UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

COMMISSION FILE NUMBER 000-55805

 

JAMES MARITIME HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

95-4363944

(State of incorporation)

 

(I.R.S. Employer Identification No.)

 

9160 South 300 West, #101

Sandy, UT 84070

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (801) 706-9429

 

Not applicable

(Former name, address and fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/A

N/A

N/A

 

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 ☐     No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions 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

Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes      No ☒

 

As of June 6, 2024, there were 8,566,429 shares of our common stock, par value $0.001 per share, and 400,000 shares of our preferred stock, par value $0.001 outstanding.

 

 

 

 

 

JAMES MARITIME HOLDINGS INC.

FORM 10-Q

FOR THE THREE MONTHS ENDED MARCH 31, 2024

 

TABLE OF CONTENTS

 

 

 

PAGE

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1. Financial Statements

 

4-17

 

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

5

 

 

 

 

 

Item 3. Quantitative and Qualitative Disclosure About Market Risk

 

7

 

 

 

 

 

Item 4. Controls and Procedures

 

7

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

Item 1. Legal Proceedings

 

8

 

 

 

 

 

Item 1A. Risk Factors

 

8

 

 

 

 

 

Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

 

8

 

 

 

 

 

Item 3. Defaults Upon Senior Securities

 

8

 

 

 

 

 

Item 4. Mine Safety Disclosure

 

8

 

 

 

 

 

Item 5. Other Information

 

8

 

 

 

 

 

Item 6. Exhibits

 

9

 

 

 

 

 

SIGNATURES

 

10

 

 

 

 

 

EXHIBIT INDEX

 

 

 

 

 

3

Table of Contents

 

PART I – FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements

 

James Maritime Holdings Inc.

A Nevada Corporation

Condensed Consolidated Financial Statements (Unaudited)

March 31, 2024

 

James Maritime Holdings Inc.

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

Condensed Consolidated Financial Statements:

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023

 

F-2

 

 

 

 

 

Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2024 and 2023

 

F-3

 

 

 

 

 

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the three months ended March 31, 2024 and 2023

 

F-4

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2024 and 2023

 

F-5

 

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

F-6-F-17

 

 

 
4

Table of Contents

  

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 AS OF MARCH 31, 2024 (UNAUDITED) AND DECEMBER 31, 2023

 

 

 

March 31,

2024

 

 

December 31,

2023

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$290,869

 

 

$45,551

 

Accounts receivables

 

 

371,835

 

 

 

720,112

 

Prepaid expenses and other current assets

 

 

453,071

 

 

 

42,724

 

Total current assets

 

 

1,115,775

 

 

 

808,387

 

 

 

 

 

 

 

 

 

 

Due from related parties

 

 

217,419

 

 

 

7,400

 

Intangible assets

 

 

2,088,274

 

 

 

2,088,274

 

Property and equipment, net

 

 

135,722

 

 

 

159,142

 

Right-of-use asset

 

 

319,204

 

 

 

346,986

 

Total assets

 

$3,876,394

 

 

$3,410,189

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$1,236,551

 

 

$1,455,216

 

Accrued payroll expenses

 

 

149,055

 

 

 

214,691

 

Due to related parties

 

 

-

 

 

 

7,960

 

Notes payable, current portion

 

 

167,319

 

 

 

536,251

 

Convertible debenture, current portion

 

 

35,000

 

 

 

35,000

 

Loans payable, current portion

 

 

552,832

 

 

 

760,842

 

Embedded conversion feature

 

 

175,045

 

 

 

175,045

 

Operating lease liability, current

 

 

83,950

 

 

 

81,805

 

Total current liabilities

 

 

2,399,753

 

 

 

3,266,810

 

 

 

 

 

 

 

 

 

 

Notes payable, net of current portion

 

 

110,287

 

 

 

110,287

 

Loans payable, net of current portion

 

 

67,800

 

 

 

67,800

 

Operating lease liability

 

 

269,693

 

 

 

288,413

 

Total liabilities

 

 

2,847,533

 

 

 

3,733,310

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Preferred Stock – Series A, 2,000,000 authorized shares, $0.001 par value; 400,000 shares issued and outstanding, as of March 31, 2024 and December 31, 2023

 

 

400

 

 

 

400

 

Common Stock, 90,000,000 shares authorized, $0.001 par value; 8,566,429 and 9,064,129 shares issued and outstanding as of March 31, 2024 and December 31, 2023

 

 

8,566

 

 

 

9,064

 

Additional paid-in capital

 

 

13,769,537

 

 

 

13,769,537

 

Accumulated deficit

 

 

(12,563,446 )

 

 

(13,915,927 )

Equity (deficit) attributable to shareholders of James Maritime Holdings, Inc.

 

 

1,028,861

 

 

 

(136,926 )

Non-controlling interest

 

 

(186,196 )

 

 

(186,196 )

Total shareholders’ equity (deficit)

 

 

1,028,861

 

 

 

(323,122 )

Total liabilities and shareholders’ equity (deficit)

 

$3,876,394

 

 

$3,410,189

 

 

 
F-2

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

 FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

 

 

 Three months ended March 31,

 

 

 

2024

 

 

2023

 

Net sales

 

$1,952,553

 

 

$2,736,403

 

Cost of goods sold

 

 

1,281,776

 

 

 

2,040,863

 

Gross profit

 

 

670,777

 

 

 

695,540

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

 

201,408

 

 

 

934,373

 

Loss on impairment of intangible assets

 

 

-

 

 

 

911,467

 

Total operating expenses

 

 

201,408

 

 

 

1,845,840

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

469,369

 

 

 

(1,150,299 )

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(160,067 )

 

 

(183,745 )

Financial expenses

 

 

(48,664 )

 

 

(15,108 )

Change in fair value of derivative liability

 

 

-

 

 

 

156,354

 

PPP forgiveness

 

 

1,091,374

 

 

 

-

 

Other income

 

 

468

 

 

 

246

 

Total other income (expense), net

 

 

883,112

 

 

 

(42,253 )

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$1,352,481

 

 

$(1,192,552 )

 

 

 

 

 

 

 

 

 

Less: net loss attributable to non-controlling interests

 

 

-

 

 

 

(151,513 )

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to James Maritime Holdings, Inc. and subsidiaries

 

$1,352,481

 

 

$(1,041,039 )

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

9,030,040

 

 

 

9,006,047

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$0.15

 

 

$(0.12 )

 

The accompanying notes to the consolidated financial statements are an integral part of these statements.

 

 
F-3

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Equity (deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 attributable

 

 

Non-

 

 

Total 

 

 

 

           Preferred Stock

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

to the

 

 

 controlling

 

 

Shareholders’ Equity

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

 Amount

 

 

Capital

 

 

Deficit

 

 

Company

 

 

interest

 

 

(Deficit)

 

Balance as at January 1, 2023

 

 

400,000

 

 

$400

 

 

 

9,004,129

 

 

$9,004

 

 

$13,656,447

 

 

$(11,454,076 )

 

$2,211,775

 

 

$(29,082 )

 

$2,182,693

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,041,039 )

 

 

(1,041,039 )

 

 

(151,513 )

 

 

(1,192,552 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as at March 31, 2023

 

 

400,000

 

 

$400

 

 

 

9,004,129

 

 

$9,004

 

 

$13,656,447

 

 

$(12,495,115 )

 

$1,170,736

 

 

$(180,595 )

 

$990,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as at January 1, 2024

 

 

400,000

 

 

$400

 

 

 

9,064,129

 

 

$9,064

 

 

$13,769,537

 

 

$(13,915,927 )

 

$(136,926 )

 

$(186,196 )

 

$(323,122 )

Shares cancelled

 

 

-

 

 

 

-

 

 

 

(866,667 )

 

 

(867 )

 

 

-

 

 

 

-

 

 

 

(867 )

 

 

-

 

 

 

(867 )

Shares reissued

 

 

-

 

 

 

-

 

 

 

368,967

 

 

 

369

 

 

 

-

 

 

 

-

 

 

 

369

 

 

 

-

 

 

 

369

 

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,352,481

 

 

 

1,352,481

 

 

 

-

 

 

 

1,352,481

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as at March 31, 2024

 

 

400,000

 

 

$400

 

 

 

8,566,429

 

 

$8,566

 

 

$13,769,537

 

 

$(12,563,446 )

 

$1,215,057

 

 

$(186,196 )

 

$1,028,861

 

 

The accompanying notes to the consolidated financial statements are an integral part of these statements.

 

 
F-4

Table of Contents

 

 JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

 

 

Three months ended March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$1,352,481

 

 

$(1,192,552 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Loss on impairment of goodwill and intangibles

 

 

-

 

 

 

911,467

 

Depreciation and amortization

 

 

23,421

 

 

 

606,122

 

Amortization of debt discounts

 

 

36,534

 

 

 

37,032

 

Change in fair value of derivative liability

 

 

-

 

 

 

(156,354 )

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(620,366 )

 

 

28,611

 

Accounts receivable

 

 

348,277

 

 

 

55,100

 

Other assets

 

 

27,782

 

 

 

(232,586 )

Due to related party

 

 

7,960

 

 

 

(21,367 )

Accounts payable and accrued expenses

 

 

(218,667 )

 

 

168,743

 

Accrued payroll

 

 

(65,636 )

 

 

10,925

 

Deferred revenue

 

 

-

 

 

 

(400,000 )

Net cash provided by (used in) operating activities

 

 

875,867

 

 

 

(184,860 )

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Payment of lease liabilities

 

 

(16,575 )

 

 

-

 

Payment of notes

 

 

(405,964 )

 

 

(371,913 )

Proceeds from loans

 

 

-

 

 

 

355,480

 

Payment of loans

 

 

(208,010 )

 

 

(177,584 )

Net cash used in financing activities

 

 

(630,549 )

 

 

(194,017 )

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

245,319

 

 

 

(378,877 )

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

45,551

 

 

 

455,454

 

Cash, end of period

 

$290,869

 

 

$76,577

 

 

 
F-5

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

1. Nature and Continuance of Operations

 

Business Operations Basis of Presentation

 

The accompanying consolidated financial statements include the accounts of James Maritime Holdings Inc. (“James Maritime”) and its majority-owned subsidiary, Gladiator Solutions Inc. (“Gladiator”), and its wholly owned subsidiary United Security Specialists Inc. (“USS”) (collectively as the “Company”). James Maritime Holdings, Inc. was incorporated in the State of Nevada on January 23, 2015.

 

Substantially all of the Company’s business is conducted through its subsidiaries, Gladiator and USS. Gladiator produces revenues through the distribution of personal protective products, primarily through mail-in orders to customers or via e-commerce sales generated through their website. USS provides professional security personnel enhanced by smartphone-based security applications.

 

Basis of Presentation and Principles of Consolidation

 

The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. The Company has adopted a December 31 fiscal year-end for financial statement reporting purposes.

 

All intercompany balances were eliminated in the condensed consolidated financial statements. Non-controlling interests are classified in the accompanying consolidated balance sheets as a component of equity. The amounts of consolidated net income (loss) attributable to both the Company and the non-controlling interests are separately presented in the accompanying consolidated statement of operations.

 

 
F-6

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

Going concern

 

The Company’s consolidated financial statements as of March 31, 2024, are prepared using U.S. GAAP, which contemplates continuation of the Company as a going concern. This contemplates the realization of assets and liquidation of liabilities in the ordinary course of business. The Company has yet to establish an ongoing source of revenue to finance its operating expenses and to continue as a going concern.

 

During the three months ended March 31, 2024, the Company generated net income of $1,352,481. The accumulated deficit as of March 31, 2024 is $12,563,446 ($13,915,927 as of December 31, 2023). In order to continue as a going concern, the Company plans to receive funds through the selling of equity securities to existing and new shareholders. The Company is also evaluating potential acquisitions in the corporate security space. Additionally, the Company has created and maintained good customer relationships during 2024 for USS, which the Company is relying on to potentially generate sustainable sales throughout 2024 and afterward. While management maintains they will be able to continue to generate sufficient cash flows through a combination of operations, debt, and equity raises, there is no guarantee the Company will be able to raise or generate additional funds in the short term to meet present obligations as they come due. Due to these factors, there is substantial doubt the Company may be able to continue as a going concern. The financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

2. Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities.

 

Estimates are used for, but not limited to, the accounting for inventories, impairment of long-term assets and derivatives.

 

It is reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existing at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results of could differ significantly from those estimates.

 

Business Combinations

 

The Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non- controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of assets and liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.

 

Cash

 

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.

 

 
F-7

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

Concentration of Credit Risk

 

The Company maintains its cash accounts with financial institutions, where, at times, deposits exceed federal insurance limits of $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances due to its assessment of the credit worthiness and financial viability of the financial institutions.

 

Inventories

 

Inventories consist primarily of finished goods. Costs of finished goods inventories include all costs incurred to bring inventory to its current condition, which includes standard cost paid to suppliers, shipping costs, and other costs. The Company values its inventory using specific identification method of each inventory item. If the Company determines that the estimated net realizable value of its inventory is less than the carrying value of such inventory, it records a charge to cost of goods sold to reflect the lower of cost or net realizable value. If actual market conditions are less favorable than those projected by the Company, further adjustments may be required that would increase the cost of goods sold in the period in which such a determination was made. As of March 31, 2024 and December 31, 2023, the Company had no inventory on hand.

 

Accounts Receivable

 

Accounts receivables are generally recorded at the invoiced amounts, net of an allowance for expected losses. The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. The allowance for accounts receivable is established through a provision reducing the carrying value of receivables. At March 31, 2024 and December 31, 2023, the Company determined that no allowance was necessary.

 

Leases

 

The Company accounts for a contract as a lease when it has the right to direct the use of the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its right-of-use (“ROU”) assets and lease liabilities at the lease commencement date and thereafter if modified. ROU assets and liabilities are represented on the balance sheet at the present value of future minimum lease payments to be made over the lease term. Leases that are insignificant or with a 12-month term or less at inception are not recorded on the consolidated balance sheet and are expensed as incurred in the consolidated statements of operations. As of December 31, 2023, the Company leased real estate and office space (the “Saratoga Lease”) under non-cancelable operating lease agreements that qualified for ROU accounting treatment. As of March 31, 2023, the Company was in default for the Saratoga Lease and, subsequent to March 31, 2023, terminated the lease with the landlord in a settlement agreement. Commencing on February 1, 2023, the Company leased a second real estate and office space (the “Suite 200 Lease”) under non-cancelable operating lease agreement that qualified for ROU accounting treatment.

 

Property and equipment

 

The Company records depreciation when appropriate using the straight-line method over the estimated useful life of the assets. Property and equipment are stated at cost less accumulated depreciation. The estimated useful lives of the Company’s property and equipment by class are as follows:

 

Asset classes

 

Useful lives (in years)

Vehicles

 

5

Furniture and fixtures

 

7

 

Management regularly reviews property, equipment, and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based on management’s assessment, there were no indicators of impairment of the Company’s property and equipment as of March 31, 2024 or December 31, 2023.

 

 
F-8

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

Intangible Assets

 

Intangible assets are recorded at their estimated fair value at the date of acquisition and are allocated to the reporting units that are expected to receive the related benefits.

 

Convertible Debt and Derivative Liabilities

 

The convertible debt is convertible into shares of common stock at a conversion rate of 10% of the lowest trading price during the previous five trading days. The terms of the embedded conversion feature require embedded derivative instrument treatment and classification as a separate liability. The conversion feature and certain other features are considered embedded derivative instruments, such as a conversion reset provision, a penalty provision and redemption option, which are to be recorded at their fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note. The Company records the resulting discount on debt related to the conversion features at initial transaction and amortizes the discount using the effective interest rate method over the life of the debt instruments. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the consolidated statement of operations.

 

Revenue recognition

 

The Company recognizes revenue when it satisfies its performance obligations by transferring control of promised products or services to its customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services.

 

The Company determines revenue recognition through the following five steps:

 

 

(1)

Identify the contract with the customer,

 

(2)

identify the performance obligations in the contract,

 

(3)

determine the transaction price,

 

(4)

allocate the transaction price to the performance obligations in the contract; and

 

(5)

recognize revenue when, or as, the performance obligations are satisfied.

 

Net revenues from Gladiator primarily consist of sales of personal protective products, including armor, plates, helmets, shields, and accessories shipped directly to customers. All revenue transactions for Gladiator comprise a single performance obligation, which consists of the sale of products to customers either through wholesale, intermediary, or direct-to-consumer channels. The company satisfies the performance obligation and records revenues when transfer of control has passed to the customer, based on the terms of sale. In all of the Companies revenue channels, transfer of control takes place at the point of sale upon shipment to customer.

 

Net revenues from USS primarily consist of security services provided to large residential, industrial, construction and government clients. Contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. The Company does offer discounts, but historically the discounts have been insignificant. The Company satisfies the performance obligation for the agreed-upon period of time and location and records revenues after completion. There are no services that would be considered fulfilled over an extended period of time and necessitate different accounting treatment.

 

Advertising Costs

 

Advertising costs are charged to selling, general, and administrative expenses. Advertising production costs are expensed the first time an advertisement related to such production costs is run. Media (television, print and radio) placement costs are expensed in the month during which the advertisement appears. Advertising expenses for the three months ended March 31, 2024 and 2023, were approximately $81,000 and $34,000, respectively.

 

 
F-9

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

Earnings per Share

 

Basic earnings per common share is computed by dividing net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are computed by dividing net income (loss) available to common stockholders for the period by the diluted weighted average common shares outstanding during the period. Diluted earnings per share reflects the potential dilution from common shares issuable through stock options, restricted stock units and other equity awards. For the three months ended March 31, 2024 and 2023, the Company generated net losses, therefore applying applicable equity instruments for diluted earnings per share would have had an anti-dilutive effect.

 

Fair Value of Financial Instruments

 

The carrying amounts shown for the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and notes and loans approximate fair value because of the short-term maturity of those instruments.

 

The Company groups its recurring, non-recurring and disclosure-only fair value measurements into the following levels when making fair value measurement disclosures:

 

Level 1 Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The Company and its subsidiaries use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques and option-pricing models), and / or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date of a change in tax rates. Deferred income tax assets are reduced by valuation allowances when necessary. On March 31, 2024 and December 31, 2023, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The 2020 through 2023 tax years remain subject to examination by federal and most state tax authorities.

 

Commitments and Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings. The Company evaluates the perceived merits of any legal proceedings, or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is possible but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

Non-controlling Interests

 

Non-controlling interests are classified in the accompanying consolidated balance sheet as a component of equity. The amounts of consolidated net income (loss) attributable to both the Company and the non-controlling interests are separately presented in the accompanying consolidated statements of operations.

 

 
F-10

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

3. Intangible Assets

 

The Company’s intangible assets are as follows:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Customer relationships

 

$2,420,014

 

 

$2,420,014

 

Supplier relationships

 

 

700,207

 

 

 

700,207

 

Employee expertise

 

 

1,719,807

 

 

 

1,719,807

 

Software development costs

 

 

99,609

 

 

 

99,609

 

Less: accumulated amortization and impairment loss

 

 

(2,851,363 )

 

 

(2,851,363 )

Net intangible assets

 

$2,088,274

 

 

$2,088,274

 

 

 
F-11

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

Amortization expense for the three months ended March 31, 2024 and 2023 equated to $nil and $287,635, respectively and is included in selling, general, and administrative expenses in the condensed consolidated statements of operations. During the three months ended March 31, 2024 and 2023, the Company recognized an impairment loss of $nil and $911,467, respectively, on assets acquired as part of the business combination with Gladiator, due to the uncertainty of future operations of that entity.

 

4. Property and Equipment

 

The table below displays the Company’s property and equipment balances as of March 31, 2024 and 2023, respectively.

 

 

 

2024

 

 

2023

 

Furniture and fixtures

 

$15,564

 

 

$16,062

 

Vehicles

 

 

195,322

 

 

 

195,322

 

Less: accumulated amortization

 

 

(75,164 )

 

 

(52,241 )

 

 

 

 

 

 

 

 

 

Total property and equipment, net

 

$135,722

 

 

$159,142

 

 

Depreciation expense for the three months ended March 31, 2024 and 2023 equated to $22,923 and $31,548, respectively and is included in selling, general, and administrative expenses in the condensed consolidated statements of operations.

 

5. Lease Payable

 

The Company leases its headquarters office. Leases with an initial term of 12 months or less or are immaterial are not included on the balance sheets. During the year ended December 31, 2020, the Company entered into an office lease for its administrative operations, (the “Saratoga lease”). The Saratoga lease is for a 48.5-month term, with an original expiration date of July 31, 2024, with an initial monthly payment of $8,819. Straight-line rent per month was calculated at $9,522. As of March 31, 2023, the Company was in default for the Saratoga Lease due to non-payment. Subsequent to March 31, 2023, the Company terminated the Saratoga Lease and entered into a settlement agreement with the landlord. During the quarter ending March 31, 2023, the Company entered a new lease for its headquarters office, (the “Suite 200 Lease”) for a 60 month lease with an expiration date of January 31, 2028 with an initial monthly payment of $7,943. There were no further changes as of March 31, 2024.

 

The components of lease expense included on the Company’s consolidated statements of operations were as follows:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Weighted average remaining lease term (in years)

 

 

2.85

 

 

 

2.85

 

Weighted average discount rate

 

 

7.6%

 

 

7.56%

 

Amounts relating to operating leases were presented on the consolidated balance sheets as of March 31, 2024 and December 31, 2023 in the following line items:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Operating Leases

 

 

 

 

 

 

ROU lease assets

 

$319,204

 

 

$346,986

 

Lease liabilities, short-term

 

 

223,179

 

 

 

81,805

 

Lease liabilities, long term

 

 

381,163

 

 

 

288,413

 

 

 
F-12

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

Future minimum lease payments required under operating leases on an undiscounted cash flow basis as of March 31, 2024 is as follows:

 

Fiscal Year

 

Operating Lease Payments

 

2024

 

$63,968

 

2025

 

 

101,346

 

2026

 

 

103,661

 

2027

 

 

107,020

 

2028

 

 

66,791

 

Total minimum lease payments

 

 

442,786

 

Less: imputed interest

 

 

(89,143 )

Present value of future minimum lease payments

 

 

353,643

 

Less:  current lease liabilities

 

 

(83,950 )

Operating lease liabilities, non-current

 

$269,693

 

 

6. Accounts Payable and Accrued Expenses

 

The accounts payable and accrued expenses balance consists of the following as of March 31, 2024 and December 31, 2023:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Accounts Payable

 

$374,736

 

 

$820,208

 

Credit card liability

 

 

69,382

 

 

 

50,040

 

Accrued interest

 

 

752,484

 

 

 

564,213

 

Taxes payable

 

 

39,949

 

 

 

20,755

 

 

 

1,236,551

 

 

$1,455,216

 

 

7. Notes Payable, current and non-current

 

The following table summarizes the outstanding notes payable amount owed by the Company as of March 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Kapitus

(a)

$122,973

 

 

$122,973

 

Henry Sierra

(b)

 

148,946

 

 

 

148,946

 

Padilla

(c)

 

5,687

 

 

 

58,256

 

Clearview

(d)

 

-

 

 

 

316,363

 

Total notes payable outstanding

 

$277,606

 

 

$646,538

 

Notes payable, current portion

 

 

167,319

 

 

 

536,251

 

Notes payable, excluding current

 

110,287

 

 

110,287

 

 

 
F-13

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

(a)

On November 4, 2020 Gladiator received $69,800 from their supplier, Kapitus Servicing Inc. Gladiator agreed to pay back the note in weekly installments of $1,419, which includes interest, for a total term of 15 months from commencement. The interest paid over the maturity period totals $22,336 (45.6% per annum). The note has been fully paid off as of December 31, 2023.

 

 

 

On August 20, 2021, Gladiator received $25,500 from their supplier, Kapitus Servicing Inc. Gladiator agreed to pay back the note in weekly installments of $519, which includes interest, for a total term of 15 months from commencement. The interest paid over the maturity period totals $8,205 (46.5% per annum). The note has been fully paid off as of December 31, 2023.

 

 

 

On September 15, 2022, Gladiator received additional funding of $150,000 from their supplier, Kapitus Servicing Inc. The Company agreed to pay back the note in weekly installments of $3,003, which includes interest, for a total term of 15 months from commencement. The interest paid over the maturity period totals $45,000 (24% per annum). For the year ended December 31, 2023, Gladiator paid $18,018 in interest expense related to this note. The Company accrued interest payable of $36,893 and $29,514, respectively, on this note as of and March 31, 2024 and December 31, 2023.

 

 

(b)

On September 23, 2021, Mr. Sierra resigned from his position of employment with USS. As a result, USS agreed to repurchase 100 shares of common stock held by Mr. Sierra and in exchange, issued a promissory note with a repurchase amount of $637,500. The repurchase amount was reduced by $405,545 as a result of distributions to Mr. Sierra from the Company. The remaining value of $231,955 is to be repaid through the promissory note. This note bears no interest and monthly installment payments are payable over 4 years beginning November 15, 2021. The promissory note was discounted at 6% prior to acquisition, however, was recognized at fair value upon the acquisition of USS by James Maritime, for an adjusted fair value of $182,773. As of March 31, 2024 and December 31, 2023, the note had an outstanding principal of $148,946, respectively.

 

 

(d)

On October 6, 2023, USS entered into a promissory note agreement with Ashley Padilla for $100,000, which matures on April 5, 2024. An origination and guarantee fee of $30,000 are included in the principal which was charged and discounted against the note over the term. As of December 31, 2023, the note had an outstanding balance of $58,256. As of March 31, 2024, the outstanding balance was $5,687.

 

 

(e)

On August 4, 2023, USS entered into a promissory note agreement with Clearview Funding Solutions for $400,000, which matured in February 2024. An origination and finance fee of $180,000 are included in the principal and discounted against the note over the term. As of December 31, 2023, the note had an outstanding balance of $318,363. The note was satisfied in full during the three months ended March 31, 2024.

 

8. Loans, current and non-current

 

The following table summarizes the outstanding loans amount owed by the Company as of March 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Quattro Capital

(a) 

$237,500

 

 

$250,000

 

Merchant cash advances

(b)

 

18,019

 

 

 

36,000

 

Vehicle loans

(c)

 

60,759

 

 

 

76,309

 

Newtek

(d)

 

236,554

 

 

 

398,533

 

SBA Loan

(e)

 

67,800

 

 

 

67,800

 

Total loans outstanding

 

$620,632

 

 

$828,642

 

Loans, current portion

 

 

552,832

 

 

 

760,842

 

Loans, excluding current

 

$ 

67,800

 

 

$ 

67,800

 

 

(a)

On December 9, 2022, Gladiator entered into a collateralized loan of the Company’s inventory with Quattro Capital LLC, a third-party lender. The Company received $250,000, maturing 60 days after the effective date, or February 9, 2023. The Company is responsible for paying additional fees related to the escrow agent and brokers in the amounts of $6,000 and $6,500, which is included in the loan balance as a debt discount. The interest will accrue at a non-compounding rate of 25% of the total loan value upon maturity (or $62,500). Penalty interest of $1,200 will accrue daily after the maturity date until the full value of the loan is paid. As of the date these condensed consolidated financial statements are filed, the loan is in default, and the Company has included interest (including penalty interest) of $565,625 as of March 31, 2024.

 

 

(b)

On September 16, 2022, Gladiator entered into a collateralized loan of the Company’s future receipts of receivables with Pinnacle Business Funding LLC (“PBF”). The Company received net amount of $145,500 (net of $$4,500 paid for ACH fees) in exchange for $202,500 receivables purchased by PBF. The Company agreed to pay $6,328 per week as funds are made available to be sent to PBF until paid off in its entirety. As of March 31, 2024 and December 31, 2023, $18,019 and $36,000 remains outstanding, respectively.

 

 
F-14

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

(b)

On November 18, 2021, USS entered into a collateralized loan of the Company’s future receipts of receivables with GHI Funding, LLC (“GHI”). The Company received a net amount of $180,000 (net of $20,000 paid for ACH fees) in exchange for $300,000 receivables purchased by GHI. The Company agreed to pay $2,600 every day for which funds are available to be sent to GHI until paid off in its entirety. This loan was satisfied in full during the year ended December 31, 2023.

 

 

(b)

On December 28, 2021, USS entered into a collateralized loan of the Company’s future receipts of receivables with Adar Funding, LLC (“AF”). The Company received a net amount $180,000 (net of $20,000 paid for ACH fees) in exchange for $300,000 receivables purchased by AF. The Company agreed to pay $5,000 every day for which funds are available to be sent to AF until paid off in its entirety. This loan was satisfied in full during the year ended December 31, 2023.

 

 

(c)

Upon acquisition of USS at September 23, 2022, the Company assumed the liabilities for eleven vehicle loans from USS which together had an outstanding total amount of $140,300. At March 31, 2024 and December 31, 2023, the total amount outstanding is $60,759 and $103,197, respectively, with 9 vehicle loans currently outstanding. The Company currently has loans for vehicles with interest rates between 0% and 12.6%, per annum. Monthly payments range from $98 to $695, with an aggregate monthly payment of $4,923. All loans have a term between 1 and 6 years.

 

 

(d)

On December 30, 2020, USS entered into a $466,000 loan agreement (“NewTek loan”) with an outside lender, NewTek Small Business Finance, LLC. The U.S. Small Business Administration (“SBA”) agreed to guarantee up to 75% of the NewTek loan principal in exchange for a guaranty fee of $10,485. Under the terms of the NewTek loan, the interest rate is the prime rate, plus 2.75% and may be adjusted every change period (every quarter). The interest rate is originally stated at 6%. Monthly installment payments, which include interest, began on February 2, 2021. As of March 31, 2024 and December 31, 2023, the principal balance was $236,554 and $398,533, respectively, and accrued interest payable as of March 31, 2024 and December 31, 2023 of $73,193 and $68,058, respectively.

 

 

(e)

On March 3, 2021, the Company received a loan from the U.S. Small Business Administration (“SBA”) in the amount of $67,900 with an interest rate of 3.75% per annum. The loan is due and payable thirty (30) years from the date of the note. Interest accrued as of March 31, 2024 and December 31, 2023 is $7,840 and $7,204, respectively.

 

9. Convertible Notes

 

On February 8, 2021, Gladiator entered into a note agreement with Pink Holdings LLC. The Company received $10,000 at a 6% interest rate per annum, maturing on February 7, 2022. All principal and interest are due upon maturity. The issuer of the note has the option to convert any part, or all of the outstanding interest or principal amount owed into fully paid and non-assessable shares of common stock of the Company at a stock price at the lower of 10% of the lowest trading price during the 5-trading day period ending on the conversion date per share. As of March 31, 2024 and December 31, 2023, the Company accrued $1,255 and $1,105, respectively, in interest related to this note. Due to the variable nature of the conversion feature, this note was determined to contain a derivative liability. It was valued using the Black-Scholes pricing model with the following inputs: 18,508 shares, stock price of $6.00, exercise price of $0.60, 0.1 year term, and volatility of 40.88%.

 

On February 26, 2021, Gladiator entered into a note agreement with Pink Holdings LLC. The Company received $25,000 at a 6% interest rate per annum, maturing on February 25, 2022. All principal and interest are due upon maturity. The issuer of the note has the option to convert any portion, or all of the outstanding interest or principal amount owed into fully paid and non-assessable shares of common stock of the Company at a stock price at the lower of 10% of the lowest trading day period ending on the conversion date per share. As of March 31, 2024 and December 31, 2023, the Company accrued $3,140 and $2,765, respectively, in interest related to this note. Due to the variable nature of the conversion feature, this note was determined to contain a derivative liability. It was valued using the Black-Scholes pricing model with the following inputs: 46,275 shares, stock price of $6.00, exercise price of $0.60, 0.1 year term, and volatility of 40.88%.

 

As of March 31, 2024, these notes have not been converted and are overdue.

 

 
F-15

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

10. Stockholders’ Equity

 

Common Stock

 

a. Authorized

 

The Company is authorized to issue 90,000,000 shares of common stock, each with a par value of $0.001.

 

b. Transactions during the three months ended March 31, 2024

 

On March 6, 2024, the Company cancelled 866,667 shares of common stock that was previously issued and re-issued the same shareholders a total of 368,967 in accordance with stated agreements.

 

There were no transactions during the three months ended March 31, 2023.

 

Preferred Stock

 

c. Authorized and voting rights

 

The Company is authorized to issue 2,000,000 shares of its series A preferred stock, each with a par value of $0.001. Each share of the series A preferred stock has the equivalent voting power of (30) thirty shares of the Company’s common stock. The series A preferred stock does not have any liquidation or dividend rights or preferences. On July 20, 2021 the Company converted 1,600,000 preferred shares held by a related party, in exchange for 750,000 shares of the Company’s common stock (the “July conversion”). The series A preferred stock does not have any native convertible rights, preferences, or other conversion terms, and the Company had not previously signed an agreement setting conversion terms for the July conversion. Therefore, the July conversion met the requirements under ASC 260 to be considered a preferred stock extinguishment for the purposes of calculating the company’s earnings per share available to common shareholders. There were no transactions during the three months ended March 31, 2024 and 2023.

 

Warrants

 

The following table summarizes the Company’s warrant activity:

 

 

 

Number of Warrants

 

 

Weighted Average Exercise Price

 

Outstanding at December 31, 2023

 

 

1,000,000

 

 

$3.50

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Expired/Cancelled

 

 

-

 

 

 

-

 

Outstanding at March 31, 2024

 

 

1,000,000

 

 

$3.50

 

Exercisable at December 31, 2023

 

 

1,000,000

 

 

$3.50

 

Exercisable at March 31, 2024

 

 

1,000,000

 

 

$3.50

 

 

 
F-16

Table of Contents

 

JAMES MARITIME HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

 

11. Subsequent Events

 

The Company evaluated subsequent events occurring from April 1, 2023 through June 6, 2024, the date in which the consolidated financial statements were available to be issued.

 

 
F-17

Table of Contents

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

This quarterly report contains forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words “believe,” “anticipate,” “expect,” “will,” “estimate,” “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. The terms “JMTM,” “we,” “us,” “our,” and the “Company” refer to James Maritime Holdings Inc., a Nevada corporation.

 

Business Overview

 

James Maritime Holdings, Inc. operates mainly through its subsidiaries, Gladiator and USS. Gladiator specializes in the distribution of personal protective products, largely through mail-in orders and e-commerce channels. On the other hand, USS offers a combination of professional security personnel services, enhanced by smartphone-based security applications, providing a unique blend of traditional and modern security solutions. The consolidated financial statements were prepared according to U.S. GAAP and SEC regulations. The Company has adopted a December 31 fiscal year-end for financial statement reporting.

 

The financial statements were prepared with estimates and assumptions that impact the reported amounts of assets and liabilities. These estimates were used for inventories, impairment of long-term assets, and derivatives. The actual results could differ significantly from these estimates. Business combinations were accounted for using the acquisition method. Assets, liabilities, and any remaining non-controlling interests were recognized at fair value on the acquisition date. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests, was recognized as goodwill. The company considers investments with an original maturity of three months or less at the purchase date as cash and cash equivalents.

 

Recent Developments

 

During the recent fiscal years, the company underwent significant corporate changes.

 

Share Exchange Agreements and Stock Conversions

 

James Maritime solidified its position in the market by becoming the majority shareholder of Gladiator Solutions Inc., holding approximately 86.7% of all shares outstanding as of December 13, 2021. The acquisition of Gladiator Solutions, Inc. resulted in the issuance of 866,667 shares and brought the total common stock balance to 7,354,129 by the end of 2021. Furthermore, on September 23, 2022, the company fortified its portfolio by completing a share exchange agreement with USS, resulting in James Maritime securing 100% of all USS shares. The acquisition of USS resulted in the issuance of 1,000,000 shares by the end of 2022, and the common stock balance reached 9,004,129. Additional paid-in capital also saw a significant increase to $13,656,447, reflecting the stock issuances and compensations during the year.

 

 
5

Table of Contents

 

 

Results of Operations

 

Three months ended March 31, 2024 and 2023

 

We had net sales of $1,952,553 for the three months ended March 31, 2024, as compared to $2,736,403 for the three months ended March 31, 2023, an decrease of $783,851 or 29%. This decrease in revenue was due to a reduction in operations of Gladiator between the two periods.

 

Cost of Goods Sold

 

Cost of Goods Sold for the three months ended March 31, 2024 was $2,040,863, as compared to $2,040,863 for the three months ended March 31, 2023, an decrease of $759,088 or 37%, due to decreased operations of Gladiator.

 

General and Administrative

 

Our general and administrative expenses for the three months ended March 31, 2024 were $201,408 a decrease of $934,373 or 78%, compared to $934,373 for the three months ended March 31, 2023.

 

Net loss

 

As a result of the foregoing, for the three months ended March 31, 2024, we recorded net income of $1,352,481 compared to a net loss of $1,192,552 for the three months ended March 31, 2023. The increase in net income was related to a reduction in operating expenses period over period, and the Company realized PPP forgiveness during the three months ended March 31, 2024 of $1,091,375.

 

Liquidity and Capital Resources

 

At March 31, 2024, the Company had $290,869 in cash. The Company has net income of $1,352,481 for the three months ended March 31, 2024, and an accumulated deficit of $12,563,446, and a working capital deficit of $1,283,978 at March 31, 2024. The Company’s condensed consolidated financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The accompanying condensed consolidated financial statements for the nine months ended March 31, 2024, have been prepared assuming the Company will continue as a going concern.

 

We do not believe that we have enough cash on hand to operate our business during the next 12 months. The Company will require additional financing to fund its future planned operations, including research and development and commercialization of its products. To date, the Company has financed its operation primarily from advances from its affiliates. The formal structure and payment terms of these advances have not yet been determined by the Company and the third parties. We do not have verbal or formal contracts with our affiliates obligating them to loan funds to us.

 

We may seek to raise additional funding that we require in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our operations. We currently do not have any agreements or arrangements in place for any future financing.

 

Operating Activities

 

During the three months ended March 31, 2024, we generated $875,867 of cash from operating activities primarily as a result of our net income of $1,352,481, offset by net changes in working capital items of operating assets and liabilities of $476,614.

 

During the three months ended March 31, 2023, we used $184,860 of cash in operating activities primarily as a result of our net loss of $1,192,552, offset by net changes in working capital items of operating assets and liabilities of $1,007,693.

 

Financing Activities

 

During the three months ended March 31, 2024, we used $630,549 of cash in financing activities as a result of $16,575 for payment of lease liabilities and repaid $405,964 of notes payable and $208,010 of loans payable.

 

During the three months ended March 31, 2023, we used $194,017 of cash in financing activities as a result of $355,480 in proceeds from bridge loans and repaid $371,913 of notes payable and $177,584 of loans.

 

Off-Balance Sheet Transactions

 

At March 31, 2024, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

 

 
6

Table of Contents

 

Item 3. Quantitative and Qualitative Disclosure About Market Risk

 

As a smaller reporting company, we are not required to provide the information required by this Item 3.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this Form 10-Q, management performed, with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive officer and principal financial officer concluded that, as of March 31, 2024, our disclosure controls and procedures were not effective.

 

Due to resource constraints, material weaknesses are evident to management regarding our inability to generate all the necessary disclosure for inclusion in our filings with the Securities and Exchanges Commission, which is due to the lack of resources and segregation of duties. We lack sufficient personnel with the appropriate level of knowledge, experience and training in GAAP to meet the demands for a public company, including the accounting skills and understanding necessary to fulfill the requirements of GAAP-based reporting. This weakness causes us to not fully identify and resolve accounting and disclosure issues that could lead to a failure to perform timely internal control and reviews. In addition, the Company has not established an audit committee, does not have any independent outside directors on the Company’s Board of Directors, and lacks documentation of its internal control processes.

 

Management’s Report on Internal Control Over Financial Reporting: Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The key internal controls for the Company are provided by executive management’s review and approval of all transactions. Our internal control over financial reporting also includes those policies and procedures that:

 

(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

 

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with the authorization of our management; and

 

(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management assessed the effectiveness of the Company’s internal controls and procedures over financial reporting as of March 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls.

 

Based on this assessment, specifically that the Company lacks sufficient personnel with the appropriate level of knowledge, experience and training in GAAP to meet the demands for a public company, including the accounting skills and understanding necessary to fulfill the requirements of GAAP-based reporting. This weakness causes us to not fully identify and resolve accounting and disclosure issues that could lead to a failure to perform timely internal control and reviews. In addition, the Company has not established an audit committee, does not have any independent outside directors on the Company’s Board of Directors, and lacks documentation of its internal control processes, management has concluded that as of March 31, 2024, our internal control over financial reporting was ineffective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 
7

Table of Contents

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or financial condition. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.

 

Item 1A. Risk Factors

 

Not required for smaller reporting companies.

 

Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None

 

 
8

Table of Contents

 

Item 6. Exhibits

 

Exhibit No.

 

Description of Exhibit

31.1 *

 

Rule 13a14(a)/15d-14(a) Certification of Principal Executive Officer

31.2 *

 

Rule 13a14(a)/15d-14(a) Certification of Principal Financial Officer

32.1 *

 

Section 1350 Certification of Principal Executive Officer/Principal Financial Officer

101.INS**

 

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH**

 

Inline XBRL Taxonomy Extension Schema Document

101.CAL**

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB**

 

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE**

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF**

 

Inline XBRL Taxonomy Definition Linkbase Document

104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

____________ 

* Filed herewith

** Furnished herewith (not filed)

 

 
9

Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

 

 

JAMES MARITIME HOLDINGS INC.

 

 

 

 

 

Date: June 6, 2024

By:

/s/ Kip Eardley

 

 

 

Kip Eardley

 

 

 

President (Principal Executive Officer)

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report 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/ Kip Eardley

 

President

 

June 6, 2024

Kip Eardley

 

(Principal Executive Officer)

 

 

 

 
10

 

nullnullnullv3.24.1.1.u2
Cover - shares
3 Months Ended
Mar. 31, 2024
Jun. 05, 2024
Cover [Abstract]    
Entity Registrant Name JAMES MARITIME HOLDINGS INC.  
Entity Central Index Key 0000889353  
Document Type 10-Q  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Small Business true  
Entity Shell Company false  
Entity Emerging Growth Company false  
Entity Current Reporting Status No  
Document Period End Date Mar. 31, 2024  
Entity Filer Category Non-accelerated Filer  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2024  
Entity Common Stock Shares Outstanding   8,566,429
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 000-55805  
Entity Incorporation State Country Code NV  
Entity Tax Identification Number 95-4363944  
Entity Address Address Line 1 9160 South 300 West  
Entity Address Address Line 2 #101  
Entity Address City Or Town Sandy  
Entity Address State Or Province UT  
Entity Address Postal Zip Code 84070  
City Area Code 801  
Local Phone Number 706-9429  
Entity Interactive Data Current Yes  
v3.24.1.1.u2
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Mar. 31, 2024
Dec. 31, 2023
ASSETS    
Cash $ 290,869 $ 45,551
Accounts receivables 371,835 720,112
Prepaid expenses and other current assets 453,071 42,724
Total current assets 1,115,775 808,387
Due from related parties 217,419 7,400
Intangible assets 2,088,274 2,088,274
Property and equipment, net 135,722 159,142
Right-of-use asset 319,204 346,986
Total assets 3,876,394 3,410,189
LIABILITIES    
Accounts payable and accrued expenses 1,236,551 1,455,216
Accrued payroll expenses 149,055 214,691
Due to related parties 0 7,960
Notes payable, current portion 167,319 536,251
Convertible debenture, current portion 35,000 35,000
Loans payable, current portion 552,832 760,842
Embedded conversion feature 175,045 175,045
Operating lease liability, current 83,950 81,805
Total current liabilities 2,399,753 3,266,810
Notes payable, net of current portion 110,287 110,287
Loans payable, net of current portion 67,800 67,800
Operating lease liability 269,693 288,413
Total liabilities 2,847,533 3,733,310
SHAREHOLDERS' EQUITY (DEFICIT)    
Preferred Stock - Series A, 2,000,000 authorized shares, $0.001 par value; 400,000 shares issued and outstanding, as of March 31, 2024 and December 31, 2023 400 400
Common Stock, 90,000,000 shares authorized, $0.001 par value; 8,566,429 and 9,064,129 shares issued and outstanding as of March 31, 2024 and December 31, 2023 8,566 9,064
Additional paid-in capital 13,769,537 13,769,537
Accumulated deficit (12,563,446) (13,915,927)
Equity (deficit) attributable to shareholders of James Maritime Holdings, Inc. 1,028,861 (136,926)
Non-controlling interest (186,196) (186,196)
Total shareholders' equity (deficit) 1,028,861 (323,122)
Total liabilities and shareholders' equity (deficit) $ 3,876,394 $ 3,410,189
v3.24.1.1.u2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Mar. 31, 2024
Dec. 31, 2023
Common Stock, par value (in dollars per share) $ 0.001 $ 0.001
Common Stock, shares authorized 90,000,000 90,000,000
Common Stock, shares issued 8,566,429 9,064,129
Common Stock, shares outstanding 8,566,429 9,064,129
Series A Preferred Stock    
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized 2,000,000 2,000,000
Preferred stock, shares issued 400,000 400,000
Preferred stock, shares outstanding 400,000 400,000
v3.24.1.1.u2
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)    
Net sales $ 1,952,553 $ 2,736,403
Cost of goods sold 1,281,776 2,040,863
Gross profit 670,777 695,540
Selling, general, and administrative expenses 201,408 934,373
Loss on impairment of intangible assets 0 911,467
Total operating expenses 201,408 1,845,840
Operating income (loss) 469,369 (1,150,299)
Other income (expense)    
Interest expense (160,067) (183,745)
Financial expenses (48,664) (15,108)
Change in fair value of derivative liability 0 156,354
PPP forgiveness 1,091,374 0
Other income 468 246
Total other income (expense), net 883,112 (42,253)
Net income (loss) 1,352,481 (1,192,552)
Less: net loss attributable to non-controlling interests 0 (151,513)
Net income (loss) attributable to James Maritime Holdings, Inc. and subsidiaries $ 1,352,481 $ (1,041,039)
Weighted average number of common shares outstanding:    
Basic and diluted 9,030,040 9,006,047
Net income (loss) per share:    
Basic and diluted $ 0.15 $ (0.12)
v3.24.1.1.u2
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (UNAUDITED) - USD ($)
Total
Common Stock
Preferred Stock
Additional Paid-In Capital
Retained Earnings (Accumulated Deficit)
Total Equity Attributable To The Company
Noncontrolling Interest
Balance, shares at Dec. 31, 2022   9,004,129 400,000        
Balance, amount at Dec. 31, 2022 $ 2,182,693 $ 9,004 $ 400 $ 13,656,447 $ (11,454,076) $ 2,211,775 $ (29,082)
Net loss (1,192,552) $ 0 $ 0 0 (1,041,039) (1,041,039) (151,513)
Balance, shares at Mar. 31, 2023   9,004,129 400,000        
Balance, amount at Mar. 31, 2023 990,141 $ 9,004 $ 400 13,656,447 (12,495,115) 1,170,736 (180,595)
Balance, shares at Dec. 31, 2023   9,064,129 400,000        
Balance, amount at Dec. 31, 2023 (323,122) $ 9,064 $ 400 13,769,537 (13,915,927) (136,926) (186,196)
Net loss 1,352,481 $ 0 0 0 1,352,481 1,352,481 0
Shares cancelled, shares   (866,667)          
Shares cancelled, amount (867) $ (867) 0 0 0 (867) 0
Shares reissued, shares   368,967          
Shares reissued, amount 369 $ 369 $ 0 0 0 369 0
Balance, shares at Mar. 31, 2024   8,566,429 400,000        
Balance, amount at Mar. 31, 2024 $ 1,028,861 $ 8,566 $ 400 $ 13,769,537 $ (12,563,446) $ 1,215,057 $ (186,196)
v3.24.1.1.u2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Cash flows from operating activities:    
Net income (loss) $ 1,352,481 $ (1,192,552)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Loss on impairment of goodwill and intangibles 0 911,467
Depreciation and amortization 23,421 606,122
Amortization of debt discounts 36,534 37,032
Change in fair value of derivative liability 0 (156,354)
Changes in operating assets and liabilities:    
Prepaid expenses and other current assets (620,366) 28,611
Accounts receivable 348,277 55,100
Other assets 27,782 (232,586)
Due to related party 7,960 (21,367)
Accounts payable and accrued expenses (218,667) 168,743
Accrued payroll (65,636) 10,925
Deferred revenue 0 (400,000)
Net cash provided by (used in) operating activities 875,867 (184,860)
Cash flows from financing activities    
Payment of lease liabilities (16,575) 0
Payment of notes (405,964) (371,913)
Proceeds from loans 0 355,480
Payment of loans (208,010) (177,584)
Net cash used in financing activities (630,549) (194,017)
Net increase (decrease) in cash 245,319 (378,877)
Cash, beginning of period 45,551 455,454
Cash, end of period $ 290,869 $ 76,577
v3.24.1.1.u2
Nature and Continuance of Operations
3 Months Ended
Mar. 31, 2024
Nature and Continuance of Operations  
Nature and Continuance of Operations

1. Nature and Continuance of Operations

 

Business Operations Basis of Presentation

 

The accompanying consolidated financial statements include the accounts of James Maritime Holdings Inc. (“James Maritime”) and its majority-owned subsidiary, Gladiator Solutions Inc. (“Gladiator”), and its wholly owned subsidiary United Security Specialists Inc. (“USS”) (collectively as the “Company”). James Maritime Holdings, Inc. was incorporated in the State of Nevada on January 23, 2015.

 

Substantially all of the Company’s business is conducted through its subsidiaries, Gladiator and USS. Gladiator produces revenues through the distribution of personal protective products, primarily through mail-in orders to customers or via e-commerce sales generated through their website. USS provides professional security personnel enhanced by smartphone-based security applications.

 

Basis of Presentation and Principles of Consolidation

 

The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC. The Company has adopted a December 31 fiscal year-end for financial statement reporting purposes.

 

All intercompany balances were eliminated in the condensed consolidated financial statements. Non-controlling interests are classified in the accompanying consolidated balance sheets as a component of equity. The amounts of consolidated net income (loss) attributable to both the Company and the non-controlling interests are separately presented in the accompanying consolidated statement of operations.

Going concern

 

The Company’s consolidated financial statements as of March 31, 2024, are prepared using U.S. GAAP, which contemplates continuation of the Company as a going concern. This contemplates the realization of assets and liquidation of liabilities in the ordinary course of business. The Company has yet to establish an ongoing source of revenue to finance its operating expenses and to continue as a going concern.

 

During the three months ended March 31, 2024, the Company generated net income of $1,352,481. The accumulated deficit as of March 31, 2024 is $12,563,446 ($13,915,927 as of December 31, 2023). In order to continue as a going concern, the Company plans to receive funds through the selling of equity securities to existing and new shareholders. The Company is also evaluating potential acquisitions in the corporate security space. Additionally, the Company has created and maintained good customer relationships during 2024 for USS, which the Company is relying on to potentially generate sustainable sales throughout 2024 and afterward. While management maintains they will be able to continue to generate sufficient cash flows through a combination of operations, debt, and equity raises, there is no guarantee the Company will be able to raise or generate additional funds in the short term to meet present obligations as they come due. Due to these factors, there is substantial doubt the Company may be able to continue as a going concern. The financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

v3.24.1.1.u2
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2024
Summary of Significant Accounting Policies  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities.

 

Estimates are used for, but not limited to, the accounting for inventories, impairment of long-term assets and derivatives.

 

It is reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existing at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results of could differ significantly from those estimates.

 

Business Combinations

 

The Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non- controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of assets and liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.

 

Cash

 

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.

Concentration of Credit Risk

 

The Company maintains its cash accounts with financial institutions, where, at times, deposits exceed federal insurance limits of $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances due to its assessment of the credit worthiness and financial viability of the financial institutions.

 

Inventories

 

Inventories consist primarily of finished goods. Costs of finished goods inventories include all costs incurred to bring inventory to its current condition, which includes standard cost paid to suppliers, shipping costs, and other costs. The Company values its inventory using specific identification method of each inventory item. If the Company determines that the estimated net realizable value of its inventory is less than the carrying value of such inventory, it records a charge to cost of goods sold to reflect the lower of cost or net realizable value. If actual market conditions are less favorable than those projected by the Company, further adjustments may be required that would increase the cost of goods sold in the period in which such a determination was made. As of March 31, 2024 and December 31, 2023, the Company had no inventory on hand.

 

Accounts Receivable

 

Accounts receivables are generally recorded at the invoiced amounts, net of an allowance for expected losses. The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. The allowance for accounts receivable is established through a provision reducing the carrying value of receivables. At March 31, 2024 and December 31, 2023, the Company determined that no allowance was necessary.

 

Leases

 

The Company accounts for a contract as a lease when it has the right to direct the use of the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its right-of-use (“ROU”) assets and lease liabilities at the lease commencement date and thereafter if modified. ROU assets and liabilities are represented on the balance sheet at the present value of future minimum lease payments to be made over the lease term. Leases that are insignificant or with a 12-month term or less at inception are not recorded on the consolidated balance sheet and are expensed as incurred in the consolidated statements of operations. As of December 31, 2023, the Company leased real estate and office space (the “Saratoga Lease”) under non-cancelable operating lease agreements that qualified for ROU accounting treatment. As of March 31, 2023, the Company was in default for the Saratoga Lease and, subsequent to March 31, 2023, terminated the lease with the landlord in a settlement agreement. Commencing on February 1, 2023, the Company leased a second real estate and office space (the “Suite 200 Lease”) under non-cancelable operating lease agreement that qualified for ROU accounting treatment.

 

Property and equipment

 

The Company records depreciation when appropriate using the straight-line method over the estimated useful life of the assets. Property and equipment are stated at cost less accumulated depreciation. The estimated useful lives of the Company’s property and equipment by class are as follows:

 

Asset classes

 

Useful lives (in years)

Vehicles

 

5

Furniture and fixtures

 

7

 

Management regularly reviews property, equipment, and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based on management’s assessment, there were no indicators of impairment of the Company’s property and equipment as of March 31, 2024 or December 31, 2023.

Intangible Assets

 

Intangible assets are recorded at their estimated fair value at the date of acquisition and are allocated to the reporting units that are expected to receive the related benefits.

 

Convertible Debt and Derivative Liabilities

 

The convertible debt is convertible into shares of common stock at a conversion rate of 10% of the lowest trading price during the previous five trading days. The terms of the embedded conversion feature require embedded derivative instrument treatment and classification as a separate liability. The conversion feature and certain other features are considered embedded derivative instruments, such as a conversion reset provision, a penalty provision and redemption option, which are to be recorded at their fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note. The Company records the resulting discount on debt related to the conversion features at initial transaction and amortizes the discount using the effective interest rate method over the life of the debt instruments. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the consolidated statement of operations.

 

Revenue recognition

 

The Company recognizes revenue when it satisfies its performance obligations by transferring control of promised products or services to its customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services.

 

The Company determines revenue recognition through the following five steps:

 

 

(1)

Identify the contract with the customer,

 

(2)

identify the performance obligations in the contract,

 

(3)

determine the transaction price,

 

(4)

allocate the transaction price to the performance obligations in the contract; and

 

(5)

recognize revenue when, or as, the performance obligations are satisfied.

 

Net revenues from Gladiator primarily consist of sales of personal protective products, including armor, plates, helmets, shields, and accessories shipped directly to customers. All revenue transactions for Gladiator comprise a single performance obligation, which consists of the sale of products to customers either through wholesale, intermediary, or direct-to-consumer channels. The company satisfies the performance obligation and records revenues when transfer of control has passed to the customer, based on the terms of sale. In all of the Companies revenue channels, transfer of control takes place at the point of sale upon shipment to customer.

 

Net revenues from USS primarily consist of security services provided to large residential, industrial, construction and government clients. Contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. The Company does offer discounts, but historically the discounts have been insignificant. The Company satisfies the performance obligation for the agreed-upon period of time and location and records revenues after completion. There are no services that would be considered fulfilled over an extended period of time and necessitate different accounting treatment.

 

Advertising Costs

 

Advertising costs are charged to selling, general, and administrative expenses. Advertising production costs are expensed the first time an advertisement related to such production costs is run. Media (television, print and radio) placement costs are expensed in the month during which the advertisement appears. Advertising expenses for the three months ended March 31, 2024 and 2023, were approximately $81,000 and $34,000, respectively.

Earnings per Share

 

Basic earnings per common share is computed by dividing net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are computed by dividing net income (loss) available to common stockholders for the period by the diluted weighted average common shares outstanding during the period. Diluted earnings per share reflects the potential dilution from common shares issuable through stock options, restricted stock units and other equity awards. For the three months ended March 31, 2024 and 2023, the Company generated net losses, therefore applying applicable equity instruments for diluted earnings per share would have had an anti-dilutive effect.

 

Fair Value of Financial Instruments

 

The carrying amounts shown for the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and notes and loans approximate fair value because of the short-term maturity of those instruments.

 

The Company groups its recurring, non-recurring and disclosure-only fair value measurements into the following levels when making fair value measurement disclosures:

 

Level 1 Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The Company and its subsidiaries use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques and option-pricing models), and / or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date of a change in tax rates. Deferred income tax assets are reduced by valuation allowances when necessary. On March 31, 2024 and December 31, 2023, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The 2020 through 2023 tax years remain subject to examination by federal and most state tax authorities.

 

Commitments and Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings. The Company evaluates the perceived merits of any legal proceedings, or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is possible but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

Non-controlling Interests

 

Non-controlling interests are classified in the accompanying consolidated balance sheet as a component of equity. The amounts of consolidated net income (loss) attributable to both the Company and the non-controlling interests are separately presented in the accompanying consolidated statements of operations.

v3.24.1.1.u2
Intangible Assets
3 Months Ended
Mar. 31, 2024
Intangible Assets  
Intangible Assets

3. Intangible Assets

 

The Company’s intangible assets are as follows:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Customer relationships

 

$2,420,014

 

 

$2,420,014

 

Supplier relationships

 

 

700,207

 

 

 

700,207

 

Employee expertise

 

 

1,719,807

 

 

 

1,719,807

 

Software development costs

 

 

99,609

 

 

 

99,609

 

Less: accumulated amortization and impairment loss

 

 

(2,851,363 )

 

 

(2,851,363 )

Net intangible assets

 

$2,088,274

 

 

$2,088,274

 

Amortization expense for the three months ended March 31, 2024 and 2023 equated to $nil and $287,635, respectively and is included in selling, general, and administrative expenses in the condensed consolidated statements of operations. During the three months ended March 31, 2024 and 2023, the Company recognized an impairment loss of $nil and $911,467, respectively, on assets acquired as part of the business combination with Gladiator, due to the uncertainty of future operations of that entity.

v3.24.1.1.u2
Property and Equipment
3 Months Ended
Mar. 31, 2024
Property and Equipment  
Property and Equipment

4. Property and Equipment

 

The table below displays the Company’s property and equipment balances as of March 31, 2024 and 2023, respectively.

 

 

 

2024

 

 

2023

 

Furniture and fixtures

 

$15,564

 

 

$16,062

 

Vehicles

 

 

195,322

 

 

 

195,322

 

Less: accumulated amortization

 

 

(75,164 )

 

 

(52,241 )

 

 

 

 

 

 

 

 

 

Total property and equipment, net

 

$135,722

 

 

$159,142

 

 

Depreciation expense for the three months ended March 31, 2024 and 2023 equated to $22,923 and $31,548, respectively and is included in selling, general, and administrative expenses in the condensed consolidated statements of operations.

v3.24.1.1.u2
Lease Payable
3 Months Ended
Mar. 31, 2024
Lease Payable  
Lease Payable

5. Lease Payable

 

The Company leases its headquarters office. Leases with an initial term of 12 months or less or are immaterial are not included on the balance sheets. During the year ended December 31, 2020, the Company entered into an office lease for its administrative operations, (the “Saratoga lease”). The Saratoga lease is for a 48.5-month term, with an original expiration date of July 31, 2024, with an initial monthly payment of $8,819. Straight-line rent per month was calculated at $9,522. As of March 31, 2023, the Company was in default for the Saratoga Lease due to non-payment. Subsequent to March 31, 2023, the Company terminated the Saratoga Lease and entered into a settlement agreement with the landlord. During the quarter ending March 31, 2023, the Company entered a new lease for its headquarters office, (the “Suite 200 Lease”) for a 60 month lease with an expiration date of January 31, 2028 with an initial monthly payment of $7,943. There were no further changes as of March 31, 2024.

 

The components of lease expense included on the Company’s consolidated statements of operations were as follows:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Weighted average remaining lease term (in years)

 

 

2.85

 

 

 

2.85

 

Weighted average discount rate

 

 

7.6%

 

 

7.56%

 

Amounts relating to operating leases were presented on the consolidated balance sheets as of March 31, 2024 and December 31, 2023 in the following line items:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Operating Leases

 

 

 

 

 

 

ROU lease assets

 

$319,204

 

 

$346,986

 

Lease liabilities, short-term

 

 

223,179

 

 

 

81,805

 

Lease liabilities, long term

 

 

381,163

 

 

 

288,413

 

Future minimum lease payments required under operating leases on an undiscounted cash flow basis as of March 31, 2024 is as follows:

 

Fiscal Year

 

Operating Lease Payments

 

2024

 

$63,968

 

2025

 

 

101,346

 

2026

 

 

103,661

 

2027

 

 

107,020

 

2028

 

 

66,791

 

Total minimum lease payments

 

 

442,786

 

Less: imputed interest

 

 

(89,143 )

Present value of future minimum lease payments

 

 

353,643

 

Less:  current lease liabilities

 

 

(83,950 )

Operating lease liabilities, non-current

 

$269,693

 

v3.24.1.1.u2
Accounts Payable and Accrued Expenses
3 Months Ended
Mar. 31, 2024
Accounts Payable and Accrued Expenses  
Accounts Payable and Accrued Expenses

6. Accounts Payable and Accrued Expenses

 

The accounts payable and accrued expenses balance consists of the following as of March 31, 2024 and December 31, 2023:

 

 

 

March 31,

2024

 

 

December 31,

2023

 

Accounts Payable

 

$374,736

 

 

$820,208

 

Credit card liability

 

 

69,382

 

 

 

50,040

 

Accrued interest

 

 

752,484

 

 

 

564,213

 

Taxes payable

 

 

39,949

 

 

 

20,755

 

 

 

1,236,551

 

 

$1,455,216

 

v3.24.1.1.u2
Notes Payable current and noncurrent
3 Months Ended
Mar. 31, 2024
Notes Payable current and noncurrent  
Notes Payable, current and non-current

7. Notes Payable, current and non-current

 

The following table summarizes the outstanding notes payable amount owed by the Company as of March 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Kapitus

(a)

$122,973

 

 

$122,973

 

Henry Sierra

(b)

 

148,946

 

 

 

148,946

 

Padilla

(c)

 

5,687

 

 

 

58,256

 

Clearview

(d)

 

-

 

 

 

316,363

 

Total notes payable outstanding

 

$277,606

 

 

$646,538

 

Notes payable, current portion

 

 

167,319

 

 

 

536,251

 

Notes payable, excluding current

 

110,287

 

 

110,287

 

(a)

On November 4, 2020 Gladiator received $69,800 from their supplier, Kapitus Servicing Inc. Gladiator agreed to pay back the note in weekly installments of $1,419, which includes interest, for a total term of 15 months from commencement. The interest paid over the maturity period totals $22,336 (45.6% per annum). The note has been fully paid off as of December 31, 2023.

 

 

 

On August 20, 2021, Gladiator received $25,500 from their supplier, Kapitus Servicing Inc. Gladiator agreed to pay back the note in weekly installments of $519, which includes interest, for a total term of 15 months from commencement. The interest paid over the maturity period totals $8,205 (46.5% per annum). The note has been fully paid off as of December 31, 2023.

 

 

 

On September 15, 2022, Gladiator received additional funding of $150,000 from their supplier, Kapitus Servicing Inc. The Company agreed to pay back the note in weekly installments of $3,003, which includes interest, for a total term of 15 months from commencement. The interest paid over the maturity period totals $45,000 (24% per annum). For the year ended December 31, 2023, Gladiator paid $18,018 in interest expense related to this note. The Company accrued interest payable of $36,893 and $29,514, respectively, on this note as of and March 31, 2024 and December 31, 2023.

 

 

(b)

On September 23, 2021, Mr. Sierra resigned from his position of employment with USS. As a result, USS agreed to repurchase 100 shares of common stock held by Mr. Sierra and in exchange, issued a promissory note with a repurchase amount of $637,500. The repurchase amount was reduced by $405,545 as a result of distributions to Mr. Sierra from the Company. The remaining value of $231,955 is to be repaid through the promissory note. This note bears no interest and monthly installment payments are payable over 4 years beginning November 15, 2021. The promissory note was discounted at 6% prior to acquisition, however, was recognized at fair value upon the acquisition of USS by James Maritime, for an adjusted fair value of $182,773. As of March 31, 2024 and December 31, 2023, the note had an outstanding principal of $148,946, respectively.

 

 

(d)

On October 6, 2023, USS entered into a promissory note agreement with Ashley Padilla for $100,000, which matures on April 5, 2024. An origination and guarantee fee of $30,000 are included in the principal which was charged and discounted against the note over the term. As of December 31, 2023, the note had an outstanding balance of $58,256. As of March 31, 2024, the outstanding balance was $5,687.

 

 

(e)

On August 4, 2023, USS entered into a promissory note agreement with Clearview Funding Solutions for $400,000, which matured in February 2024. An origination and finance fee of $180,000 are included in the principal and discounted against the note over the term. As of December 31, 2023, the note had an outstanding balance of $318,363. The note was satisfied in full during the three months ended March 31, 2024.

v3.24.1.1.u2
Loans current and noncurrent
3 Months Ended
Mar. 31, 2024
Loans current and noncurrent  
Loans, current and non-current

8. Loans, current and non-current

 

The following table summarizes the outstanding loans amount owed by the Company as of March 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Quattro Capital

(a) 

$237,500

 

 

$250,000

 

Merchant cash advances

(b)

 

18,019

 

 

 

36,000

 

Vehicle loans

(c)

 

60,759

 

 

 

76,309

 

Newtek

(d)

 

236,554

 

 

 

398,533

 

SBA Loan

(e)

 

67,800

 

 

 

67,800

 

Total loans outstanding

 

$620,632

 

 

$828,642

 

Loans, current portion

 

 

552,832

 

 

 

760,842

 

Loans, excluding current

 

$ 

67,800

 

 

$ 

67,800

 

 

(a)

On December 9, 2022, Gladiator entered into a collateralized loan of the Company’s inventory with Quattro Capital LLC, a third-party lender. The Company received $250,000, maturing 60 days after the effective date, or February 9, 2023. The Company is responsible for paying additional fees related to the escrow agent and brokers in the amounts of $6,000 and $6,500, which is included in the loan balance as a debt discount. The interest will accrue at a non-compounding rate of 25% of the total loan value upon maturity (or $62,500). Penalty interest of $1,200 will accrue daily after the maturity date until the full value of the loan is paid. As of the date these condensed consolidated financial statements are filed, the loan is in default, and the Company has included interest (including penalty interest) of $565,625 as of March 31, 2024.

 

 

(b)

On September 16, 2022, Gladiator entered into a collateralized loan of the Company’s future receipts of receivables with Pinnacle Business Funding LLC (“PBF”). The Company received net amount of $145,500 (net of $$4,500 paid for ACH fees) in exchange for $202,500 receivables purchased by PBF. The Company agreed to pay $6,328 per week as funds are made available to be sent to PBF until paid off in its entirety. As of March 31, 2024 and December 31, 2023, $18,019 and $36,000 remains outstanding, respectively.

(b)

On November 18, 2021, USS entered into a collateralized loan of the Company’s future receipts of receivables with GHI Funding, LLC (“GHI”). The Company received a net amount of $180,000 (net of $20,000 paid for ACH fees) in exchange for $300,000 receivables purchased by GHI. The Company agreed to pay $2,600 every day for which funds are available to be sent to GHI until paid off in its entirety. This loan was satisfied in full during the year ended December 31, 2023.

 

 

(b)

On December 28, 2021, USS entered into a collateralized loan of the Company’s future receipts of receivables with Adar Funding, LLC (“AF”). The Company received a net amount $180,000 (net of $20,000 paid for ACH fees) in exchange for $300,000 receivables purchased by AF. The Company agreed to pay $5,000 every day for which funds are available to be sent to AF until paid off in its entirety. This loan was satisfied in full during the year ended December 31, 2023.

 

 

(c)

Upon acquisition of USS at September 23, 2022, the Company assumed the liabilities for eleven vehicle loans from USS which together had an outstanding total amount of $140,300. At March 31, 2024 and December 31, 2023, the total amount outstanding is $60,759 and $103,197, respectively, with 9 vehicle loans currently outstanding. The Company currently has loans for vehicles with interest rates between 0% and 12.6%, per annum. Monthly payments range from $98 to $695, with an aggregate monthly payment of $4,923. All loans have a term between 1 and 6 years.

 

 

(d)

On December 30, 2020, USS entered into a $466,000 loan agreement (“NewTek loan”) with an outside lender, NewTek Small Business Finance, LLC. The U.S. Small Business Administration (“SBA”) agreed to guarantee up to 75% of the NewTek loan principal in exchange for a guaranty fee of $10,485. Under the terms of the NewTek loan, the interest rate is the prime rate, plus 2.75% and may be adjusted every change period (every quarter). The interest rate is originally stated at 6%. Monthly installment payments, which include interest, began on February 2, 2021. As of March 31, 2024 and December 31, 2023, the principal balance was $236,554 and $398,533, respectively, and accrued interest payable as of March 31, 2024 and December 31, 2023 of $73,193 and $68,058, respectively.

 

 

(e)

On March 3, 2021, the Company received a loan from the U.S. Small Business Administration (“SBA”) in the amount of $67,900 with an interest rate of 3.75% per annum. The loan is due and payable thirty (30) years from the date of the note. Interest accrued as of March 31, 2024 and December 31, 2023 is $7,840 and $7,204, respectively.

v3.24.1.1.u2
Convertible Notes
3 Months Ended
Mar. 31, 2024
Convertible Notes  
Convertible Notes

9. Convertible Notes

 

On February 8, 2021, Gladiator entered into a note agreement with Pink Holdings LLC. The Company received $10,000 at a 6% interest rate per annum, maturing on February 7, 2022. All principal and interest are due upon maturity. The issuer of the note has the option to convert any part, or all of the outstanding interest or principal amount owed into fully paid and non-assessable shares of common stock of the Company at a stock price at the lower of 10% of the lowest trading price during the 5-trading day period ending on the conversion date per share. As of March 31, 2024 and December 31, 2023, the Company accrued $1,255 and $1,105, respectively, in interest related to this note. Due to the variable nature of the conversion feature, this note was determined to contain a derivative liability. It was valued using the Black-Scholes pricing model with the following inputs: 18,508 shares, stock price of $6.00, exercise price of $0.60, 0.1 year term, and volatility of 40.88%.

 

On February 26, 2021, Gladiator entered into a note agreement with Pink Holdings LLC. The Company received $25,000 at a 6% interest rate per annum, maturing on February 25, 2022. All principal and interest are due upon maturity. The issuer of the note has the option to convert any portion, or all of the outstanding interest or principal amount owed into fully paid and non-assessable shares of common stock of the Company at a stock price at the lower of 10% of the lowest trading day period ending on the conversion date per share. As of March 31, 2024 and December 31, 2023, the Company accrued $3,140 and $2,765, respectively, in interest related to this note. Due to the variable nature of the conversion feature, this note was determined to contain a derivative liability. It was valued using the Black-Scholes pricing model with the following inputs: 46,275 shares, stock price of $6.00, exercise price of $0.60, 0.1 year term, and volatility of 40.88%.

 

As of March 31, 2024, these notes have not been converted and are overdue.

v3.24.1.1.u2
Stockholders Equity
3 Months Ended
Mar. 31, 2024
Stockholders Equity  
Stockholders' Equity

10. Stockholders’ Equity

 

Common Stock

 

a. Authorized

 

The Company is authorized to issue 90,000,000 shares of common stock, each with a par value of $0.001.

 

b. Transactions during the three months ended March 31, 2024

 

On March 6, 2024, the Company cancelled 866,667 shares of common stock that was previously issued and re-issued the same shareholders a total of 368,967 in accordance with stated agreements.

 

There were no transactions during the three months ended March 31, 2023.

 

Preferred Stock

 

c. Authorized and voting rights

 

The Company is authorized to issue 2,000,000 shares of its series A preferred stock, each with a par value of $0.001. Each share of the series A preferred stock has the equivalent voting power of (30) thirty shares of the Company’s common stock. The series A preferred stock does not have any liquidation or dividend rights or preferences. On July 20, 2021 the Company converted 1,600,000 preferred shares held by a related party, in exchange for 750,000 shares of the Company’s common stock (the “July conversion”). The series A preferred stock does not have any native convertible rights, preferences, or other conversion terms, and the Company had not previously signed an agreement setting conversion terms for the July conversion. Therefore, the July conversion met the requirements under ASC 260 to be considered a preferred stock extinguishment for the purposes of calculating the company’s earnings per share available to common shareholders. There were no transactions during the three months ended March 31, 2024 and 2023.

 

Warrants

 

The following table summarizes the Company’s warrant activity:

 

 

 

Number of Warrants

 

 

Weighted Average Exercise Price

 

Outstanding at December 31, 2023

 

 

1,000,000

 

 

$3.50

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Expired/Cancelled

 

 

-

 

 

 

-

 

Outstanding at March 31, 2024

 

 

1,000,000

 

 

$3.50

 

Exercisable at December 31, 2023

 

 

1,000,000

 

 

$3.50

 

Exercisable at March 31, 2024

 

 

1,000,000

 

 

$3.50

 

v3.24.1.1.u2
Subsequent Events
3 Months Ended
Mar. 31, 2024
Subsequent Events  
Subsequent Events

11. Subsequent Events

 

The Company evaluated subsequent events occurring from April 1, 2023 through June 6, 2024, the date in which the consolidated financial statements were available to be issued.

v3.24.1.1.u2
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2024
Summary of Significant Accounting Policies  
Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities.

 

Estimates are used for, but not limited to, the accounting for inventories, impairment of long-term assets and derivatives.

 

It is reasonably possible that the estimate of the effect of a condition, situation, or set of circumstances that existing at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results of could differ significantly from those estimates.

Business Combinations

The Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non- controlling interests is recognized as goodwill. Certain adjustments to the assessed fair values of assets and liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.

Cash

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash and cash equivalents.

Concentration of Credit Risk

The Company maintains its cash accounts with financial institutions, where, at times, deposits exceed federal insurance limits of $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances due to its assessment of the credit worthiness and financial viability of the financial institutions.

Inventories

Inventories consist primarily of finished goods. Costs of finished goods inventories include all costs incurred to bring inventory to its current condition, which includes standard cost paid to suppliers, shipping costs, and other costs. The Company values its inventory using specific identification method of each inventory item. If the Company determines that the estimated net realizable value of its inventory is less than the carrying value of such inventory, it records a charge to cost of goods sold to reflect the lower of cost or net realizable value. If actual market conditions are less favorable than those projected by the Company, further adjustments may be required that would increase the cost of goods sold in the period in which such a determination was made. As of March 31, 2024 and December 31, 2023, the Company had no inventory on hand.

Accounts Receivable

Accounts receivables are generally recorded at the invoiced amounts, net of an allowance for expected losses. The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. The allowance for accounts receivable is established through a provision reducing the carrying value of receivables. At March 31, 2024 and December 31, 2023, the Company determined that no allowance was necessary.

Leases

The Company accounts for a contract as a lease when it has the right to direct the use of the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines the initial classification and measurement of its right-of-use (“ROU”) assets and lease liabilities at the lease commencement date and thereafter if modified. ROU assets and liabilities are represented on the balance sheet at the present value of future minimum lease payments to be made over the lease term. Leases that are insignificant or with a 12-month term or less at inception are not recorded on the consolidated balance sheet and are expensed as incurred in the consolidated statements of operations. As of December 31, 2023, the Company leased real estate and office space (the “Saratoga Lease”) under non-cancelable operating lease agreements that qualified for ROU accounting treatment. As of March 31, 2023, the Company was in default for the Saratoga Lease and, subsequent to March 31, 2023, terminated the lease with the landlord in a settlement agreement. Commencing on February 1, 2023, the Company leased a second real estate and office space (the “Suite 200 Lease”) under non-cancelable operating lease agreement that qualified for ROU accounting treatment.

Property and equipment

The Company records depreciation when appropriate using the straight-line method over the estimated useful life of the assets. Property and equipment are stated at cost less accumulated depreciation. The estimated useful lives of the Company’s property and equipment by class are as follows:

 

Asset classes

 

Useful lives (in years)

Vehicles

 

5

Furniture and fixtures

 

7

 

Management regularly reviews property, equipment, and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based on management’s assessment, there were no indicators of impairment of the Company’s property and equipment as of March 31, 2024 or December 31, 2023.

Intangible Assets

Intangible assets are recorded at their estimated fair value at the date of acquisition and are allocated to the reporting units that are expected to receive the related benefits.

Convertible Debt and Derivative Liabilities

The convertible debt is convertible into shares of common stock at a conversion rate of 10% of the lowest trading price during the previous five trading days. The terms of the embedded conversion feature require embedded derivative instrument treatment and classification as a separate liability. The conversion feature and certain other features are considered embedded derivative instruments, such as a conversion reset provision, a penalty provision and redemption option, which are to be recorded at their fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note. The Company records the resulting discount on debt related to the conversion features at initial transaction and amortizes the discount using the effective interest rate method over the life of the debt instruments. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the consolidated statement of operations.

Revenue recognition

The Company recognizes revenue when it satisfies its performance obligations by transferring control of promised products or services to its customers, which occurs either at a point in time or over time, depending on when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services.

 

The Company determines revenue recognition through the following five steps:

 

 

(1)

Identify the contract with the customer,

 

(2)

identify the performance obligations in the contract,

 

(3)

determine the transaction price,

 

(4)

allocate the transaction price to the performance obligations in the contract; and

 

(5)

recognize revenue when, or as, the performance obligations are satisfied.

 

Net revenues from Gladiator primarily consist of sales of personal protective products, including armor, plates, helmets, shields, and accessories shipped directly to customers. All revenue transactions for Gladiator comprise a single performance obligation, which consists of the sale of products to customers either through wholesale, intermediary, or direct-to-consumer channels. The company satisfies the performance obligation and records revenues when transfer of control has passed to the customer, based on the terms of sale. In all of the Companies revenue channels, transfer of control takes place at the point of sale upon shipment to customer.

 

Net revenues from USS primarily consist of security services provided to large residential, industrial, construction and government clients. Contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. The Company does offer discounts, but historically the discounts have been insignificant. The Company satisfies the performance obligation for the agreed-upon period of time and location and records revenues after completion. There are no services that would be considered fulfilled over an extended period of time and necessitate different accounting treatment.

Advertising Costs

Advertising costs are charged to selling, general, and administrative expenses. Advertising production costs are expensed the first time an advertisement related to such production costs is run. Media (television, print and radio) placement costs are expensed in the month during which the advertisement appears. Advertising expenses for the three months ended March 31, 2024 and 2023, were approximately $81,000 and $34,000, respectively.

Earnings per Share

Basic earnings per common share is computed by dividing net income (loss) available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per common share are computed by dividing net income (loss) available to common stockholders for the period by the diluted weighted average common shares outstanding during the period. Diluted earnings per share reflects the potential dilution from common shares issuable through stock options, restricted stock units and other equity awards. For the three months ended March 31, 2024 and 2023, the Company generated net losses, therefore applying applicable equity instruments for diluted earnings per share would have had an anti-dilutive effect.

Fair Value of Financial Instruments

The carrying amounts shown for the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and notes and loans approximate fair value because of the short-term maturity of those instruments.

 

The Company groups its recurring, non-recurring and disclosure-only fair value measurements into the following levels when making fair value measurement disclosures:

 

Level 1 Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The Company and its subsidiaries use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques and option-pricing models), and / or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs such as observable, independent market data and/or unobservable data that management believes are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk.

Income taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date of a change in tax rates. Deferred income tax assets are reduced by valuation allowances when necessary. On March 31, 2024 and December 31, 2023, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The 2020 through 2023 tax years remain subject to examination by federal and most state tax authorities.

Commitments and Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings. The Company evaluates the perceived merits of any legal proceedings, or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is possible but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Non-controlling Interests

Non-controlling interests are classified in the accompanying consolidated balance sheet as a component of equity. The amounts of consolidated net income (loss) attributable to both the Company and the non-controlling interests are separately presented in the accompanying consolidated statements of operations.

v3.24.1.1.u2
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2024
Summary of Significant Accounting Policies  
Summary of estimated useful lives of assets

Asset classes

 

Useful lives (in years)

Vehicles

 

5

Furniture and fixtures

 

7

v3.24.1.1.u2
Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2024
Intangible Assets  
Summary of Intangible Assets

 

 

March 31,

2024

 

 

December 31,

2023

 

Customer relationships

 

$2,420,014

 

 

$2,420,014

 

Supplier relationships

 

 

700,207

 

 

 

700,207

 

Employee expertise

 

 

1,719,807

 

 

 

1,719,807

 

Software development costs

 

 

99,609

 

 

 

99,609

 

Less: accumulated amortization and impairment loss

 

 

(2,851,363 )

 

 

(2,851,363 )

Net intangible assets

 

$2,088,274

 

 

$2,088,274

 

v3.24.1.1.u2
Property and Equipment (Tables)
3 Months Ended
Mar. 31, 2024
Property and Equipment  
Summary of Property and Equipment

 

 

2024

 

 

2023

 

Furniture and fixtures

 

$15,564

 

 

$16,062

 

Vehicles

 

 

195,322

 

 

 

195,322

 

Less: accumulated amortization

 

 

(75,164 )

 

 

(52,241 )

 

 

 

 

 

 

 

 

 

Total property and equipment, net

 

$135,722

 

 

$159,142

 

v3.24.1.1.u2
Lease Payable (Tables)
3 Months Ended
Mar. 31, 2024
Lease Payable  
Summary of lease cost

 

 

March 31,

2024

 

 

December 31,

2023

 

Weighted average remaining lease term (in years)

 

 

2.85

 

 

 

2.85

 

Weighted average discount rate

 

 

7.6%

 

 

7.56%
Summary of operating lease

 

 

March 31,

2024

 

 

December 31,

2023

 

Operating Leases

 

 

 

 

 

 

ROU lease assets

 

$319,204

 

 

$346,986

 

Lease liabilities, short-term

 

 

223,179

 

 

 

81,805

 

Lease liabilities, long term

 

 

381,163

 

 

 

288,413

 

Summary of Future minimum lease payments

Fiscal Year

 

Operating Lease Payments

 

2024

 

$63,968

 

2025

 

 

101,346

 

2026

 

 

103,661

 

2027

 

 

107,020

 

2028

 

 

66,791

 

Total minimum lease payments

 

 

442,786

 

Less: imputed interest

 

 

(89,143 )

Present value of future minimum lease payments

 

 

353,643

 

Less:  current lease liabilities

 

 

(83,950 )

Operating lease liabilities, non-current

 

$269,693

 

v3.24.1.1.u2
Accounts Payable and Accrued Expenses (Tables)
3 Months Ended
Mar. 31, 2024
Accounts Payable and Accrued Expenses  
Summary of accounts payable and accrued expenses

 

 

March 31,

2024

 

 

December 31,

2023

 

Accounts Payable

 

$374,736

 

 

$820,208

 

Credit card liability

 

 

69,382

 

 

 

50,040

 

Accrued interest

 

 

752,484

 

 

 

564,213

 

Taxes payable

 

 

39,949

 

 

 

20,755

 

 

 

1,236,551

 

 

$1,455,216

 

v3.24.1.1.u2
Notes Payable current and noncurrent (Tables)
3 Months Ended
Mar. 31, 2024
Notes Payable current and noncurrent  
Summary of outstanding notes payable

 

 

2024

 

 

2023

 

Kapitus

(a)

$122,973

 

 

$122,973

 

Henry Sierra

(b)

 

148,946

 

 

 

148,946

 

Padilla

(c)

 

5,687

 

 

 

58,256

 

Clearview

(d)

 

-

 

 

 

316,363

 

Total notes payable outstanding

 

$277,606

 

 

$646,538

 

Notes payable, current portion

 

 

167,319

 

 

 

536,251

 

Notes payable, excluding current

 

110,287

 

 

110,287

 

v3.24.1.1.u2
Loans current and noncurrent (Tables)
3 Months Ended
Mar. 31, 2024
Loans current and noncurrent  
Summary of loans

 

 

2024

 

 

2023

 

Quattro Capital

(a) 

$237,500

 

 

$250,000

 

Merchant cash advances

(b)

 

18,019

 

 

 

36,000

 

Vehicle loans

(c)

 

60,759

 

 

 

76,309

 

Newtek

(d)

 

236,554

 

 

 

398,533

 

SBA Loan

(e)

 

67,800

 

 

 

67,800

 

Total loans outstanding

 

$620,632

 

 

$828,642

 

Loans, current portion

 

 

552,832

 

 

 

760,842

 

Loans, excluding current

 

$ 

67,800

 

 

$ 

67,800

 

v3.24.1.1.u2
Stockholders equity (Tables)
3 Months Ended
Mar. 31, 2024
Stockholders equity (Tables)  
Summary of warrants

 

 

Number of Warrants

 

 

Weighted Average Exercise Price

 

Outstanding at December 31, 2023

 

 

1,000,000

 

 

$3.50

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Expired/Cancelled

 

 

-

 

 

 

-

 

Outstanding at March 31, 2024

 

 

1,000,000

 

 

$3.50

 

Exercisable at December 31, 2023

 

 

1,000,000

 

 

$3.50

 

Exercisable at March 31, 2024

 

 

1,000,000

 

 

$3.50

 

v3.24.1.1.u2
Nature and Continuance of Operations (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Dec. 13, 2023
Nature and Continuance of Operations        
Net loss $ 1,352,481 $ (1,192,552)    
Accumulated deficit $ (12,563,446)   $ (13,915,927) $ (13,915,927)
v3.24.1.1.u2
Summary of Significant Accounting Policies (Details)
3 Months Ended
Mar. 31, 2024
Vehicles [Member]  
Property and equipment useful lifes 5 years
Furniture and Fixtures [Member]  
Property and equipment useful lifes 7 years
v3.24.1.1.u2
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Summary of Significant Accounting Policies    
Cash FDIC Insured limit $ 250,000  
Advertising expense $ 81,000 $ 34,000
v3.24.1.1.u2
Intangible Assets (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Less: accumulated depreciation impairment loss $ (2,851,363) $ (2,851,363)
Intangible assets, net 2,088,274 2,088,274
Customer Relationships [Member]    
Intangible assets, net 2,420,014 2,420,014
Supplier Relationships [Member]    
Intangible assets, net 700,207 700,207
Employee expertise [Member]    
Intangible assets, net 1,719,807 1,719,807
Software development costs [Member]    
Intangible assets, net $ 99,609 $ 99,609
v3.24.1.1.u2
Intangible Assets (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Intangible Assets    
Amortization expense $ 0 $ 287,635
Less: impairment loss $ 0 $ (911,467)
v3.24.1.1.u2
Property and Equipment (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Less: accumulated amortization $ (75,164) $ (52,241)
Total property and equipment, net 135,722 159,142
Vehicles [Member]    
Property and Equipment 195,322 195,322
Furniture and Fixtures [Member]    
Property and Equipment $ 15,564 $ 16,062
v3.24.1.1.u2
Property and Equipment (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2024
Mar. 31, 2023
Property and Equipment    
Depreciation expense $ 22,923 $ 31,548
v3.24.1.1.u2
Lease Payable (Details)
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Lease Payable    
Weighted average remaining lease term (in years) 2 years 10 months 6 days 2 years 10 months 6 days
Weighted average discount rate 7.60% 7.56%
v3.24.1.1.u2
Lease Payable (Details 1) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Lease Payable    
ROU lease assets $ 319,204 $ 346,986
Lease liabilities, short-term 223,179 81,805
Lease liabilities, long-term $ 381,163 $ 288,413
v3.24.1.1.u2
Lease Payable (Details 2) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Lease Payable    
2024 $ 63,968  
2025 101,346  
2026 103,661  
2027 107,020  
2028 66,791  
Total minimum lease payments 442,786  
Less: imputed interest (89,143)  
Present value of future minimum lease payments 353,643  
Less: current lease liabilities (83,950)  
Operating lease liabilities, non-current $ 269,693 $ 288,413
v3.24.1.1.u2
Lease Payable (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2020
Lease Payable    
Leases monthly payment $ 7,943 $ 8,819
Straight-line rent per month   $ 9,522
Lease term the Company entered a new lease for its headquarters office, (the “Suite 200 Lease”) for a 60 month lease with an expiration date of January 31, 2028 lease is for a 48.5-month term, with an original expiration date of July 31, 2024
v3.24.1.1.u2
Accounts Payable and Accrued Expenses (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Accounts Payable and Accrued Expenses    
Accounts payable $ 374,736 $ 820,208
Credit card liability 69,382 50,040
Accrued interest 752,484 564,213
Taxes payable 39,949 20,755
Accounts Payable and Accrued Expenses $ 1,236,551 $ 1,455,216
v3.24.1.1.u2
Notes Payable current and noncurrent (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Notes payable outstanding $ 277,606 $ 646,538
Notes payable, current portion 167,319 536,251
Notes payable, excluding current 110,287 110,287
Kapitus [Member]    
Notes payable outstanding 122,973 122,973
Henry Sierra [Member]    
Notes payable outstanding 148,946 148,946
Padilla [Member]    
Notes payable outstanding 5,687 58,256
Clearview [Member]    
Notes payable outstanding $ 0 $ 316,363
v3.24.1.1.u2
Notes Payable current and noncurrent (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Oct. 06, 2023
Aug. 04, 2023
Dec. 09, 2022
Mar. 03, 2021
Nov. 04, 2020
Sep. 15, 2022
Nov. 18, 2021
Sep. 23, 2021
Aug. 20, 2021
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Interest rate       3.75%                
Interest expense                   $ 160,067 $ 183,745  
Maturity period       30 years                
Weekly installments payments                   405,964 $ 371,913  
USS [Member]                        
Repurchase common stock shares               100        
Description of repurchase amount               The repurchase amount was reduced by $405,545 as a result of distributions to Mr. Sierra from the Company. The remaining value of $231,955 is to be repaid through the promissory note        
Promissory note issued               $ 637,500        
Maturity period               4 years        
Weekly installments payments             $ 2,600          
Note discounted prior to acquisition               6.00%        
Fair value adjusted               $ 182,773        
Outstanding principal amount                   148,946   $ 148,946
USS [Member] | October 6, 2023 [Member]                        
Promissory note issued $ 100,000                      
Outstanding principal amount                   5,687   58,256
Origination fee $ 30,000                      
USS [Member] | August 4, 2023 [Member]                        
Promissory note issued   $ 400,000                    
Outstanding principal amount                       318,363
Origination fee   $ 180,000                    
Gladiator [Member]                        
Interest rate         45.60%              
Interest expense                   565,625    
Preoceeds from notes         $ 69,800              
Interest paid         $ 22,336              
Maturity period     60 days   15 months              
Weekly installments payments         $ 1,419              
Gladiator [Member] | August 20, 2021 [Member]                        
Interest rate                 46.50%      
Preoceeds from notes                 $ 25,500      
Interest paid                 $ 8,205      
Maturity period                 15 months      
Weekly installments payments                 $ 519      
Gladiator [Member] | September 15, 2022 [Member]                        
Interest rate           24.00%            
Interest expense                       18,018
Accrued interest payable                   $ 36,893   $ 29,514
Preoceeds from notes           $ 150,000            
Interest paid           $ 45,000            
Maturity period           15 months            
Weekly installments payments           $ 3,003            
v3.24.1.1.u2
Loans current and noncurrent (Details) - USD ($)
Mar. 31, 2024
Dec. 31, 2023
Total loans outstanding $ 620,632 $ 828,642
Loans, current portion 552,832 760,842
Loans, excluding current 67,800 67,800
Quattro Capital [Member]    
Total loans outstanding 237,500 250,000
Merchant Cash Advances [Member]    
Total loans outstanding 18,019 36,000
Vehicle Loans [Member]    
Total loans outstanding 60,759 76,309
Newtek [Member]    
Total loans outstanding 236,554 398,533
SBA Loan [Member]    
Total loans outstanding $ 67,800 $ 67,800
v3.24.1.1.u2
Loans current and noncurrent (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Dec. 09, 2022
Mar. 03, 2021
Nov. 04, 2020
Sep. 23, 2022
Sep. 16, 2022
Dec. 28, 2021
Nov. 18, 2021
Sep. 23, 2021
Dec. 30, 2020
Mar. 31, 2024
Mar. 31, 2023
Dec. 31, 2023
Sep. 30, 2022
Preoceeds from loans   $ 67,900               $ 0 $ 355,480    
Accrued interest                   7,840   $ 7,204  
Interest rate   3.75%                      
Interest payable                   160,067 183,745    
Maturity period   30 years                      
Per day installments payments                   405,964 $ 371,913    
USS [Member]                          
Preoceeds from loans             $ 180,000            
Fees of ACH paid             20,000            
Purchased receivables by PBF             300,000            
Maturity period               4 years          
Outstanding principal amount                   148,946   148,946  
Per day installments payments             $ 2,600            
December 28, 2021 [Member] | USS [Member]                          
Preoceeds from loans           $ 180,000              
Fees of ACH paid           20,000              
Purchased receivables by PBF           300,000              
Per day installments payments           $ 5,000              
December 30, 2020 [Member] | USS [Member]                          
Preoceeds from loans                 $ 466,000        
Accrued interest                   73,193   68,058  
Interest rate                 6.00%        
Description of loan agreement                 The U.S. Small Business Administration (“SBA”) agreed to guarantee up to 75% of the NewTek loan principal in exchange for a guaranty fee of $10,485. Under the terms of the NewTek loan, the interest rate is the prime rate, plus 2.75% and may be adjusted every change period (every quarter)        
Outstanding principal amount                   236,554   398,533  
Gladiator [Member]                          
Preoceeds from loans $ 250,000                        
Interest rate     45.60%                    
Description of interest and interest rate The interest will accrue at a non-compounding rate of 25% of the total loan value upon maturity (or $62,500). Penalty interest of $1,200 will accrue daily after the maturity date until the full value of the loan is paid                        
Fees of escrow agent $ 6,000                        
Fees of brokers $ 6,500                        
Interest payable                   565,625      
Maturity period 60 days   15 months                    
Per day installments payments     $ 1,419                    
Gladiator [Member] | September 16, 2022 [Member]                          
Preoceeds from loans         $ 145,500                
Fees of ACH paid         4,500                
Purchased receivables by PBF         202,500                
Remeaning loan amount                   18,019   36,000  
Per day installments payments         $ 6,328                
Vehicle Loans [Member] | USS [Member]                          
Per day installments payments       $ 4,923                  
Outstanding liability                   $ 60,759   $ 103,197 $ 140,300
Vehicle Loans [Member] | USS [Member] | Minimum [Member]                          
Interest rate       0.00%                  
Maturity period       1 year                  
Per day installments payments       $ 98                  
Vehicle Loans [Member] | USS [Member] | Maximum [Member]                          
Interest rate       12.60%                  
Maturity period       6 years                  
Per day installments payments       $ 695                  
v3.24.1.1.u2
Convertible Note Payable (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Feb. 08, 2021
Feb. 26, 2021
Mar. 31, 2024
Mar. 31, 2023
Feb. 27, 2021
Black-Scholes pricing mode     866,667    
Convertible Notes [Member]          
Maturity February 7, 2022        
Interest rate 6.00%        
Black-Scholes pricing mode 18,508        
Stock price $ 6.00        
Covertible year term 1 month 6 days        
Volatility rate 40.88%        
Exercise price $ 0.60        
Accrued interest payable and interest expense     $ 1,255 $ 1,105  
Notes Payable $ 10,000        
Convertible Notes One [Member]          
Maturity   February 25, 2022      
Interest rate   6.00%      
Black-Scholes pricing mode   46,275      
Stock price         $ 6.00
Covertible year term   1 month 6 days      
Volatility rate   40.88%      
Exercise price         $ 0.60
Accrued interest payable and interest expense     $ 3,140 $ 2,765  
Notes Payable   $ 25,000      
v3.24.1.1.u2
Stockholders Equity (Details) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Stockholders Equity    
Number of warrants outstanding, Beg 1,000,000  
Number of warrants outstanding, End 1,000,000 1,000,000
Number of warrants Exercisable 1,000,000 1,000,000
Weighted Average Exercise Price Outstanding, Beg $ 3.50  
Weighted Average Exercise Price Granted 0  
Weighted Average Exercise Price Exercised 0  
Weighted Average Exercise Price Expired/Cancelled 0  
Weighted Average Exercise Price Exercisable 3.50 $ 3.50
Weighted Average Exercise Price Outstanding, End $ 3.50 $ 3.50
v3.24.1.1.u2
Stockholders Equity (Details Narrative) - $ / shares
3 Months Ended
Mar. 31, 2024
Dec. 31, 2023
Jul. 20, 2021
Shares cancelled 866,667    
Shares re-issued 368,967    
Common stock, par value $ 0.001 $ 0.001  
Common stock, shares authorized 90,000,000 90,000,000  
Series A Preferred Stock      
Preferred stock, shares authorized 2,000,000 2,000,000  
Preferred shares     1,600,000
Preferred Stock, par value $ 0.001    

James Maritime (PK) (USOTC:JMTM)
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