrants and Class A Common
Stock were issued upon exercise of pre-funded warrants of $
Fiscal year 2022
During the year ended December 31, 2022, the Company issued shares of common stock as follows:
| ● |
restricted shares for consulting services valued at $ | |
| ● |
shares issued under the Purchase Agreement (inclusive of commitment shares to the underwriter), for aggregate proceeds of $ |
Class B Common Sock
The Company had shares of Class B common stock issued and outstanding as of December 31, 2023 and 2022.
Warrants
January 2023 offering
For
the year ended December 31, 2023, the Company issued a total of
April 2023 offering
For
the year ended December 31, 2023, the Company issued a total of
October 2023 offering
For
the year ended December 31, 2023, the Company issued
| F-20 |
For
the year ended December 31, 2023, and 2022, the Company recognized finance expense of $
Year ended December 31, 2023 | ||||
| Expected term | ||||
| Expected average volatility | % | |||
| Expected dividend yield | ||||
| Risk-free interest rate | % |
A summary of activity of the warrants during the year ended December 31, 2023 as follows:
| Number of | Weighted average | Average | ||||||||||
| shares | Exercise Price | Life (years) | ||||||||||
| Outstanding, December 31, 2022 | $ | - | ||||||||||
| Granted | ||||||||||||
| Granted | ||||||||||||
| Granted | ||||||||||||
| Granted | ||||||||||||
| Granted | ||||||||||||
| Granted | ||||||||||||
| Exercised | ( | ) | - | |||||||||
| Exercised | ( | ) | - | |||||||||
| Expired | - | |||||||||||
| Outstanding, December 31, 2023 | $ | |||||||||||
| Exercisable, December 31, 2023 | $ | |||||||||||
The intrinsic value of the warrants as of December 31, 2023 is $.
Stock Options
On August 21, 2023, the Company granted options with an exercise price of $ with a term of five () years to exercise from the grant date, to employees of the Company.
In October 2023, the Company granted options with an exercise price of $, with a term of five () years to exercise from the grant date, to an employee of the Company under separation agreement. Options vest at grant date.
Year Ended December 31, 2023 | ||||
| Expected term | - years | |||
| Expected average volatility | % | |||
| Expected dividend yield | ||||
| Risk-free interest rate | - % | |||
| F-21 |
During
the year ended December 31, 2023, the Company granted options valued at $
| Options Outstanding | Weighted | |||||||||||
| Number of | Weighted Average | Average Remaining life | ||||||||||
| Options | Exercise Price | (years) | ||||||||||
| Outstanding, December 31, 2022 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | - | |||||||||||
| Forfeited/canceled | - | |||||||||||
| Outstanding, December 31, 2023 | $ | |||||||||||
| Exercisable options, December 31, 2023 | $ | |||||||||||
Note 16. Income tax
The Company has not made a provision for income taxes for the year ended December 31, 2023 and 2022, since the Company has the benefit of net operating losses in these periods and the Company changed from a limited liability partnership to a C corporation during 2021.
Due
to uncertainties surrounding the Company’s ability to generate future taxable income to realize deferred income tax assets arising
as a result of net operating losses carried forward, the Company has not recorded any deferred income tax assets as of December 31, 2023.
The Company has incurred a net operating loss of $
A
reconciliation between expected income taxes, computed at the federal income tax rate of
Years Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Loss for the year | $ | ( | ) | $ | ( | ) | ||
| Income tax (recovery) at statutory rate | $ | ( | ) | $ | ( | ) | ||
| State income tax expense, net of federal tax effect | ( | ) | ( | ) | ||||
| Permanent difference and other | ||||||||
| Change in valuation allowance | ||||||||
| Income tax expense per books | $ | $ | ||||||
| F-22 |
Net deferred tax assets consist of the following components as of:
December 31, 2023 | December 31, 2022 | |||||||
| Non-operating loss carryforward | $ | $ | ||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset | $ | $ | ||||||
Note 17. Subsequent Events
Subsequent
to December 31, 2023, shares of Series A Convertible Preferred Stock and dividend payable of $
Subsequent
to December 31, 2023,
On
January 29, 2024, the Company entered into a public offering of an aggregate of shares of Class A Common Stock and pre-funded
warrants to purchase up to an aggregate of
On
February 29, 2024, the Company entered into a public offering of an aggregate of shares (the “Shares”) of
Class A Common Stock, which have been sold pursuant to that certain Underwriting Agreement, dated February 29, 2024, by and between the
Company and the Representative of the Underwriters. Gross proceeds from the offering were $
| F-23 |
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
| (a) | The following documents are filed as part of this report: |
| (1) | Financial Statements: |
The consolidated financial statements required by this Item are included beginning at page F-1.
| (1) | Financial Statement Schedules: |
All financial statement schedules have been omitted because they are not applicable, not required or the information required is shown in the consolidated financial statements or the notes thereto.
(b) Exhibits
The following documents are included as exhibits to this report.
| 4 |
+ Management contract or compensatory plan or arrangement.
# Pursuant to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit were omitted by means of marking such portions with an asterisk because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed.
* Previously filed
ITEM 16. FORM 10-K SUMMARY
None.
| 5 |
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized on this 11th day of October 2024.
| SIDUS SPACE, INC. | |
| /s/ Carol Craig | |
| Carol Craig | |
Chief Executive Officer (Principal Executive Officer) |
Pursuant to the requirements of the Securities Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Carol Craig | Chief Executive Officer (Principal Executive Officer) | October 11, 2024 | ||
| Carol Craig | ||||
| * | Chief Financial Officer (Principal Financial and Accounting Officer) |
October 11, 2024 | ||
| Bill White | ||||
| * | Director and Chairman | October 11, 2024 | ||
| Leonardo Riera | ||||
| * | Director | October 11, 2024 | ||
| Dana Kilborne | ||||
| * | Director | October 11, 2024 | ||
| Cole Oliver | ||||
| * | Director | October 11, 2024 | ||
| Richard Berman | ||||
| /s/ Jeffrey Shuman | Director | October 11, 2024 | ||
Jeffrey Shuman |
||||
| Director | October 11, 2024 | |||
Lavanson “LC” Coffey III |
| * By: | /s/ Carol Craig | |
Carol Craig |
||
| Attorney-in-Fact |
| 6 |