UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
Or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _____
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act:
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
Indicate by check mark if the registrant is not required to file reports pursuant to the Section 13 or Section 15(d) of the Exchange Act. ☐ Yes ☒ No
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 15(d) of the Exchange Act
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. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 ☐ | ||
| 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 Act). ☐ Yes
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
As of May 15, 2024, the registrant had shares of common stock outstanding.
BOXABL INC.
FORM 10-Q
TABLE OF CONTENTS
In this Form 10-Q, the term “BOXABL”, “we”, “us”, “our”, or “the Company” refers to BOXABL Inc. and our subsidiaries on a consolidated basis.
THIS FILING MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
| 2 |
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
BOXABL INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| As of | ||||||||
| March 31, 2024 | December 31, 2023 | |||||||
| (In Thousands) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property, equipment and other assets: | ||||||||
| Long-term investments | ||||||||
| Restricted cash | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Right of use assets | ||||||||
| Deposits on equipment | ||||||||
| Deposits | ||||||||
| Total property, equipment, and other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Customer deposits | ||||||||
| Deferred revenue | ||||||||
| Lease liability- current | ||||||||
| Subscription liability | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Lease liability - long-term | ||||||||
| Asset retirement obligation | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies — See note 10 | ||||||||
| Stockholders’ equity: | ||||||||
| Series A Preferred Stock $ par, billion shares authorized, K shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Series A-1 Preferred Stock $ par, billion shares authorized, K shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Series A-2 Preferred Stock $ par, billion shares authorized, K shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Series A-3 Preferred Stock $ par, billion shares authorized, K shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Common Stock $par, billion shares authorized, billion shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited interim condensed consolidated financial statements
| 3 |
BOXABL INC.
CONSOLIDATED Statements of operations
(Unaudited)
| For The Three Months Ended | ||||||||
| (In Thousands, except per share amounts) | March 31, 2024 | March 31, 2023 | ||||||
| Revenues | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross loss | ||||||||
| Operating expenses: | ||||||||
| General and administrative | ||||||||
| Sales and marketing | ||||||||
| Research and development | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ||||||||
| Other expense/(income): | ||||||||
| Interest income | ( | ) | ( | ) | ||||
| Other income | ( | ) | ( | ) | ||||
| Total expense/(income): | ( | ) | ( | ) | ||||
| Net loss | $ | $ | ||||||
| Weighted average common shares outstanding - basic and diluted | ||||||||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | ||||
See accompanying notes to unaudited interim condensed consolidated financial statements
| 4 |
BOXABL INC.
CONSOLIDATED statements of stockholders’ equity
(Unaudited)
| Series A-3 Preferred Stock | Series A-2 Preferred Stock | Series A-1 Preferred Stock | Series A Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||
| (In Thousands) | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Equity | |||||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | | |||||||||||||||||||||||||||||||||||||||||
| Issuance of Series A-2 Preferred Stock | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Offering costs | - | - | ( | ) | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to unaudited interim condensed consolidated financial statements
| 5 |
BOXABL INC.
CONSOLIDATED statements of cash flows
(Unaudited)
| For The Three Months Ended | ||||||||
| (In Thousands) | March 31, 2024 | March 31, 2023 | ||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation, accretion and amortization | ||||||||
| Stock based compensation expense | ||||||||
| Net gains on marketable securities | ( | ) | ( | ) | ||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ( | ) | ||||
| Other current assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Customer deposits | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Right of use assets/Liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchase of property and equipment and deposits | ( | ) | ( | ) | ||||
| Deposits | ( | ) | ||||||
| Purchase of Intangible Assets | ( | ) | ||||||
| Purchase of investments | ( | ) | ( | ) | ||||
| Sale of investments | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||
| Offering costs | ( | ) | ||||||
| Proceeds from sale of preferred stock | ||||||||
| Accrual of Subscription Liability | ||||||||
| Net cash provided by financing activities | ||||||||
| Change in cash, cash equivalents, and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents, and restricted cash beginning of year | ||||||||
| Cash, cash equivalents, and restricted cash end of the period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Non cash investing and financing activities: | ||||||||
| Increase in long-lived asset from capitalization of asset retirement costs | $ | $ | ||||||
The following table provides a reconciliation of cash, cash equivalents and restricted cash to the amounts recorded on the Company’s unaudited interim consolidated balance sheets
| March 31, | ||||||||
| (In Thousands) | 2024 | 2023 | ||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Cash, cash equivalents, and restricted cash end of the period | $ | $ | ||||||
See accompanying notes to unaudited interim condensed consolidated financial statements
| 6 |
BOXABL INC.
notes to CONSOLIDATED financial statements
(Unaudited)
NOTE 1- INCORPORATION AND NATURE OF BUSINESS
Description of Business
BOXABL Inc., is a Nevada (“C”) corporation originally organized as a Nevada limited liability company, on December 2, 2017. The corporation converted from a Nevada limited liability company to a Nevada corporation on June 16, 2020. These unaudited interim condensed consolidated audited financial statements of BOXABL Inc., (which may be referred to as the “Company”, “BOXABL”, “we”, “us” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s headquarters are in Las Vegas, Nevada.
BOXABL Inc., is developing a new type of building system using modern manufacturing processes. Its products result in sustainable high-quality buildings at lower cost, benefiting from mass production practices, resolving the problems of housing shortages by offering a quick solution, and reducing the carbon footprint. The Company has also developed patented shipping technology, allowing it to serve large geographic areas from one factory.
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements of Boxabl Inc. (the” Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company’s management, all adjustments considered necessary for a fair statement have been included in the accompanying unaudited financial statements. All intercompany transactions and balances have been eliminated in consolidation. The unaudited interim condensed consolidated financial statements include the accounts of 500 Group from June 15, 2023. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024.
The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2023, included in the Company’s Annual Report on the Form 10-K filed with the SEC on April 1, 2024.
Except as otherwise stated, these unaudited interim condensed consolidated financial statements are presented in thousands of U.S. dollars, indicated by a “K”.
Prior Period Reclassification
Certain prior period amounts have been reclassified to conform to the current period presentation.
| (i) | The Company reflected an additional K shares of Series A-1 preferred stock, resulting in additional paid-in-capital of $ |
Use of Estimates
The preparation of the unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the unaudited interim condensed consolidated financial statements and accompanying notes. Actual results could differ materially from these estimates. These estimates form the basis for judgements the Company makes about the carrying values of its assets and liabilities, which are not readily apparent from other sources. These estimates are based on information available as of the date of the unaudited interim condensed consolidated financial statements, including historical information and various other assumptions that the Company believes are reasonable under the circumstances. Actual results could differ materially from these estimates.
Risks and Uncertainties
The Company’s business and operations are sensitive to general business and economic conditions in the US and worldwide along with local, state, and federal governmental policy decisions. A host of factors beyond the Company’s control could cause fluctuations in these conditions. Adverse conditions may include recession, downturn or otherwise, government policies. These adverse conditions could affect the Company’s financial condition, results of its operations and cash flows.
| 7 |
Fair Value of Financial Instruments
Fair value is defined as 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. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:
| ● | Level 1 – Valuations based on quoted prices for identical assets and liabilities in active markets. Level 1 assets consist of investments. | |
| ● | Level 2 – Valuations based on observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. | |
| ● | Level 3 – Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. The Company valued its employee stock options (NQSO’s and ISO’s) and stock grants (RSU’s) at grant date fair value using a Level 3 mark. See Note 9 – Stockholders Equity (Deficit): Stock Based Compensation. |
Restricted Cash and Deposits
On
June 1, 2023, the Company was required to obtain a letter of credit to make a Security Deposit related to the expansion of premises of
$
Marketable Debt Securities
The Company generally invests its excess cash into Marketable debt securities, which consist of short-term and long-term investments in US treasury bills and notes that are classified as held-to-maturity.
Short-Term Investments in U.S. Treasury Notes, Held-to-Maturity
Short-term investments in U.S. treasury notes include U.S Treasury notes with maturities of less than 12 months. The realized and unrealized gains and losses on short-term investments in US treasury notes are determined using the specific identification method. If a US treasury note has an unrealized loss and we either intend to sell the security or it is more likely than not that we will be required to sell the security before its anticipated recovery, we will record an impairment charge to investment and other income (expense), net for the entire amount of the unrealized loss and adjust the amortized cost basis of the security.
Long-Term Investments in U.S. Treasury Notes, Held-to-Maturity
Long-term investments in U.S. treasury notes include U.S Treasury notes with maturities of 12 months or more. The realized and unrealized gains and losses on long-term investments in US treasury notes are determined using the specific identification method. If a US treasury note has an unrealized loss and we either intend to sell the security or it is more likely than not that we will be required to sell the security before its anticipated recovery, we will record an impairment charge to investment and other income (expense), net for the entire amount of the unrealized loss and adjust the amortized cost basis of the security.
Inventory
Inventory consists of raw materials, in-bound freight and duties, work in progress, and finished goods. Inventories available for sale are valued at the lower of cost or net realized value. Cost is determined using the weighted average method. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, bulk sales, and the expected recoverable values for each disposition category. On a periodic basis, the Company performs a physical count of its inventory and records an Inventory Valuation Allowance for inventory that has become obsolete or inventory that has a cost basis in excess of the expected net realizable value. Damaged and obsolete inventory are valued based on management’s best estimate and any difference charged to expense.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Expenditures for maintenance, repairs, and minor improvements are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation and amortization are removed from the respective accounts, and any gain or loss is included in operations. Major improvements with economic lives greater than one year are capitalized. Leasehold improvements are depreciated over the lesser of the lease term or the estimated useful life. Depreciation is computed using the straight-line method over the following estimated useful lives:
| Software, computers and other peripheral equipment | ||
| Furniture and fixtures | ||
| Machinery and equipment | ||
| Tenant improvements | ||
| Vehicles | ||
| Casita fixed assets |
| 8 |
Intangible Assets
Intangible
assets are amortized over the respective estimated lives on a straight-line basis unless the lives are determined to be indefinite and
reviewed for impairment whenever events or other changes in circumstances indicate that the carrying amount may not be recoverable. The
Company’s intangible assets are amortized over their estimated useful life of
Revenue
Revenue is measured based on the amount of consideration that we expect to receive, reduced by allowance for estimated returns, chargebacks, promotional discounts, markdowns, and rebates based on Management’s estimates and the Company’s historical experience. Revenue also excludes any amounts collected on behalf of third parties, including sales and indirect taxes. In arrangements where we have multiple performance obligations, the transaction price is allocated to each performance obligation using the relative stand-alone selling price. We generally determine stand-alone selling prices based on the prices charged to customers.
The Company determines revenue recognition through the following steps in accordance with ASC Topic 606, Revenue from Contracts with Customers:
| - | Identification of a contract with a customer. |
| - | Identification of the performance obligations in the contract. |
| - | Determination of the transaction price. |
| - | The customer has the ability and intent to pay the contractual amount.
|
| - | Allocation of the transaction price to the performance obligations in the contract. |
| - | Recognition of revenue when or as the performance obligations are satisfied. |
Revenues are recognized when performance obligations are satisfied through the transfer of “Boxes,” services or parts to the Company’s customers. Generally, control transfers upon shipment of the Casita to the customer and considers the transfer of legal title and risk and rewards of ownership to the Customer. Occasionally, performance obligations for the Company may also include the delivery, installation and other services. The Company records a liability for customer deposits received prior to delivery of the Casita or fulfilment of the service. The liability is relieved, with revenue being recognized once the performance obligations to the customer are satisfied.
Cost of Goods Sold
Cost of goods sold consists primarily of the cost of products used in the production of the Company’s finished products, inbound and outbound shipping costs, the related labor, and indirect overhead costs associated with that production.
On a periodic basis, the Company performs a physical count of its inventory and records an Inventory Valuation Allowance for inventory that has become obsolete or inventory that has a cost basis in excess of the expected net realizable value. Damaged and obsolete inventory are valued based on management’s best estimate and any difference charged to expense.
Advertising and Promotion
The Company incurs third party advertising costs as well as payroll-related costs for its marketing personnel engaged in promotional activities. Advertising and promotion costs to market our products and services are expensed as incurred. Certain marketing costs related to the issuance of the Company’s securities are accounted for as a reduction to the proceeds from the equity offering, and not included in sales and marketing expense.
| 9 |
Research and Development
Research and development costs consisting of design, materials, and consultants related to prototype and process improvements and developments are expensed as incurred.
Concentration of Credit Risk
Cash and Cash Equivalents:
The Company classifies all highly liquid instruments with an original maturity of three months or less as cash equivalents. Due to the maturity of cash equivalents, the carrying amounts of these instruments approximate their fair values. Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are maintained at high quality financial institutions. As of March 31, 2024 and December 31, 2023, the Company’s deposits exceeded the Federal Deposit Insurance Corporation (FDIC) limit. The Company has not experienced any losses with respect to its cash balances. Based upon assessment of the financial condition of these institutions, management considers that the risk of loss of any uninsured balances do not have a significant impact on the Company’s operations.
Customers:
During
the three months ended March 31, 2024 and 2023, revenues from four customers were approximately
The Company uses ASC 718 for Stock-Based Compensation. Compensation for all stock-based awards, including stock options and restricted stock, are measured at fair value on the date of grant and recognized over the associated vesting periods. The fair value of stock options is estimated on the date of grant using a Black-Scholes model. The fair value of restricted stock awards is estimated on the date of the grant based on the fair value of the Company’s underlying common stock. The Company recognizes compensation expense for stock options and restricted stock awards on a straight-line basis over the associated service or vesting periods.
Determining the grant date fair value of options using the Black-Scholes option-pricing model requires management to make assumptions and judgments. These estimates involve inherent uncertainties and, if different assumptions had been used, stock-based compensation expense could have been materially different from the amounts recorded.
Contingencies
The Company is involved in lawsuits, claims, and proceedings, which arise in the ordinary course of business. In accordance with the FASB ASC Topic 450 Contingencies, the Company will make a provision for a liability when it is both probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company believes it has adequate provisions for any such matters. The Company reviews these provisions in conjunction with any related provisions on assets related to the claims at least quarterly and adjusts these provisions to reflect the impacts of negotiations, settlements, rulings, advice of leg al counsel and other pertinent information related to the case. Should developments in any of these matters outlined below cause a change in the Company’s determination as to an unfavorable outcome and result in the need to recognize a material provision, or, should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on the Company’s results of operations, cash flows, and financial position in the period or periods in which such a change in determination, settlement or judgment occurs.
| 10 |
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. Diluted net loss per share reflects the actual weighted average of common shares issued and outstanding during the period plus potential common shares. Stock options and convertible instruments are considered potential common shares and are included in the calculation of diluted net loss per share when their effect is dilutive. As all potentially dilutive securities are anti-dilutive for the periods presented as a result of the net loss, diluted net loss per share is the same as basic net loss per share for each period.
| As of | ||||||||
| (In Thousands ) | March 31, 2024 | December 31, 2023 | ||||||
| Common share options | ||||||||
| Restricted stock units | ||||||||
| Warrants | ||||||||
| Preferred Stock | ||||||||
| Total | ||||||||
Warranty Provision
The
Company offers its customers warranties on products sold for a period of up to
Recent Accounting Pronouncements
As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
On December 14, 2023 the FASB issued a final standard on improvements to income tax disclosures ASU 2023-09, Improvements to Income Tax Disclosures. The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The Company is currently evaluating the potential impact of this update on its consolidated financial statements.
For public business entities (PBEs), the new requirements will be effective for annual periods beginning after December 15, 2024. For entities other than public business entities (non-PBEs), the requirements will be effective for annual periods beginning after December 15, 2025. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the potential impact of this update on its consolidated financial statements.
NOTE 2 –MANAGEMENT’S PLAN
These consolidated financial statements have been prepared under the assumption that the Company will be able to
continue its operations and will be able to realize its assets and discharge its liabilities in the normal course of business for the
foreseeable future. For the three months ended March 31, 2024, the Company reported a net loss of $
The continuing viability of the Company and its ability to continue as a going concern is dependent on the Company being successful in its continued efforts in growing its revenue and/or accessing additional sources of capital. Management’s plan to address this need includes (a) continued exercise of tight controls to conserve cash, (b) accelerating sales of Casitas to generate revenue, and (c) raising funds through equity financing. The Company anticipates current capital on hand and expected future funding will be sufficient to fund the Company’s operations in excess of twelve months. There are no assurances that our plans will be successful. The Company is currently selling shares through Regulation D and anticipates raising funds through other offerings of preferred stock.
NOTE 3 – INVESTMENTS
As of March 31, 2024 and December 31, 2023, investments in securities consists of U.S. Treasury Notes carried at cost, consisting of the following:
| Balance as of | ||||||||
| March 31, | December 31, | |||||||
| (In Thousands) | 2024 | 2023 | ||||||
| Investments in short-term U.S. Treasury Notes | $ | $ | ||||||
| Investments in long-term U.S. Treasury Notes | ||||||||
| Total investments in U.S. Treasury Notes | $ | $ | ||||||
The Long-Term Investments include maturities extending beyond 12 months from the balance sheet date.
The cost basis of investments held is determined by the Company using the specific identification method.
Gains and losses on sale of investments, interest and unrealized gains are all reported within interest income on the unaudited interim condensed consolidated statement of operations.
| 11 |
NOTE 4 – INVENTORIES, NET
As of March 31, 2024 and December 31, 2023, inventory consists of the following:
| Balance as of | ||||||||
| March 31, | December 31, | |||||||
| (In Thousands) | 2024 | 2023 | ||||||
| Raw material | $ | $ | ||||||
| Inventory in-transit | ||||||||
| Work-in progress | ||||||||
| Finished goods | ||||||||
| Total inventory | $ | $ | ||||||
Inventories
are written down for any obsolescence or when the net realizable value considering future events and conditions is less than the carrying
value. For the three months ended March 31, 2024 and 2023, the Company recorded $
NOTE 5 – PROPERTY AND EQUIPMENT, NET
The Company’s property and equipment consists of the following amounts as of March 31, 2024 and December 31, 2023:
| Balance as of | ||||||||
| March 31, | December 31, | |||||||
| (In Thousands) | 2024 | 2023 | ||||||
| Software, computers and other peripheral equipment | $ | $ | ||||||
| Furniture and fixtures | ||||||||
| Machinery and equipment | ||||||||
| Tenant improvements | ||||||||
| Vehicles | ||||||||
| Casita fixed assets | ||||||||
| Construction in-progress | ||||||||
| $ | $ | |||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment - net | $ | $ | ||||||
Depreciation
During
the three months ended March 31, 2024 and 2023, the Company recognized $
Deposits on Equipment
As
of March 31, 2024 and December 31, 2023, the Company paid $
A substantial amount of these deposits was paid to a vendor who has not fulfilled their obligations to this point. The Company is pursuing legal remedies to recover the equipment and has determined that recoverability is probable.
| 12 |
NOTE 6 – INTANGIBLE ASSETS, NET
On
June 15, 2023, the Company engaged in an all-stock statutory merger with 500 Group, Inc., a Nevada corporation (“500 Group”)
and its subsidiary Build IP. The Company exchanged K shares of its Non-Voting Series A-2 Preferred Stock for 500 Group’s
100 outstanding shares of 500 Group’s common stock in a transaction valued at $
Intellectual Property
The
Company recorded intellectual property of $
NOTE 7 –LEASES
On December 29, 2020, the Company signed a
On June 10, 2022, the Company signed a
Pursuant to an agreement dated April 12, 2023, but
effective as of January 1, 2023, the Company will lease to Supercar System four support squares located in the Company’s main property
located at 5435 E. N. Belt Road, Las Vegas, Nevada for $
The Company recognizes lease expense for its operating leases on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms that can extend the lease term. The Company has determined that it was reasonably certain that the renewal options would be exercised based on previous history and knowledge, current understanding of future business needs and the level of investment in leasehold improvements, among other considerations. The incremental borrowing rate used in the calculation of the lease liability is based on the rate available to the Company. The depreciable life of assets and leasehold improvements are limited by the expected lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain subsidiaries of the Company rent or sublease certain office space to/from other subsidiaries of the Company.
| 13 |
As
of March 31, 2024 and December 31, 2023, the weighted average remaining lease term was
No
ROU asset is recorded for leases with a lease term, including any reasonably assured renewal terms, of 12 months or less. Upon adoption
of ASC 842, the Company also recorded lease liabilities computed as the present value of future minimum lease payments, including reductions
from any landlord incentives, plus any additional direct costs from executing the leases. Lease liabilities are amortized using the effective
interest method using a discount rate of
During
the three months ended March 31, 2024 and 2023, rent expenses totaled $
During
the three months ended March 31, 2024 the Company performed improvements to the leased facility that required the accrual of an
asset retirement obligation to restore the property to its original condition at the end of the lease. In connection with
this improvement, the landlord required the Company to make an additional security deposit of $
Sublease
Effective
as of January 1, 2023, the Company leased to Supercar System four support squares located in the Company’s main property located
at 5435 E. N. Belt Road, Las Vegas, Nevada for $
NOTE 8 – RELATED PARTY TRANSACTIONS
The Company had the following transactions with related parties:
| Three Months Ended March 31, | ||||||||
| (In Thousands) | 2024 | 2023 | ||||||
| Consolidated Statement of Operations | ||||||||
| Rental income | $ | $ | ||||||
| Professional fees | $ | $ | ||||||
| Balance as of | ||||||||
| March 31, 2024 | December 31, 2023 | |||||||
| Consolidated Balance Sheets | ||||||||
| Preferred stock | ||||||||
| Acquisition of patents | ||||||||
(1) The Company has a contract with the majority shareholder and CEO to share certain costs related to office space, support staff, and consultancy services.
(2)
The Company entered into an exclusive license agreement with Build IP LLC, an entity controlled by the Company’s majority shareholder
and CEO. Under the terms of the agreement, Build IP LLC agreed to license its structure, transport, and trademark patents to the Company
in exchange for a quarterly royalty payment of
| 14 |
(3) The Company incurred professional expenses related to a former member of the Board of Directors for providing consulting services.
(4)
As of March 31, 2024 and December 31, 2023, the Company had K shares outstanding of Series A Preferred Stock, representing an initial
cost of $
At
times, the Company utilizes credit cards for operational purchases. The credit card was initially established by creating a business
account under the Company’s Chief Executive Officer credit umbrella for which the structure remains. All amounts on the Company’s
credit cards are guaranteed by the Chief Executive Officer. The balance on the credit card was approximately $
NOTE 9 – STOCKHOLDERS’ EQUITY
Preferred and Common Stock
The Company was converted to a C-Corporation in the state of Nevada on June 16, 2020. In conjunction with the conversion, the Company authorized the issuance of billion shares of common stock with a par value of $ and million shares of preferred stock with a par value of $. The Company initially designated all shares of preferred stock as “Series A Preferred Stock”, see below for rights and preferences.
On February 24, 2021, the Company filed an amendment to the articles of incorporation which increased the number of authorized preferred shares to million, for which K and K shares were classified as Series A Preferred Stock and Series A-1 Preferred Stock, respectively.
On
November 19, 2021, the Board of Directors approved a
On September 1, 2023, the Company filed an amendment to the articles of incorporation which authorized the issuance of billion shares of Series A-3 Preferred Stock of $ par value, and increased the amount of authorized unclassified Preferred Stock to billion shares. On May 3, 2024, this amendment was refiled and accepted by the state of Nevada following completion of certain validation procedures under Nevada law associated with correcting defective corporate acts as discussed in the Company’s Definitive Information Statement filed with the Commission on March 29, 2024.
Preferred Stock Liquidation Preference
The following table summarizes the liquidation preferences as of March 31, 2024, in order of liquidation:
| (In Thousands) | Shares Authorized | Shares Issued and Outstanding | Liquidation Preference Balance | |||||||||
| Series A-3 Preferred Stock | $ | |||||||||||
| Series A-2 Preferred Stock | ||||||||||||
| Series A-1 Preferred Stock | ||||||||||||
| Series A Preferred Stock | ||||||||||||
| Non-classified Preferred Stock | ||||||||||||
| Total Series A Preferred Stock | $ | |||||||||||
| 15 |
Sales of Preferred Stock
During the three months ended March 31, 2024, the Company did not issue any shares.
During
the three months ended March 31, 2023, the Company issued K shares of Series A-2 preferred stock for gross proceeds of $
Warrants
In
connection with the issuance of certain A-3 shares, as of March 31, 2024 and December 31, 2023, the Company has issued
Offering Costs and Deferred Offering Costs
The
Company incurred offering costs of $
As
of March 31, 2024 and December 31, 2023, the Company recorded $
Subscription Liability
As of March 31, 2024 and December 31, 2023, the Company had $K and $K, respectively, in a subscription liability pertaining to proceeds received, but the Preferred A-2 shares were not yet issued.
Stock-based Compensation
Stock Options:
In 2021, the Company’s board of directors authorized the 2021 Stock Option Plan which allows for the issuance of options to purchase up to K shares of the Company’s common stock. During the three months ended March 31, 2024, the Company did not grant any stock options to purchase shares.
| Weighted Average | ||||||||||||
| (In Thousands except for per share price) | Stock Options | Exercise Price per Share | Term (in years) | |||||||||
| Outstanding as of December 31, 2022 | ||||||||||||
| Granted | $ | |||||||||||
| Exercised | ||||||||||||
| Forfeited/cancelled | ( | ) | ( | ) | ||||||||
| Outstanding as of December 31, 2023 | $ | | ||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Forfeited/cancelled | ( | ) | ||||||||||
| Outstanding as of March 31, 2024 | ||||||||||||
| Exercisable as of March 31, 2024 | $ | |||||||||||
| 16 |
The Company accounts for share-based compensation arrangements using a fair value method which requires the recognition of compensation expense for costs related to all share-based payments including stock options. The fair value method requires the Company to estimate the fair value of share-based payment awards on the date of grant using an option pricing model. The Company uses the Black-Scholes pricing model to estimate the fair value of options granted that are then expensed on a straight-line basis over the vesting period. The Company accounts for forfeitures as they occur in the year-of forfeiture and share-based compensation expense adjusted accordingly. Option valuation models, including the Black-Scholes option-pricing model, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant-date fair value of an award. These assumptions include the risk-free rate of interest, expected dividend yield, expected volatility, and the expected life of the award.
| As of | ||||
| December 31, 2023 | ||||
| Expected life (years) (1) | - | |||
| Risk-free interest rate (2) | - | % | ||
| Expected volatility (3) | % | |||
| Annual dividend yield (4) | % | |||
| Weighted average fair value of options granted | $ | -$ | ||
| (1) |
| (2) |
| (3) |
| (4) |
Share-based compensation expense is not adjusted for estimated forfeitures, but instead adjusted upon an actual forfeiture of a stock option. Amounts recorded for forfeited or expired unexercised options are accounted for in the year of forfeiture.
Restricted Stock Units (“RSU”s):
As part of the 2021 Stock Option Plan, the Company issued RSUs to certain employees of the Company. RSUs represent a right to receive a single common share that is both nontransferable and forfeitable until certain conditions are satisfied. RSU awards generally and stock-based compensation is recognized over the service period.
There were no RSU awards during the three months ended March 31, 2024 and 2023.
| 17 |
| Weighted-Average Grant Date | ||||||||
| (In Thousands except for per share price) | RSU’s | Fair Value per Share | ||||||
| Outstanding as of December 31, 2022 | $ | |||||||
| Awarded | ||||||||
| Vested | ||||||||
| Cancelled | ( | ) | ||||||
| Outstanding as of December 31, 2023 | $ | |||||||
| Awarded | ||||||||
| Vested | ||||||||
| Cancelled | ( | ) | ||||||
| Outstanding at March 31, 2024 | $ | |||||||
| For the Three Months Ended March 31, | ||||||||
| (In Thousands) | 2024 | 2023 | ||||||
| Cost of Goods Sold | $ | $ | ||||||
| General and Administrative | ||||||||
| Sales and Marketing | ||||||||
| Research and Development | ||||||||
| Total Stock-Based Compensation Expense | $ | $ | ||||||
The expected life of employee stock options was estimated using the “simplified method,” as the Company has no historical information to develop reasonable expectations about future exercise patterns and employment duration for its stock option grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. The expected life of awards that vest immediately use the contractual maturity since they are vested when issued. For stock price volatility, the Company uses public company compatibles as a basis for its expected volatility to calculate the fair value of option grants. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option at the grant-date.
The Company recognizes stock option forfeitures as they occur as there is insufficient historical data to accurately determine future forfeiture rates.
Future stock-based compensation expense related to these options and RSUs as of March 31, 2024, to be recognized is approximately $ million, which is expected to be expensed over the remaining vesting period of years. The amount of future stock-based compensation expense could be affected by any future option and RSU grants or by any forfeitures.
| 18 |
NOTE 10 – COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company enters into contractual agreements with third parties that include non-cancelable payment obligations, for which it is liable in future periods. These arrangements can include terms binding the Company to minimum payments and/or penalties if it terminates the agreement for any reason other than an event of default as described in the agreement.
In the course of business, the Company is party to various legal proceedings and claims from time to time. A liability will be accrued when a loss is both probable and can be reasonably estimated. Management believes that the probability of a material loss is remote. However, litigation is inherently uncertain, and it is not possible to predict the ultimate disposition of these proceedings. There are no legal proceedings, which the Company believes will have a material adverse effect on the Company’s financial position.
Litigation
The Company entered a settlement with the state of
Arizona related to the delivery of Casita units prior to receiving certification from the state. The Company paid $
In connection with the Casitas delivered in Arizona,
the Company entered a settlement with a customer related to the costs of reconstruction of the Casita units. Under the terms of the settlement
agreement, the customer has agreed to pay the first $
In December 2023, the Company received certification from ICC Evaluation Service related to the structural panels of the Casitas, which assist with procuring “plan approval” from various state regulatory agencies.
Claims filed by the Company on its former employees
| (i) | The Company is addressing a situation where a former employee violated
their confidentiality agreement post-termination. Quantifying the resulting harm is complex and ongoing. Legal action has been initiated
in Nevada State Court against the former employee, with efforts underway to fulfill court requirements for service. The Company’s
claim is straightforward, and it anticipates a judgment in its favor, likely resulting in compensation below $ |
| (ii) | The Company is addressing a situation involving a former employee who breached agreements. Assessing the exact impact of this breach is ongoing. Legal proceedings have been initiated in Nevada, then moved to federal court. The former employee, represented by counsel, filed motions. Discovery is currently paused. The Company’s claim is straightforward, with no counterclaims. It anticipates a favorable judgment, likely resulting in compensation below a certain threshold. |
| (iii) | The Company uncovered potential misconduct by a former employee related to a stock scheme, the impact of which is challenging to measure. Promptly upon discovery, the Company engaged external legal and consulting resources for an internal investigation and reported the matter to the FBI. Legal action was initiated in New York and later transferred to Nevada, but serving the former employee has proven difficult. Alternate service methods are being pursued. The Company’s claim is one-sided, without counterclaims. It expects a favorable judgment, likely resulting in compensation below a certain threshold, though investigations into damages continue. |
Claims filed by a former employee against the Company
| (i) | The Company received notifications of employment-related charges filed by a former employee with the EEOC and the NLRB. The allegations involve various issues such as discrimination and interference with employee rights. The Company provided responses to both agencies and is awaiting further developments. Due to limited information on the former employee’s arguments, the Company’s assessment of liability potential remains inconclusive, but it does not expect a significant impact on its financial position. |
| 19 |
Claim filed by the Company based on Business Disparagement and Defamation
An internet
blogger who posted defamatory information regarding the Company. The harm suffered as a result of this Internet Blogger’s actions
is difficult to quantify, and has not yet been fully quantified. The company filed a legal action against the Internet Blogger in Nevada
State Court. The Internet Blogger has not appeared and we recently filed a motion for default judgment against him seeking $
Claim filed against the Company by former COO
The Company’s former Chief Operating Officer, terminated for cause after seven months of employment, filed a civil complaint in Nevada alleging various claims against the Company and its directors. The amount sought by the former employee is unspecified. The defendants (Company’s Directors at the time) filed motions to dismiss certain claims, which were partially granted. The Company denied the allegations and filed a counterclaim alleging fraud and breach of contract. Damages are still being investigated. The case is in the discovery phase, and the former employee’s deposition revealed potential evidence tampering, prompting the Company to prepare a motion. No trial date is set, and the Company anticipates a favorable outcome.
Claim filed by Leader Capital High Quality Income Fund against the Company
Leader Capital is a shareholder of Company and has filed suit against Company and its transfer agent, Transfer Online, Inc. claiming Breach of Duty to Register a Transfer of a Security, Conversion, Breach of Fiduciary Duty, Intentional Interference with Prospective Economic Advantage. Plaintiff in said action seeks relief and monetary damages including compensatory damages, treble damages, punitive damages, attorney’s fees and costs. The Company has agreed to provide a defense to Transfer Online and we have been engaged in defending the lawsuit. The discovery phase has not yet commenced, and it is difficult to quantify the potential for liability at this early stage of the litigation. The Company doesn’t believe this will have a materially adverse effect on the Company’s financial position.
NOTE 11 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through May 15, 2024, the issuance date of these consolidated financial statements.
Brave Lawsuit
On April 30, 2024, the Company filed a Complaint against Brave Control Solutions Inc. and Brent McPhail in the US District Court for the Eastern District of Michigan alleging Breach of Contract, Unjust Enrichment, Fraud, and Violations of UCC-2-609 and UCC 2-721 in connection with deposits on equipment. The Company expects to receive judgment in its favor.
California Approval
On May 2, 2024, the Company received approval to sell units in California under the residential building code.
Regulation A Offering
On
April 30, 2024, the Company filed an amended Form 1-A Offering Statement with the SEC in relation to the sale of up to $
Validated Articles of Incorporation
On May 3, 2024, the Company filed its Fifth Amended and Restated Articles of Incorporation with the State of Nevada Office of the Secretary of State. Among other items described in the Company’s Definitive Information Statement filed with the Commission on March 29, 2024, this amendment validated the authorization of Series A-3 Preferred Stock, certain transactions involving the Company’s securities and other corporate governance matters.
Forfeitures
Subsequent to March 31, 2024 the Company forfeited RSUs and Stock Options. No additional shares were issued.
| 20 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes for the years ended December 31, 2023 included in our most recent annual report on Form 10-K.
In addition to our consolidated financial statements, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those discussed in these forward-looking statements. See above Forward-Looking Statements.
Overview
The Company is a manufacturer of building systems and is in the process of scaling our production of “Casitas” to meet the demand for our products. In addition to our first Nevada manufacturing facility (“Factory 1”), which we took possession of in May 2021, we expanded our production capacity by signing a lease for additional Nevada facilities (“Factory 2”) in June 2022 and (“Factory 3”) in May 2023. While our growth has mainly been funded by our capital raising activities as described below in “Liquidity,” we anticipate our increased manufacturing capacity will allow us to build Boxes more efficiently, and, in doing so generate additional revenue in the future. To emphasize the sales impact, we have expanded our sales and business development team, hiring three additional sales resources.
In 2023, we manufactured 260 Casitas primarily planned to fulfill an order with one of our customers in Arizona but have not made any deliveries. Various permits from state and local governments are required in order to sell and install the Casitas as modular houses. The permitting process has caused delays in the delivery of the product and has affected the timing and amount of the Company’s revenues. Currently, the Company is in the process of obtaining various permits related to the Casitas.
In December 2023, BOXABL completed the requested third-party inspection for the State of Arizona and received a report recommending Factory and Casita certification which was approved by the State. Accordingly, we are resuming sales to customers in Arizona, and in states where there is no state modular program, and for projects that are under a different classification such as park model RVs or government projects. Nevertheless, these new sales may face delays due to the time needed to prepare the site for installation, arrange capital for payment of amounts due to the Company by the purchaser, and other preparatory steps that need to be taken in order to arrange delivery and installation of the units.
On May 2, 2024, BOXABL received approval to sell units in California under the residential building code.
BOXABL has approved plans in several jurisdictions that do not have modular housing legislation (Oklahoma, Utah, Tribal Lands, etc.). The Company is also approved to sell Casitas as a Park Model RV configuration. We believe the Company can sell Park Model RVs in forty-five states without additional qualifications.
The Company anticipates that the incoming demand from the aforementioned jurisdictions, other jurisdictions currently in the process to be approved as for example Texas, plus customers under Park Model RV categories will support the Company’s operations.
The Company retained multiple third-party inspection agencies to assist in achieving certification in multiples states with modular housing legislation simultaneously. The Company does not expect that this regulatory process will cause further delays in our ability to generate revenue with respect to our current or future production.
As of May 13, 2024, the Company sold six units in 2024 to states that do not have modular housing legislation or under Park Model RV.
| 21 |
The Company maintains short-term liquidity of $35,312K and $46,259K as of March 31, 2024 and December 31, 2023, including cash and cash equivalents and short-term investments in U.S. Treasury Notes. In addition, the Company’s inventory balance as of March 31, 2024 was $19,158K on the accompanying consolidated balance sheet. The Company expects to sell these finished goods during 2024. Currently the Company’s average negative operating cashflow needed to maintain operations beyond the short-term is approximately $3.7 million per month. Accordingly, the Company’s liquidity including current assets is sufficient to fund approximately 14 months of operations.
The Company does not have financial debt and has recorded $9,007K and $9,822K in deposits in advance as of March 31, 2024 and December 31, 2023 related to automation equipment to secure our operational ramp-up in production. The Company maintains a commitment to pay an additional $2,341K for this equipment upon delivery.
The Company expects to generate funds from the sale of its current inventory in 2024, sale of future inventory resulting from manufacturing, sales of equity securities pursuant to an offering under Regulation A, and Regulation D in which a preliminary offering statement has been filed, and, if needed, could also look for financing opportunities related to our equipment.
During 2024, the Company restructured the sales and marketing team, to better focus on the demand from its sales channels. Skilled sales resources have been added and allocated to support the B2B and B2C channels respectively.
Trend Information
In total, we have received interest from more than 175,000 potential customers wishing to reserve their place in line for a Casita Box. Each of these potential customers has agreed to our Room Module Order Agreement. Of that number, we currently have deposits from over 8,500 potential customers ranging from $100, $200, $1,200 or $5,000 for over 15,000 Casitas. We are currently only accepting deposits of $200. While there is no assurance that any of these reservations will result in binding orders or revenue, we believe that the volume of reservations demonstrates significant interest in our product, which necessitates our efforts to focus on scaling up production capacity.
We also recently announced a new prototype, frequently referenced as the “GOLDIBOX” with three-bedrooms, two-and-a-half bathrooms and an outdoor deck, which is expanding public understanding of BOXABL beyond tiny houses and is already getting a lot of attention from Developers. We are now able to produce multi-bedroom units with our 19x19 ft. Boxes.
The Company is currently engaging in the developmental phase of an expanded product line, which includes a variety of sizes and configurations that extend beyond our existing Casita model. The growing interest expressed by various external stakeholders including developers has prompted us to explore additional sales channels. We anticipate the delivery of the initial prototypes in 2024.
Inflation
We have not yet been materially impacted by inflationary pressures because of the key differentiators in our building components compared to traditional, stick-built homes, as well as our manufacturing process in the factory setting compared to construction in the field. If the Company encounters significant increases in the cost of manufacture due to inflation, we believe we would be able to pass on those costs to end consumers as they would likely encounter greater inflationary impacts in traditionally built homes. Recent inflationary pressures have not materially impacted the Company’s operations.
| 22 |
Results of Operations
Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023
Revenues
Gross Revenues were $625K and $28K for the three months ended March 31, 2024 and 2023, respectively. Revenue in 2024 was generated by sales of our Casitas, supporting labor and materials, including the sale of six Casitas to four customers. We are continuing to work to execute on the new sales strategy, which includes closing deals from our waitlist.
Cost of Goods Sold
Cost of Goods Sold were $4,245K and $1,673K for the three months ended March 31, 2024 and 2023, respectively. Cost of goods sold consists primarily of the cost of products used in the production of the Company’s finished products, shipping, the related labor, stock compensation expense and overhead charges associated with that production. The Manufacturing Overhead represents the wages of salaried personnel directly involved in the manufacturing and production process, increasing year over year aligned with our strategy to increase production.
The cost of goods sold for the three months ended March 31, 2024 and 2023, consist of the following:
| March 31, | ||||||||
| (In Thousands) | 2024 | 2023 | ||||||
| Direct Material/Shipping | $ | 223 | $ | 10 | ||||
| Direct labor | 67 | - | ||||||
| Manufacturing Overhead | 4,120 | 1,602 | ||||||
| Cost of Goods Sold | $ | 4,410 | $ | 1,612 | ||||
During the three months ended March 31, 2024, the Company continued developing and implementing strategic cost-saving initiatives to reduce the cost of goods sold. In particular, standardizing terms and conditions with suppliers, improving manufacturing efficiencies and reducing quality issues, and implementing risk management procedures and maintaining employee engagement. In addition, the Company continued upgrading the manufacturing concept and installing more automated equipment to scale production. We expect this will allow the Company to ramp up production and reduce the cost per unit further.
During the three months ended March 31, 2024 and 2023, manufacturing overhead was $4,120K and $1,603K, respectively. This consisted primarily of the allocation of indirect labor, rent and lease expense, and depreciation expense. Other allocations to manufacturing overhead included indirect supplies, scrapped material, and maintenance costs. These overhead costs are relatively fixed and will not increase proportionally with the increase in production or sales.
Operating Expenses
During the three-month period ending March 31, 2024 and 2023, operating expenses were as follows:
| March 31, | ||||||||
| (In Thousands) | 2024 | 2023 | ||||||
| General and Administrative | $ | 3,729 | $ | 3,010 | ||||
| Sales and Marketing | 2,859 | 1,369 | ||||||
| Research and Development | 2,247 | 1,188 | ||||||
| Total Operating Expense | $ | 8,835 | $ | 5,567 | ||||
General and administrative expenses consists of compensation and benefits for positions on the factory floor and company administration, rents, shop supplies, and utilities. As we expand production capacity and ramp up operations, we expect these expenses to continue to grow. Advertising and marketing expenses generally consist of advertising and promotions. We have undertaken advertising campaigns specific to the product, as well as advertising directly to investors. Research and development is essential to test and develop the BOXABL product further and reflects a push to increase capacity, sales, and further test raw material used in production and researching industry standards and regulations.
Compensation Expense
The Company’s Equity Incentive Plan provides for the issuance of Stock Options and Restricted Stock Units (“RSUs”) among other types of equity incentives, including ISOs and NQSOs. The RSUs granted by the Board vest depending upon future events and are expensed periodically, over the vesting term. As of March 31, 2024 and December 31, 2023, the Company had 56,071K and 60,500K RSUs outstanding. As of March 31, 2024 and December 31, 2023, 286K and 286K RSU shares, respectively, were fully vested. As of March 31, 2024 and December 31, 2023, the Company had 52,713K and 55,236K ISO/NQSO shares, respectively, outstanding.
| 23 |
Liquidity and Capital Resources
Sources of Liquidity
To date, our operations have been primarily financed by our exempt offerings of securities made in reliance on Regulation A, Regulation CF and both Rule 506(c) and Rule 506(b) of Regulation D. For details regarding our securities offerings, see below “Sales of Securities.”
Cash and Cash Equivalents
As of March 31, 2024, the Company held $6,718 in cash and cash equivalents and $28,594 in investments in short-term treasury notes, compared to $18,574K in cash and cash equivalents and $27,685K in investments in short-term treasury notes as of December 31, 2023.
Historical Cash Flows
At March 31, 2024, our principal source of liquidity was cash and cash equivalents and short- and long-term investments, which we achieved through our offerings of securities as discussed above. Based on the Company’s current burn rate, we anticipate that the current short-term liquidity including on-hand inventory and accounts receivable will be sufficient to meet our immediate cash needs for approximately 14 months.
| Three Months Ended March 31, | ||||||||
| (In Thousands) | 2024 | 2023 | ||||||
| Net Cash Used in Operating Activities | $ | (10,391 | ) | $ | (9,328 | ) | ||
| Net Cash Provided by (Used in) Investing Activities | $ | (1,573 | ) | $ | 3,736 | |||
| Net Cash Provided by Financing Activities | $ | 139 | $ | 3,034 | ||||
Operating Activities
Cash used in operating activities included net loss adjusted for several non-cash items such as depreciation & amortization, stock-based compensation, extinguishment of debt and other non-cash expenses, in addition to the change in working capital.
Investing Activities
Primary investing activities included purchase of Property, equipment, leasehold improvement, Payment of security deposit for our factory and other facility, and acquisition and sales of short-term and long-term investments.
Financial Activities
Primary sources of our financial activities included net proceeds from issuance and sales of securities.
Inventory
Our physical assets increased with inventory of $19,158K as of March 31, 2024, which is primarily finished goods including 325 Casita Boxes units, compared to $18,694K as of December 31, 2023, which is primarily finished goods, including 313 Casita Boxes units. As we continue producing Casita Boxes, the amount of inventory consisting of finished goods has increased compared to the amount of raw materials as inventory.
Property, Plant and Equipment
Property, Plant and Equipment increased to $12,485K as of March 31, 2024, from $10,766K at December 31, 2023 resulting from additional capital improvements to our manufacturing facility.
In addition to installed capital equipment, as of March 31, 2024, we recorded $9,007K in deposits related to production equipment, compared to $9,822K as of December 31, 2023.
| 24 |
Sales of Securities
Sales of Capital Stock
During the three months ended March 31, 2024, the Company did not sell any stock.
On February 23rd, 2024 the Company filed a Preliminary Form 1-A expecting to conduct an offering of its Non-Voting Series A-3 Preferred Stock under Regulation A.
Material Commitments and Obligations
Expense Commitments
As of March 31, 2024, we reported current lease liabilities of $3,258K compared to $3,182K as of December 31, 2023. Our long-term lease liability decreased to $9,820K as of March 31, 2024, from $10,661K as of December 31, 2023.
Customer Deposits
Our main non-lease liability is the Company’s obligation to customers who have placed deposits on the purchase of a Casita. As of March 31, 2024, the Company held Customer deposits in the amount of $3,835K, a decrease from $3,987K as of December 31, 2023.
Deferred Revenue
As of March 31, 2024 and December 31, 2023, our balance sheet carried $2,570K and $2,684K deferred revenue related to purchase orders from Oklahoma (see “Trend Information”) and the Purchase Agreement with Pronghorn Services LLC (included as Exhibit 10.9). The Company notes that while the agreement was never executed, the parties have been acting under the terms of the agreement, with the Company receiving the full payment of the purchase orders ahead of shipping units). Pursuant to our method for recognizing revenue, deferred revenue reflects the amount that had not yet been delivered as of the date of the consolidated financial statements.
Critical Accounting Estimates
Inventory
Inventory consists of raw materials, in-bound freight and duties, work in progress, and finished goods. Inventories available for sale are valued at the lower of cost or net realized value. Cost is determined using the weighted average method. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, bulk sales, and the expected recoverable values for each disposition category. On a periodic basis, the Company performs a physical count of its inventory and records an Inventory Valuation Allowance for inventory that has become obsolete or inventory that has a cost basis in excess of the expected net realizable value. Damaged and obsolete inventory are valued based on management’s best estimate and any difference charged to expense
Intangible Assets
The Company evaluates its intangible assets for impairment annually, or more frequently whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company utilizes a qualitative assessment to evaluate whether it is more likely than not that the fair value of an intangible asset is less than its carrying value, and if so, the Company will perform a quantitative test. An impairment loss is recognized if the carrying value exceeds the fair value.
Stock-Based Compensation
The Company applies ASC 718 for its Stock-Based Compensation. Compensation for all stock-based awards, including stock options and restricted stock, are measured at fair value on the date of grant and recognized over the associated vesting periods. The fair value of stock options is estimated on the date of grant using a Black-Scholes model. The fair value of restricted stock awards is estimated on the date of the grant based on the fair value of the Company’s underlying common stock. For stock options and restricted stock awards subject to a three-year vesting period, the Company recognizes compensation expense over the associated service periods.
Determining the grant date fair value of options using the Black-Scholes option-pricing model requires management to make assumptions and judgments. These estimates involve inherent uncertainties and, if different assumptions had been used, stock-based compensation expense could have been materially different from the amounts recorded.
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Planned Timeline
With the success of our initial fundraising through our offerings under Regulation A, Regulation D, and Regulation CF, we have continued to advance our planned timeline beyond initial testing of Casitas, delivery of orders, and developing Factory 2 and 3. As of May 15, 2024, we see our next 12-month timeline as follows:
| Month 1-3 | ● | Continue delivery of orders to states do not have modular housing legislation, Park Model RV configuration, to California and to Arizona. Costs are estimated to be $3 million. |
| ● | Ramp-up production. Costs are estimated to be $40.2 million. | |
| ● | Obtain plant and Casita certification in Florida, New Mexico, and Texas. Costs are estimated to be $100K per state. | |
| Month 4-6 | ● | Complete the design and prototyping of our next Generation of Boxes (new sizes), and begin production of these generations. Costs are estimated to be $9.3 million. |
| Month 7+ | ● | Begin and complete ramp up of production to achieve our desired production at scale for our facilities. |
| ● | Upgrade manufacturing equipment including: CNC equipment, Lamination Line, Paint Line, and Casita Assembly Conveyor System. Costs to complete these orders are $2.4 million. | |
| ● | Obtain next generation Casita certification in several states including Arizona, California, Texas and Nevada. Costs are estimated to be $100K per state. |
The Company believes the above referenced activities are achievable with its current cash and cash equivalents as referenced in Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview.
On the regulatory side of our business, we have received Generation 1.0 state modular approvals required for our Casitas in Arizona, which was finalized in December 2023. On May 2, 2024, we received approval to sell units in California under the residential building code. We still anticipate achieving state modular approvals for our current generation Casitas in California, Nevada, Texas, New Mexico and Florida followed by Generation 2.0 state modular approvals for our Casitas and our multifamily set-ups in California, Arizona, and Nevada later in 2024.
There is no assurance that we will be able to meet this timeline. It is provided to identify our intentions for moving forward during the next 12 months of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company as defined by §229.10(f)(1), BOXABL is not required to provide the information under this Item.
ITEM 4. CONTROLS AND PROCEDURES
Limitations on Effectiveness of Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”), refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact there are resource constraints and management are required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934). Based on that evaluation, as of March 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the period ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Arizona Department of Housing Settlement
On January 23, 2023, the Office of Administration of the Arizona Dept. of Housing brought an administrative complaint against BOXABL, alleging that BOXABL did not comply with certain requirements prior to shipping housing units into Arizona, and seeking penalties up to suspension or revocation of its license, an administrative penalty, or probation.
On February 9, 2023, BOXABL filed its verified Answer, explaining inter alia that BOXABL had acted in good faith and in accordance with its reasonable interpretation of the Department’s instructions regarding the shipments into Arizona, and that shipments were only made after requesting and obtaining the Department’s written consent and authorization in November 2022. This administrative complaint was resolved by settlement agreement on April 21, 2023. BOXABL paid an administrative penalty to Arizona Dept. of Housing in the amount of $48 thousand on April 26, 2023, and has satisfied all of its obligations to the Arizona Department of Housing under the settlement agreement.
In a separate settlement between the Parties, dated May 30, 2023, regarding the costs of the reconstruction of the Casitas, Freeport has assumed responsibility to pay reconstruction costs, but the Company will be responsible for 10% of any costs in excess of $1 million. The Company will also incur 50% of shipping costs in the event the contract is canceled and the Casitas removed. The Company accrued a $570 thousand warranty for such costs and any costs related to the 10-year limited warranty offering to Pronghorn.
Litigation Against Former Employees
On or about June 13, 2023, the Company filed two lawsuits against former employees alleging claims including breach of contract, violations of the Computer Fraud & Abuse Act, violations of the Defend Trade Secrets Act, conversion, unjust enrichment, breach of covenant of good faith and fair dealing, and demand for temporary and permanent injunctive relief. These litigation matters remain pending. Management does not anticipate these matters will have a material impact on the Company’s results of operations or financial condition.
On or about March 2023, the Company discovered through one of its compliance programs that a former employee had issued fraudulent securities. An internal investigation was commenced and the matter was reported to the Federal Bureau of Investigation. Shortly thereafter, the Company filed a lawsuit against this former employee for breach of contract, violations of the Computer Fraud and Abuse Act, violations of the Defend Trade Secrets Act, Conversion, Unjust Enrichment, Breach of the Covenant of Good Faith and Fair Dealing and for a temporary and permanent injunction. The matter remains pending in the U.S. District Court for the District of Nevada. Management does not anticipate this matter will have a material impact on the Company’s results of operations or financial condition.
On September 2, 2022, BOXABL received notice of a charge of employment discrimination had been filed with the Equal Employment Opportunity Commission (“EEOC”) against BOXABL under Title VII of the Civil Rights Act of 1964 (Title VII). The circumstances of the alleged discrimination are alleged to have occurred on or about May 1, 2022. On October 3, 2022, BOXABL (through counsel) filed a position statement refuting the allegations and providing supporting documentation of BOXABL’s position. The matter is pending before the EEOC. Management does not anticipate this matter will have a material impact on the Company’s results of operations or financial condition.
On or about September 25, 2023, BOXABL received notice of a charge of unfair labor practices had been filed with the National Labor Relations Board against BOXABL under Section 7 of the NLRA. The circumstances of the alleged charge are alleged to have occurred between March 2023 and September 2023. On or about October 12, 2023, BOXABL (through counsel) filed a position statement refuting the allegations and providing supporting documentation of BOXABL’s position. The matter is pending before the NLRB. Management does not anticipate this matter will have a material impact on the Company’s results of operations or financial condition.
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Other Litigation
On April 30, 2024, the Company filed a lawsuit against Brave Control Solutions, Inc. (“Brave”), and its CEO, Brent McPhail. The lawsuit was filed in the United States District Court for the Eastern District of Michigan. The lawsuit related to the Company’s claim of breach of contract by Brave related to the design, manufacture, and programing of specialized equipment to be used by the Company. Management does not believe this litigation will have a material affect on the Company’s operations, but intends to seek full redress available to it.
On June 13, 2023, the Company filed a lawsuit against a person, not affiliated with the Company, alleging claims based on business disparagement and defamation of the Company. Management does not anticipate the matter will have a material impact on the Company’s results of operations or financial condition.
On November 19, 2021, a former employee, who served as Chief Operating Officer during the seven-month period from March 2021 until September 27, 2021, at which time he was terminated, filed a complaint against the Company and its directors in the Eighth Judicial District Court of Clark County, Nevada, claiming breach of contract and wrongful termination. While the legal action has proceeded to discovery, the Company denies the merit of the allegations and will continue to defend against them. Management does not anticipate these matters will have a material impact on the Company’s results of operations or financial condition.
On or about October 5, 2023, Leader Capital High Quality Income Fund, a series of Leader Funds Trust, a Delaware statutory trust, commenced an action against BOXABL and other defendants in the District Court for Nevada asserting claims for breach of duty to register a transfer of a security (NRS 104.8401), Conversion, Intentional Interference with Prospective Economic Advantage. Plaintiff claims that it requested the removal of a restrictive legend to shares held by Plaintiff and that BOXABL refused and/or delayed approval of the removal and caused Plaintiff to suffer damages. BOXABL denies the merit of the allegations and damages sought and will continue to defend against them. Management does not anticipate these matters will have a material impact on the Company’s results of operations or financial condition.
We know of no other existing or pending legal proceedings against us, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
The Company is party to various legal proceedings and claims from time to time. A liability will be accrued when a loss is both probable and can be reasonably estimated. Management believes that the probability of a material loss is remote. However, litigation is inherently uncertain, and it is not possible to predict the ultimate disposition of these proceedings.
Item 1A. RISK FACTORS
Rule 421(d) of the Securities Act of 1933 (§230.421(d) of this chapter). Smaller reporting companies are not required to provide the information required by this item.
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Item 2. Unregistered Sales of Equity Securities
Since December 31, 2019, the Company has engaged in the following offerings of securities:
| ☐ | From December 2, 2020 through May 22, 2021, the Company sold to no more than 35 purchasers in any 90-calendar day period who were either accredited investors (or the Company reasonably believed immediately prior to the sale that the investor had such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of the prospective investment) 33,350K shares of Non-Voting Series A Preferred Stock* and the underlying Common Stock into which they convert under Rule 506(b) of Regulation D for a total of $567K. In connection with this offering, the Company provided investors with an offering memorandum that provided the information required by Part 2 of Form 1-A under Regulation A, and audited financial statements for the fiscal years ended December 31, 2019 and 2018. | |
| ☐ | From November 17, 2020, through April 1, 2022, the Company sold Convertible Promissory Notes to accredited investors, which converted into shares of Non-Voting Series A-1 Preferred Stock* on April 1, 2022, under Rule 506(c) of Regulation D for a total of $44,852K. For details regarding the conversion of the Convertible Promissory Notes, see Item 2. Financial Information – Sale and Subsequent Conversion of Convertible Promissory Notes. | |
| ☐ | From May 3, 2021, through November 13, 2021, the Company sold 68,097K shares of Non-Voting Series A-1 Preferred Stock and the underlying shares of Common Stock into which they convert under Regulation Crowdfunding for a total of $4,835K. Commission File No. 020-28025. | |
| ☐ | On March 31, 2022, the Company commenced a Regulation A offering in which it sold Non-Voting Series A Preferred Stock, Non-Voting Series A-1 Preferred Stock, NonVoting Series A-2 Preferred Stock* and the underlying shares of Common Stock into which they convert. The Regulation A offering also included selling securityholders selling Common Stock. The offering terminated on January 12, 2023, by which time the Company had sold 5,914K shares of Non-Voting Series A Preferred Stock for a total of $83K; 742K shares of Non-Voting Series A-1 Preferred Stock for a total of $59K; 81,064K shares of Non-Voting Series A-2 Preferred Stock for a total of $64,850K; and the selling securityholders sold 12,488K shares of Common Stock for a total of $9,991K. Commission File No. 024-11419. | |
| ☐ | From August 25, 2022 through February 20, 2023, the Company sold 5,914K shares of Non-Voting Series A-2 Preferred Stock and the underlying shares of Common Stock into which they convert for a total of $4,731K in reliance on Regulation Crowdfunding. Commission File No. 020-30797 | |
| ☐ | Beginning November 23, 2021, the Company commenced an exempt offering of Non-Voting Series A-2 Preferred Stock and the underlying shares of Common Stock into which they convert, pursuant to Rule 506(c) of Regulation D. The Company closed the offering August 31, 2023, having sold 45,011K shares for gross proceeds of $33,837K. | |
| ☐ | On June 15, 2023, the Company engaged in a statutory merger with an affiliated corporation, 500 Group, in which the Company exchanged 37,500K shares of Non-Voting Series A-2 Preferred Stock in exchange for 500 Group’s 100 outstanding shares of Common Stock in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended. For details, see Item 7. Certain Relationships and Related Transactions and Director Independence. | |
| ☐ | Between September 18 and October 9, 2023, the Company conducted an offering of its Series A-2 Preferred Stock in reliance on Regulation Crowdfunding. The Company sold 4,079K shares of Series A-2 Preferred Stock for gross proceeds of approximately $3,263K. Commission File No. 020-32926. | |
| ☐ | Beginning February 17, 2023, the Company commenced a Canadian exclusive offering, through FrontFundr, of its Non-Voting Series A-2 Preferred Stock and the underlying shares of Common Stock into which they convert. This offering is subject to applicable exemptions under Canadian securities laws and is strictly limited to investors from specific Canadian provinces, which is verified by FrontFundr. As of December 31, 2023, the Company has sold 388K shares for gross proceeds of $310K
Beginning September 1, 2023, the Company commenced an exempt offering of Non-Voting Series A-3 Preferred Stock* and the underlying shares of Common Stock into which they convert, pursuant to Rule 506(c) of Regulation D. As of December 31, 2023, the Company sold 8,343K shares for gross proceeds of $4,184K |
* All classes of Preferred Stock convert into Common Stock upon the Company undertaking a firm underwriting registered offering (an “IPO”) or an offering of the Company’s Common Stock under Regulation A.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Insider trading arrangements and Rule 10b5-1 Trading Plans.
During the quarter ended March 31, 2024, none of the Company’s officers or directors have entered into a contract, established a plan, or issued instructions that provides for the purchase or sale of any equity securities of the Company intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act.
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Item 6. Exhibits
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| # | This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act. | |
* + |
Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. Management contract or compensatory plan or arrangement. |
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signatures
Pursuant to the requirements 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.
| BOXABL INC. | ||
| (Registrant) | ||
| Date: May 15, 2024 | ||
| By: | /s/ Paolo Tiramani | |
| Paolo Tiramani | ||
| Chief Executive Officer and Director | ||
| By: | /s/ Martin Costas | |
| Martin Costas | ||
| Chief Financial Officer | ||
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