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YoY shift: Lean -
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.23pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-
Not scored
Net-tone change vs last year's 10-K.
MD&A
-0.23pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
No section text extracted for this filing. The 10-K may use a non-standard template that the parser doesn't recognize - the original doc is still linked in the Stats tab.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
decline+4
Positive rising
No words rose this year.
MD&A (Item 7)
1,540 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
This Annual Report contains forward-looking statements. Our actual results could differ materially from those set forth because of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this Annual Report. See “Cautionary Note Regarding Forward Looking Statements” above.
Year ended December 31, 2023 as compared to year ended December 31, 2022
Revenues. During the year ended December 31, 2023, the Company had operating revenues of $2,498,566, as compared to operating revenues of $$7,515,451 for the year ended December 31, 2022. The decrease from 2022 to 2023 was $5,016,975 (67%). The decline was due to a decline in sales at SST.
Cost of Revenues. During the year ended December 31, 2023, cost of revenues was $1,920,142, as compared to cost or revenues of $6,467,990 for the year ended December 31, 2022. The decrease from 2022 to 2023 was $4,547,848 (70%). Cost of sales primarily includes cost of equipment, cost of labor, cost of transportation and delivery, and allocation of corporate overhead. The decline was due to a decline in sales at SST.
Gross Profit . Gross profit for the year ended December 31, 2023 was $578,424as compared to gross profit of $1,047,551 for the year ended December 31, 2022. Gross profit expressed as a percentage of sales for 2022 was 23%, as compared to 14% for 2022.
Operating Expenses. During the year ended December 31, 2023, the Company incurred operating expenses of $2,241,606 consisting primarily of the impairment of Goodwill and Intangible assets, payroll, professional and consulting fees. Of the operating expense, $1,031,638 consists of non-cash expenses, such as depreciation and amortization and expenses for shares and warrants issued for services. During the year ended December 31, 2022, the Company incurred operating expenses of $2,645,480 consisting primarily of payroll, professional and consulting fees. Of the operating expense, $981,594 consists of non-cash expenses, such as depreciation and amortization and expenses for shares and warrants issued for services.
Other Income (Expenses) . During the year ended December 31, 2023, the Company incurred other income (expense) $79,444 consisting of interest expense, amortization of debt discounts, gain on investments, debt settlement, loan forgiveness, loss on debt conversions, derivative liability expense and derivative expense. During the year ended December 31, 2022, the Company incurred other income (expense) $2,083,561 consisting of interest expense, amortization of debt discounts, loss on investments, debt settlement, loan forgiveness, loss on debt conversions, derivative liability expense and derivative expense.
Net Losses . As a result of the above, the Company incurred a net loss of $1,583,738, for the year ended December 31, 2023, as compared to a net loss of $3,681,490 for the year ended December 31, 2022.
Our Auditors Have Issued a Going Concern Opinion
The Company’s independent registered public accounting firm has expressed substantial doubt as to the Company’s ability to continue as a going concern as of December 31, 2023. The consolidated financial statements in this report on Form 10-K have been prepared assuming that the Company will continue as a going concern. As discussed in the notes to the consolidated financial statements, these conditions raise substantial doubt from the Company’s ability to continue as a going concern. The Company’s plans in regard to these matters are also described in the notes to the Company’s consolidated financial statements. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
As reflected in the accompanying consolidated financial statements, for the year ended December 31, 2023, the Company had:
a net loss of $1,583,738; and
net cash used in operations of $176,588.
Additionally, at December 31, 2023, the Company had:
an accumulated deficit of $25,799,891;
stockholders’ deficit of $3,120,474; and
a working capital deficit of $3,701,663.
Liquidity and Capital Resources at December 31, 2023
Operating Activities
For the years ended December 31, 2023 and 2022, the Company reflected net cash used in operating activities of $176,588 and $858,229, respectively, a decrease of $681,641 (79%). Operating activities primarily consist of a net loss of $1,583,738, offset by non-cash net expenses of $361,878, and increases in accounts receivable, inventory, and prepaid expenses, offset by an increase in accounts payable and decrease in deferred revenues.
Investing Activities
For the year ended December 31, 2023 and 2022, the Company reflected net cash provided by (used in) investing activities of $(9,007) and $89,941.
Financing Activities
For the year ended December 31, 2023 and 2022, the Company reflected net cash provided by financing activities of $93,071 and $817,612, respectively, a decrease of $724,541 (89%). Financing activities primarily consisted of proceeds and repayments from debt, proceeds and related drawdown on the accounts receivable credit facility and proceeds from the issuance of common stock and Class A preferred stock.
We manage liquidity risk by reviewing, on an ongoing basis, our sources of capital and capital required to support sales and operations. The Company has cash on hand of $99,954 at December 31, 2022. Although the Company intends to raise additional debt and equity capital, the Company may continue to incur losses from operations and incur negative cash flows from operating activities over the near-term. Future potential losses could be significant as sales increase along with associated expenses related to compensation, professional fees, business development and regulatory compliance.
The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieveprofitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis of our current circumstances including our financial position, our cash flows and cash usage forecasts for the twelve months ended December 31, 2023, and our current capital structure including equity-based instruments and our obligations and debts.
If the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations. The Company continues to explore obtaining additional capital financing and is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about our ability to continue as a going concern within the twelve-month period subsequent to the date that these consolidated financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. Accordingly, the consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management’s strategic plans include the following:
Pursuing additional capital raising opportunities (debt or equity),
Continue to execute on our strategic planning while increasing operational efficiency,
Continuing to explore and execute prospective partnering or distribution opportunities; and
We expect our expenses will continue to increase during the foreseeable future as a result of increased operational expenses and the development of our clean air and audio/visual businesses. Consequently, our dependence on the proceeds from future debt or equity investments will be used to implement our business plan of expanding our business through mergers and acquisition and expanding revenues through growing sales in the clean air and audio/visual businesses. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adverse effect on our anticipated results from operations and financial condition. There is no assurance that we will be able to obtain necessary amounts of additional capital or that our estimates of our capital requirements will prove to be accurate. As of the date of this report, we did not have any commitments from any source to provide such additional capital. Even if we are able to secure outside financing, it may be unavailable in the amounts or the times when we require. Furthermore, such financing would likely take the form of bank loans, private placement of debt or equity securities or some combination of these. The issuance of additional equity securities would dilute the stock ownership of current investors while incurring loans, leases, or debt which would increase our capital requirements and a possible loss of valuable assets if such obligations were not repaid in accordance with their terms.
Summary of Significant Accounting Policies
See Note 2 to the Consolidated Financial Statements included in Item 8 of this Annual Report.
