Nano Magic Inc 10-Q for FY2023 Q2
Nano Magic Inc. (NMGX)
About this 10-Q
Nano Magic Inc filed this 10-Q on August 14, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).
Headline figures
Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $709.29K
- up 43.6% from $493.78K a year earlier
- Net loss
- $650.87K
- compared with net income of $307.13K a year earlier
- Diluted EPS
- -$0.06
- compared with $0.03 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
For
the quarterly period ended
COMMISSION
FILE NO.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive office, including Zip Code)
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| OTC Markets |
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☐ Yes ☒
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, 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 ☒
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 “accelerated filer”, “large 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
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒
As of August 14, 2023, the registrant had shares of Common Stock issued and outstanding.
Nano Magic Inc.
INDEX
| 2 |
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements that we believe are within the meaning of the federal securities laws. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements, including the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding our strategy, future operations, future expectations or future estimates, financial position and objectives of management. Those statements in this Form 10-Q containing the words “believes,” “anticipates,” “plans,” “expects” and similar expressions constitute forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and are subject to a number of risks, uncertainties and assumptions relating to our operations, results of operations, competitive factors, shifts in market demand and other risks and uncertainties.
Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate and actual results may differ from those indicated by the forward-looking statements included in this Form 10-Q. In light of the significant uncertainties inherent in the forward-looking statements included in this Form 10-Q, you should not consider the inclusion of such information as a representation by us or anyone else that we will achieve such results. Moreover, we assume no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.
| 3 |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NANO MAGIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| NET REVENUES | $ | $ | $ | $ | ||||||||||||
| COST OF SALES | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OTHER OPERATING INCOME | ||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Selling and marketing expenses | ||||||||||||||||
| Salaries, wages and related benefits | ||||||||||||||||
| Stock compensation expense | ||||||||||||||||
| Research and development | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total Operating Expense | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Income (loss) from investment in subsidiary | ( | ) | ( | ) | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ||||||||||||
| LOSS FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| INCOME (LOSS) FROM DISCONTINUED OPERATIONS | ||||||||||||||||
| Income (loss) from discontinued operations | ( | ) | ||||||||||||||
| Gain on sale of discontinued operations | ||||||||||||||||
| NET INCOME FROM DISCONTINUED OPERATIONS | ||||||||||||||||
| NET (LOSS) INCOME | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| NET (LOSS) INCOME PER SHARE - BASIC: | ||||||||||||||||
| Continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Discontinued operations | $ | $ | $ | $ | ||||||||||||
| NET (LOSS) INCOME PER SHARE - BASIC: | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| NET (LOSS) INCOME PER SHARE - DILUTED: | ||||||||||||||||
| Continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Discontinued operations | $ | $ | $ | $ | ||||||||||||
| NET (LOSS) INCOME PER SHARE - DILUTED: | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
| F-1 |
NANO MAGIC INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| June 30 | December 31 | |||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses | ||||||||
| Current portion of note receivable | ||||||||
| Total Current Assets | ||||||||
| Operating lease right-of-use assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Note receivable, non-current | ||||||||
| Non-marketable equity investment in subsidiary | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accounts payable - related parties | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Current portion of notes payable | ||||||||
| Current portion of finance leases | ||||||||
| Advances from related parties | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Notes payable and debt discount, net of current portion | ||||||||
| Finance leases, net of current portion | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (See Note 11) | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred stock, $ par value, shares authorized; shares issued and outstanding | ||||||||
| Common stock: $ par value, shares authorized; and issued and outstanding at June 30, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
See accompanying notes to consolidated financial statements.
| F-2 |
NANO MAGIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022
(unaudited)
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Class A Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net of issuance costs | ||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||
| Warrants and options on private placement | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2023 | ( | ) | ||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net of issuance costs | ||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Warrants and options on private placement | - | |||||||||||||||||||
| Net Income | - | |||||||||||||||||||
| Balance, June 30, 2022 | ( | ) | ||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
| F-3 |
NANO MAGIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(unaudited)
| Class A Common Stock | Additional Paid-in | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common stock issued for cash, net of issuance costs | ||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||
| Restricted stock issued for services | ||||||||||||||||||||
| Warrants and options on private placement | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2023 | ( | ) | ||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance | $ | $ | $ | ( | ) | |||||||||||||||
| Common stock issued for cash, net of issuance costs | ||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||
| Warrants and options on private placement | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Net income (loss) | - | ( | ) | ( | ) | |||||||||||||||
| Balance, June 30, 2022 | ( | ) | ||||||||||||||||||
| Balance | ( | ) | ||||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
| F-4 |
NANO MAGIC INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| 2023 | 2022 | |||||||
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net income from discontinued operations | ||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Change in inventory obsolescence reserve | ( | ) | ||||||
| Depreciation and amortization expense | ||||||||
| Bad debt expense | ||||||||
| Stock-based compensation and stock issued for services | ||||||||
| Income from investment in subsidiary | ( | ) | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ||||||||
| Prepaid expenses and contract assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accounts payable - related party | ( | ) | ||||||
| Operating lease liabilities | ||||||||
| Accrued expenses | ||||||||
| Contract liabilities | ||||||||
| Total adjustments | ||||||||
| Net cash used by continuing operating activities | ( | ) | ( | ) | ||||
| Net cash used by discontinued operating activities | ( | ) | ||||||
| NET CASH USED BY OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM CONTINUING INVESTING ACTIVITIES | ||||||||
| Proceeds from note receivable | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES | ( | ) | ||||||
| CASH FLOWS FROM CONTINUING FINANCING ACTIVITIES | ||||||||
| Proceeds from sale of common stock and warrants | ||||||||
| Proceeds from issuance of convertible debt and warrants | ||||||||
| Repayment of bank loans | ( | ) | ( | ) | ||||
| Repayment of finance leases | ( | ) | ( | ) | ||||
| Repayment of advances from related parties | ( | ) | ||||||
| Net cash provided by continuing financing activities | ||||||||
| Net cash provided by discontinued financing activities | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET (DECREASE) INCREASE IN CASH | ( | ) | ||||||
| CASH in continuing operations, beginning of period | ||||||||
| CASH in discontinued operations, beginning of period | ||||||||
| CASH, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid during the period for interest | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
| F-5 |
NANO MAGIC INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
(unaudited)
NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION
Organization
Nano Magic Inc. (“we”, “us”, “our”, “Nano Magic” or the “Company”), a Delaware corporation, develops and sells a portfolio of nano-layer coatings, nano-based cleaners, and nano-composite products based on its proprietary technology. On March 2, 2021 we changed our name to Nano Magic Holdings Inc. On December 31, 2022, our wholly-owned subsidiary Nano Magic LLC was merged into the parent company and we changed our name to Nano Magic Inc.
Effective
May 31, 2022, we sold a
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information. Accordingly, they do not include all the information and disclosures required by US GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the unaudited condensed consolidated financial statements of the Company as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the operating results for the full year ending December 31, 2023 or any other period. The balance sheet at December 31, 2022 has been derived from the audited financial statement at that date but does not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2022 and for the year then ended, which were filed with the Securities and Exchange Commission on Form 10-K on April 11, 2023.
Going Concern
These
unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of
assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the unaudited
consolidated financial statements, the Company had losses from continuing operations and net cash used by continuing operations of
$
Reclassifications
Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period. These reclassifications had no effect on the previously reported net loss.
NOTE 2 – DISCONTINUED OPERATIONS
Effective
May 31, 2022, we sold a
| F-6 |
In connection with the sale, the capital structure of Applied Nanotech was changed to give us, as the holder of Class B common stock of Applied Nanotech, a 30% economic interest, certain information rights, special consent rights, and tag-along rights, as well as the obligation to sell our stock under certain circumstances if other stockholders are selling. The Class A stock acquired by the buyers was pledged to secure the promissory note given in payment of the purchase price.
The following includes the detail of major classes of assets and liabilities of discontinued operations summarized on the accompanying unaudited consolidated financial statements:
The following is the detail of major line items that constitute income (loss) from discontinued operations:
SCHEDULE OF INCOME (LOSS) FROM DISCONTINUED OPERATIONS
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of Sales | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Salaries, wages and related benefits | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Interest and other expense | ||||||||||||||||
| Net income (loss) on discontinued operations | $ | $ | ( | ) | $ | $ | ||||||||||
NOTE 3 – INVENTORY
At June 30, 2023 and December 31, 2022, inventory consisted of the following:
SCHEDULE OF INVENTORY
| June 30, 2023 | December 31, 2022 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Inventory, gross | ||||||||
| Less: reserve for obsolescence | ( |
) | ( |
) | ||||
| Inventory, net | $ | $ | ||||||
NOTE 4 – INVESTMENT IN SUBSIDIARY
The
Company is accounting for its
NOTE 5 – NOTES PAYABLE AND FINANCE LEASES
Notes Payable
On
January 7, 2022, the Company sold to one investor a $
On
July 27, 2022, the Company sold two convertible notes, one for $
| F-7 |
On
October 26, 2022, the Company sold to an investor a $
On
December 18, 2022, the Company issued a convertible promissory note for $
On
June 14, 2023, the Company issued a convertible, secured note and warrants to purchase
At
June 30, 2023 and at December 31, 2022, we had outstanding convertible notes aggregating $
On
February 10, 2015, Nano Magic entered into a $
Finance Leases
On
August 11, 2020, the company entered into a finance lease for furniture. We financed $
On
September 24, 2020, the company entered into a finance lease with Raymond Leasing Corporation for a forklift. Nano Magic LLC financed
$
In
December 2020, the company entered into a finance lease for production equipment. We financed $
NOTE 6 – RELATED PARTY TRANSACTIONS
At
June 30, 2023 and at December 31, 2022, accounts payable – related parties totaled $
Other compensation paid to directors was:
SCHEDULE OF RELATED PARTY TRANSACTIONS
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Ronald J. Berman | $ | $ | + | $ | $ | + | ||||||||||
| Tom J. Berman | $ | * | $ | * | $ | * | $ | * | ||||||||
| Scott E. Rickert | $ | $ | | ++ | $ | $ | ++ | |||||||||
| + | |
| * | |
| ++ |
| F-8 |
At
June 30, 2023 and at December 31, 2022, aggregate advances from Scott & Jeanne Rickert were $
We granted options to our President and CEO Tom Berman in lieu of salary: In April, an option to purchase up to shares, fully vested for salary not paid from January to March, and, in May, a second option for up to shares that vest at the rate of shares monthly for salary not paid in April and subsequent months of 2023. Also in May, we granted our Chief Financial Officer an option for up to shares in recognition of his services from 2019 through 2022. Both our CFO and our General Counsel were granted options in May for up to shares, vesting shares per month starting in January 2023 and each month thereafter. In May, 2023, we also granted director Ronald Berman an option to purchase up to shares for services previously rendered and granted him an option for shares that vest at the rate of shares per month beginning in April and for each calendar month of 2023. All options have an exercise price of $ per share and a four-year term.
One
of the purchasers of the
Mr. Ron Berman and Mr. Tom Berman are the managers of the limited liability company that is the manager of PEN Comeback, LLC, PEN Comeback 2, LLC, Magic Growth, LLP, Magic Growth 2 LLC and Magic Growth 3 LLC. These five limited liability companies purchased shares of common stock and derivative securities from us in 2018, 2019, 2020, 2021 and 2022. See the subsection on Sales of Stock under Issuances of Common Stock in Note 7.
In
addition, Mr. Tom Berman and Mr. Ron Berman are two of three individuals who share voting power of the sole manager of the limited liability
company that is our landlord in Michigan. Together, Tom and Ron Berman hold, in the aggregate, a
NOTE 7 – STOCKHOLDERS’ EQUITY
Description of Preferred and Common Stock
Preferred Stock
The preferred stock may be issued in one or more series. The Company’s board of directors are authorized to issue the shares of preferred stock in such series and to fix from time to time before issuance thereof the number of shares to be included in any such series and the designation, powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of such series.
Common Stock
Issuances of Common Stock
Common Stock Issued for Services
In February 2023, we reached an agreement with the landlord of our Michigan facility to accept shares of our common stock at a price of $ per share as partial payment of rent for the six-month period from October 2022 through March 2023. Those shares were issued in March, 2023.
| F-9 |
In May 2023, we reached a further agreement with the landlord that calls for us to pay cash each month to cover the cost of the mortgage and the lease for the lighting fixtures, but that will allow us to pay the balance of the rent by issuing shares of our stock valued at $ per share. We have the option to continue to use stock to pay a portion of the rent through 2024.
On May 30, 2023, the Company issued shares of restricted common stock to a consultant as compensation for services. The shares are subject to forfeiture until vested. So long as the consulting services agreement remains in effect shares vested in May for prior service, and another shares vest at the end of May and each calendar month thereafter, with shares vesting in December 2023. During 2024, shares will vest at the end of each month, with shares vesting at the end of December 2024.
Sales of Common Stock and Derivative Equity Securities
During
the quarter ended June 30, 2023, the Company sold shares
of common stock for proceeds of $
During
the quarter ended June 30, 2022, the Company sold shares of common stock for proceeds of $495,834
and warrants to purchase up to shares of common stock for proceeds of $
Stock Options
Stock options to purchase common stock outstanding at June 30, 2023 include those described below. No options were exercised during the period. No options have been included in diluted earnings per share as they would be anti-dilutive.
| Number
of Options | Weighted
Average Exercise Price | Weighted
Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding December 31, 2022 | $ | $ | ||||||||||||||
| Exercised | - | |||||||||||||||
| Issued | ||||||||||||||||
| Expired & forfeited | ( | ) | - | ( | ) | |||||||||||
| Outstanding June 30, 2023 | $ | $ | ||||||||||||||
| Exercisable June 30, 2023 | $ | $ | ||||||||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Stock options | ||||||||
| Stock warrants | ||||||||
| Total | ||||||||
| F-10 |
Warrants
As
of June 30, 2023, there were outstanding and exercisable warrants to purchase
2021 Equity Incentive Plan
On March 2, 2021, our Board adopted the 2021 Nano Magic 2021 Equity Incentive Plan (the “Plan”) to allow equity compensation for those who provide services to the Company and to encourage ownership in the Company by personnel whose service to the Company is important to its continued progress, to encourage recipients to act as owners and thereby in the stockholders’ interest and to enable recipients to share in the Company’s success. Initially, shares were available for issuance under the Plan and that number of options were also granted to employees on March 2, 2021. On April 8, 2021 the number of shares under the Plan was increased by , and an additional options were granted. On June 21, 2021 an additional shares were made available for issuance under the Plan and options for shares were granted, but subsequently forfeited. In February 2022, we granted options with an exercise price of $ and weighted average fair value on the grant date of $.
On April 12, 2023, the Company granted options under the 2021 Equity Plan. On May 30, 2023 the Board granted an additional options under the 2021 Equity Plan to employees and a consultant. All options are at an exercise price of $.
Other Options
On
April 12, 2023, the Company issued an additional
NOTE 8 – COMMITMENTS AND CONTINGENCIES
Litigation
The Company may be, from time to time, subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business. As of June 30, 2023 we were not a defendant in any proceedings. Our policy is to accrue costs for contingent liabilities, including legal proceedings or unasserted claims that may result in legal proceedings, when a liability is probable and the amount can be reasonably estimated. As of June 30, 2023, the Company has not accrued any amount for litigation contingencies.
NOTE 9 – SUBSEQUENT EVENTS
On June 16, 2023, the Company issued a note at face value of $
On July 19, 2023, the Board authorized the creation of an Advisory Committee. In August the Company agreed to issue to each of three individuals who will serve on that committee a total of shares of restricted stock for their services during 2023.
| F-11 |
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying unaudited condensed consolidated financial statements.
OVERVIEW
Nano Magic is a leader in developing and bringing to market cutting-edge nanotechnology-powered industrial and consumer cleaning, protection and anti-fog solutions formulated in Detroit, Michigan. Nano Magic focuses on innovative and advanced product solutions harnessing the magic power of nanotechnology to create a safer, more socially conscious, and higher performing world. Visit www.nanomagic.com for more information.
Effective May 31, 2022, we sold a majority interest in our subsidiary, Applied Nanotech, Inc. (“ANI”). ANI performs contract research services for the Company and for governmental and private customers and that work was previously reported as our Contract research segment. We retain a 30% interest in ANI that is now recorded as an equity investment.
RESULTS OF OPERATIONS
The following comparative analysis on results of operations was based primarily on the comparative condensed consolidated financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report. The results discussed below are for the three and six months ended June 30, 2023 and 2022.
Comparison of Results of Continuing Operations for the Three and Six Months ended June 30, 2023 and 2022
Revenues:
For the three and six months ended June 30, 2023 and 2022, revenues from continuing operations were:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Total revenue | $ | 709,293 | $ | 493,782 | $ | 1,406,322 | $ | 1,012,925 | ||||||||
For the three months ended June 30, 2023, revenues from continuing operations increased by $215,511 or 44% as compared to the three months ended June 30, 2022. For the six months ended June 30, 2023 revenues increased by $393,397 or 39%, as compared to the six months ended June 30, 2022. The increases were due to sales increases in multiple channels.
Cost of sales
Cost of sales includes inventory costs, materials and supplies costs, internal labor and related benefits, subcontractor costs, depreciation, and allocated overheads and shipping and handling costs incurred.
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Cost of sales: | $ | 507,155 | $ | 458,330 | $ | 1,129,434 | $ | 990,894 | ||||||||
For the three months ended June 30, 2023, cost of revenues increased by $48,825 or 11 % as compared to the three months ended June 30, 2022. For the six months ended June 30, 2023, cost of revenues increased by $138,540 or 14% as compared to the six months ended June 30, 2022. Cost of sales increased as sales revenue increased, but did not increase proportionately reflecting cost cutting efforts over the last year.
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Gross profit
For the three months ended June 30, 2023, gross profit was $202,138 as compared to $35,452 for the prior year, an increase of $166,686 or 470%. For the six months ended June 30, 2023, gross profit was $276,888 as compared to $22,031 for the prior year, an increase of $254,857 or 1,157%. For the three- and six-month periods the increases were due to higher sales volume as well as product mix generating improved margin year over year.
Operating expenses
For the three months ended June 30, 2023, operating expenses increased by $26,007 or 3% compared to the three months ended June 30, 2022. For the six-month period ended June 20, 2023, operating expenses decreased by $277,497 or 15% as compared to the six months ended June 30, 2022. For the three and six months ended June 30, 2023 and 2022, operating expenses consisted of the following:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Selling and marketing expenses | $ | 54,018 | $ | 96,301 | $ | 113,442 | $ | 175,830 | ||||||||
| Salaries, wages and related benefits | 189,896 | 316,752 | 468,562 | 712,718 | ||||||||||||
| Stock compensation expense | 260,249 | 39,366 | 290,393 | 106,621 | ||||||||||||
| Research and development | 6,371 | 3,211 | 12,275 | 10,700 | ||||||||||||
| Professional fees | 112,762 | 188,794 | 302,221 | 442,773 | ||||||||||||
| General and administrative expenses | 258,508 | 211,463 | 447,514 | 463,261 | ||||||||||||
| Total | $ | 881,894 | $ | 855,887 | $ | 1,634,407 | $ | 1,911,903 | ||||||||
| ● | For the three months ended June 30, 2023, selling and marketing expenses decreased by $42,283 or 44% as compared to the three months ended June 30, 2022. For the six months ended June 30, 2023, selling and marketing expenses decreased by $62,388 or 35% as compared to the six months ended June 30, 2022. The decreases were due to attendance at fewer trade shows in 2023 and the decision to bring certain consumer marketing efforts in-house. |
| ● | For the three months ended June 30, 2023, salaries, wages and related benefits decreased by $126,766 or 40%, as compared to the three months ended June 30, 2022. For the six months ended June 30, 2023, salaries, wages and related benefits decreased by $244,156 or 34%, as compared to the six-months ended June 30, 2022. These decreases were due to reductions in headcount. |
| ● | For the three months ended June 30, 2023, stock compensation expense increased by $220,883 or 561%. For the six months ended June 30, 2023, stock compensation expense increased $183,772 or 172%. The increase was due in substantial part to the grant of options to employees in lieu of cash bonuses, payment of a portion of some salaries in options in lieu of cash, and other stock incentives to employees and consultants. |
| ● | For the three months ended June 30, 2023, research and development costs increased by $3,160 or 98%, as compared to the three months ended June 30, 2022. For the six months ended June 30, 2023, research and development costs increased by $1,575 or 15%, as compared to the six months ended June 30, 2022. The changes were due to product development and testing expenses. |
| ● | For the three months ended June 30, 2023, professional fees decreased by $76,032 or 40%, as compared to the three months ended June 30, 2022. For the six months ended June 30, 2023, professional fees decreased by $140,552 or 32%, as compared to the six months ended June 30, 2022. The changes were due to a reduction in fees from professional services firms used by the Company. |
| ● | For the three months ended June 30, 2023, general and administrative expenses increased by $47,045 or 22% as compared to the three months ended June 30, 2022 due to an increase in bad debt expenses for the quarter. For the six months ended June 30, 2023, general and administrative expenses decreased by $15,747 or 3% as compared to the six months ended June 30, 2022 due to efforts to control costs in light of reduced sales. |
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Other Operating Income
For the three and six months ended June 30, 2023, other operating income amounted to $11,420 as compared to $0 for the three and six months ended June 30, 2022. The difference is due to one-time income booked for the settlement of a claim with a supplier in April of 2023.
Loss from operations
As a result of the factors described above, for the three months ended June 30, 2023, loss from operations amounted to $668,336 as compared to a loss of $820,435 for the three months ended June 30, 2022, a reduction of $152,099 or 19%. For the six months ended June 30, 2023, loss from operations amounted to $1,346,099 as compared to a loss of $1,889,872 for the six months ended June 30, 2022, a reduction of $543,773 or 29%.
Income from investment in subsidiary
As a result of the sale of a 70% interest in ANI , we now report our 30% share of ANI’s income or loss as an investment in a subsidiary. For the three and six months ended June 30, 2023 there was income of $8,782 and $40,938, respectively. For the three and six-month periods ended June 30, 2022, we recorded a loss from that investment of $3,161.
Interest expense
For the three months ended June 30, 2023 interest expense was $7,575 as compared to $8,337 in the prior year, and for the six months ended June 30, 2023 interest expense was $21,943 up from $15,635 in the prior year. The decrease for the three-month period was due in substantial part to the payment of the Key Bank financing and reduced interest payable as financing leases mature. The increase in the six-month comparative period was due to accrued interest on convertible notes outstanding.
Other income
For the three months ended June 30, 2023, other income was $16,264 as compared to $3,886 for the three months ended June 30, 2022. For the six months ended June 30, 2023, other income was $23,202 as compared to $2,625 for the six months ended June 30, 2022. The increase was due to a non-recurring tax refund plus interest income on the note receivable from a subsidiary.
Loss from continuing operations
As a result of the foregoing, we reported a loss from continuing operations of $650,865 for the three-month period ended June 30, 2023 and a loss of $828,047 for the three-month period in the prior year, a reduction of $177,182 or 21%. For the six-month period ended June 30, 2023 our loss from continuing operations was $1,303,902 as compared to $1,906,043 for the six-month period ended June 30, 2022, a reduction of $602,141 or 32%.
Income (loss) from discontinued operations
Effective May 31, 2022, we sold a 70% interest in our subsidiary ANI to two of its officers and long-time employees in exchange for a promissory note in the face amount of $450,000. On a continuing basis, we no longer recognize income from this operation in the statement of operations. For the three and six months ended June 30, 2022, we recognized a loss of $13,045 and income of $1,300, respectively. For the three and six months ended June 30, 2022, we recognized a one-time gain on the sale of discontinued operations of $1,148,225.
Net loss (income)
For the three months ended June 30, 2023, net loss was $650,865 as compared to net income of $307,133 for the three months ended June 30, 2022. For the six months ended June 30, 2023, net loss amounted to $1,303,902 as compared to a loss of $756,518 for the six months ended June 30, 2022. The net income in the quarter ended June 30, 2022 was primarily attributed to the one-time gain of $1,148,225 recognized on the sale of ANI that also offset some of the losses for the six-month period in 2022.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had working capital of $125,261 and $19,813 of unrestricted cash as of June 30, 2023 and working capital of $524,389 and $259,223 of unrestricted cash as of December 31, 2022.
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The following table sets forth a summary of changes in our working capital from December 31, 2022 to June 30, 2023:
December 31, 2022 to June 30, 2023 | ||||||||||||||||
| June 30, 2023 | December 31, 2022 | Change in Working Capital | Percentage Change | |||||||||||||
| Working capital: | ||||||||||||||||
| Total current assets | $ | 1,491,328 | $ | 1,900,858 | $ | (409,530 | ) | (21.54 | )% | |||||||
| Total current liabilities | 1,366,067 | 1,376,469 | 10,402 | 0.76 | % | |||||||||||
| Working capital: | $ | 125,261 | $ | 524,389 | $ | (399,128 | ) | (76.11 | )% | |||||||
The decrease in current assets was primarily due to a reduction in cash and in prepaid expenses. The increase in current liabilities was primarily due to an increase in accrued expenses, the current portion of notes payable and the current portion of operating lease liabilities, partially offset by a decrease in accounts payable.
Net cash used by operating activities was $(725,395) for the six months ended June 30, 2023 as compared to net cash used by operating activities of $(1,163,180) for the six months ended June 30, 2022, a net change of $437,785 or a reduction of 38%. Net cash used by operating activities for the six months ended June 30, 2023 primarily resulted from net loss from continuing operations of $1,303,902 adjusted for add-backs of $416,037 and changes in operating assets and liabilities of $162,470.
Net cash provided by continuing investing activities was $17,171 for the six months ended June 30, 2023, as compared to net cash used by continuing investing activities of $(4,910) for the same period in 2022. The change was due in substantial part to payment on the note from a subsidiary.
Net cash provided by continuing financing activities was $468,814 for the six months ended June 30, 2023 reflecting $445,000 in proceeds from sales of common stock, warrants and convertible notes, as compared to net cash provided by continuing financing activities of $1,298,146 for the same period in 2022. Net cash provided by discontinued financing activities was $0 and $20,000 for the six months ended June 30, 2023 and June 30, 2022, respectively.
Future Liquidity and Capital Needs.
Our principal future uses of cash are for working capital requirements, including working capital to support increased product sales, sales and marketing expenses and reduction of accrued liabilities. Application of funds among these uses will depend on numerous factors including our sales and other revenues and our ability to control costs.
Equipment Financing and Loans
See note 5 to our unaudited condensed consolidated financial statements regarding our equipment loan and financing leases.
Off-Balance Sheet Arrangements
We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated unaudited financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
ITEM 3. Quantitative and Qualitative disclosures about market risk
Not applicable to smaller reporting companies.
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ITEM 4. Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report (the “Evaluation Date”). Based upon this evaluation, our principal executive officer and principal financial officer concluded that we do not have sufficient resources in our accounting function to have segregation of duties so that the initiation of transactions, the custody of assets and the recording of transactions are performed by separate individuals. However, to the extent possible, these tasks are performed by separate individuals. Management evaluated our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.
Changes in Internal Control
There were no changes identified in connection with our internal control over financial reporting during the three months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 1A. RISK FACTORS
Not required of smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On April 12, 2023, the Company granted 47,610 options under the 2021 Equity Plan and an additional 30,000 in options to Tom J. Berman our President. The options were granted to individuals in lieu of cash for a portion of their salary for the period from December 31, 2022 through March 31, 2023. All options are at an exercise price of $0.65 per share for a four-year term and were fully vested on date of grant.
On April 14, 2023, the Company sold 196,851 shares of common stock to an accredited investor for proceeds of $246,064 and sold to that investor warrants to purchase up to 196,813 shares of common stock for proceeds of $3,936. The warrants are exercisable at any time during the four years after date of issue at a warrant exercise price of $1.75.
On May 8, 2023, as part of a settlement agreement entered into on April 27, 2023, the Company sold to the counterparty 57,143 shares of common stock for proceeds of $100,000 at a price of $1.75 per share.
In March 2023, we issued 52,800 shares of common stock to our landlord in partial payment of our rent in Michigan.
On May 30, 2023 the Board granted 175,071 options under the 2021 Equity Plan to employees and consultants and an additional 399,228 options to officers and to a consultant who is also a director. All options are at an exercise price of $0.65 per share.
On May 30, 2023, the Company issued 76,922 shares of restricted common stock to a consultant as compensation for services.
On June 16, 2023, the Company issued a note at face value of $50,000 and sold that investor, for a price of $0.02 per warrant, warrants to purchase up to 10,000 shares of common stock at an exercise price of $1.75. On July 24, 2023, the Company sold a convertible note at its face amount of $50,000. On that same day, the Company sold 133,333 shares of common stock for proceeds of $100,000.
In July and August 2023, the Company granted an aggregate of 192,302 shares of restricted stock to four individuals who will serve on the advisory committee.
Grants under the 2021 Equity Plan were exempt under Rule 701. The sales and issuances of stock and other securities were exempt from registration under Section 4(a)(2) of the Securities Act. Cash proceeds were used for general corporate purposes.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
| Exhibit
No. |
Description | |
| 31.1* | Rule 13a-14(a)/15d-14(a) Certificate of Principal Executive Officer | |
| 31.2* | Rule 13a-14(a)/15d-14(a) Certificate of Chief Financial Officer | |
| 32.1* | Section 1350 Certificate of Principal Executive Officer and Chief Financial Officer | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition | |
| 101.LAB | Inline XBRL Taxonomy Extension Labels | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
Nano Magic Inc. (Registrant) | |
| Date: August 14, 2023 | /s/ Tom J. Berman |
| Tom J. Berman, | |
| President and Chief Executive Officer | |
| Date: August 14, 2023 | /s/ Leandro Vera |
| Leandro Vera | |
| Chief Financial Officer |
| 10 |
Exhibit 31.1
Certificate of Principal Executive Officer
Pursuant to Rule 13a-14(a)/15d-14(a)
I, Tom J. Berman, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2023 of Nano Magic Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting) as defined in the Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 14, 2023 | /s/ Tom J. Berman |
|
Tom J. Berman President and Chief Executive Officer |
Exhibit 31.2
Certificate of Principal Financial Officer
Pursuant to Rule 13a-14(a)/15d-14(a)
I, Leandro Vera, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2023 of Nano Magic Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present, in all material respects, the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting) as defined in the Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: August 14, 2023 | /s/ Leandro Vera |
| Leandro Vera | |
| Chief Financial Officer |
Exhibit 32.1
Section 1350 Certification of Principal Executive Officer
In connection with the quarterly report of Nano Magic Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tom J. Berman, President of the Company, and I, Leandro Vera, Chief Financial Officer, certify to the best of our knowledge:
1. The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: August 14, 2023 | /s/ Tom J. Berman |
| Tom J. Berman | |
| President and Chief Executive Officer | |
| Date: August 14, 2023 | /s/ Leandro Vera |
| Leandro Vera | |
| Chief Financial Officer |