UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

 

for the quarterly period ended June 30, 2023

 

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 000-54649

 

SAMSARA LUGGAGE, INC.

(Exact name of registrant as specified in its charter)

Nevada  
26-0299456
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)
     

135 E. 57th Street, Suite 18-130

New York, New York

  10022
(Address of principal executive offices)   (Zip Code)

  

(855)-256-7477

(Registrant’s telephone number, including area code)

 

 

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

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
         

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
    Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).  Yes ☐     No

 

The number of shares of the registrant’s common stock outstanding as of August 14, 2023 was 10,582,414 shares.

 

 

 

 

 

 

SAMSARA LUGGAGE, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

 

  Page No.
PART I. FINANCIAL INFORMATION
     
Item 1. Interim Financial Statements (unaudited) 1
  Condensed Balance Sheets at June 30, 2023 (unaudited) and December 31, 2022 (audited) 1
  Condensed Statements of Operations for the Six and Three Months Ended June 30, 2023 and 2022 (unaudited) 2
  Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the Six and Three Months ended June 30, 2023 and 2022 (unaudited) 3
  Condensed Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (unaudited) 4
  Notes to Condensed Financial Statements (unaudited) 5
Item 2. Management’s Discussion and Analysis 17
Item 3. Quantitative and Qualitative Disclosures about Market Risk 23
Item 4. Controls and Procedures 23
     
PART II. OTHER INFORMATION
 
Item 1. Legal Proceedings 24
Item 1A. Risk Factors 24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24
Item 3. Defaults upon Senior Securities 24
Item 4. Mine Safety Disclosures 24
Item 5. Other Information 24
Item 6. Exhibits 24
  Signatures 26

 

i

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

SAMSARA LUGGAGE, INC.

CONDENSED BALANCE SHEETS

(Dollars in thousands, except per-share amounts)

 

   June 30,
2023
   December 31,
2022
 
   (Unaudited)     
         
ASSETS          
Current assets          
Cash and cash equivalents  $79   $168 
Accounts receivable   10    1 
Inventory   77    155 
Other current assets   11    21 
Total current assets   177    345 
           
TOTAL ASSETS  $177   $345 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities          
Accounts payable  $147   $47 
Other current liabilities   382    285 
Related party payable   144    121 
Deferred revenue   2    6 
Convertible notes and short-term loans   1,226    1,167 
Note payable, net   32    61 
Conversion option derivative liability   361    632 
Warrant derivative liability   
-
    1 
Total current liabilities   2,294    2,320 
           
TOTAL LIABILITIES   2,294    2,320 
           
MEZZANINE EQUITY:          
Convertible and redeemable preferred shares, $0.0001 par value, 1,000,000 shares authorized, 103,876 and 193,408 shares outstanding at June 30, 2023 and December 31, 2022, respectively   86    161 
           
STOCKHOLDERS’ DEFICIT          
Common stock, $0.0001 par value; 7,500,000,000 shares authorized; 9,604,115 and 4,406,312 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively.   1    
-
 
Additional paid-in capital   10,585    10,464 
Accumulated deficit   (12,789)   (12,600)
Total stockholders’ deficit   (2,203)   (2,136)
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $177   $345 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

1

 

 

SAMSARA LUGGAGE, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per-share amounts)

(Unaudited)

 

   For the Three Months Ended
June 30,
   For the Six Months Ended
June 30,
 
   2023   2022   2023   2022 
                 
REVENUE  $101   $112   $349   $143 
                     
COST OF GOODS SOLD   40    61    186    81 
                     
GROSS PROFIT   61    51    163    62 
                     
OPERATING EXPENSES                    
Research and development   5    6    43    46 
Sales and marketing   58    164    128    410 
General and administrative   175    281    289    449 
TOTAL OPERATING EXPENSES   238    451    460    905 
                     
OPERATING LOSS   (177)   (400)   (297)   (843)
                     
FINANCING INCOME (EXPENSES)                    
Interest and amortization of issuance cost on note and short-term loan and other   (51)   (398)   (164)   (606)
Income (expenses) in respect of warrants issued and convertible component in convertible loan, net interest expenses   277    (144)   272    218 
TOTAL FINANCING INCOME (EXPENSES)   226    (542)   108    (388)
                     
NET INCOME (LOSS)  $49   $(942)  $(189)  $(1,231)
                     
Net Income (Loss) Per-share                    
Basic  $0.01   $(0.40)  $(0.03)  $(0.55)
                     
Diluted  $(0.00)  $(0.40)  $(0.03)  $(0.55)
                     
Weighted average number of common shares outstanding                    

Basic

   7,078,754    2,353,012    6,043,236    2,221,576 
                     
Diluted   74,485,254    

2,353,012

    

6,043,236

    

2,221,576

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

2

 

 

SAMSARA LUGGAGE, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022

(Dollars in thousands, except per-share amounts)

(Unaudited)

 

   Common Stock   Additional
Paid-In
   Services   Accumulated   Total
Stockholders’
 
   Shares   Amount   Capital   receivable   Deficit   Deficit 
Balance at January 1, 2023   4,406,312   $
-
   $10,464   $
-
   $(12,600)  $(2,136)
Conversion of Preferred A shares into common shares   1,481,840    1    40    
-
    
-
    41 
Net loss   -    
-
    
-
    
-
    (238)   (238)
Balance at March 31, 2023 (unaudited)   5,888,152   $1   $10,504   $
-
   $(12,838)  $(2,333)
Conversion of Preferred A shares into common shares   2,049,297    
-
    35    
-
    
-
    35 
Stock Based Compensation   1,666,666    
-
    46    
-
         46 
Net income   -    
-
    
-
    
-
    49    49 
Balance at June 30, 2023 (unaudited)   9,604,115   $1   $10,585   $
-
   $(12,789)  $(2,203)
                               
Balance at January 1, 2022   2,055,487   $
-
   $9,852   $(356)  $(10,194)  $(698)
Conversion of convertible debt into common shares   97,458    
-
    56    
-
    
-
    56 
Amortization of services   -    
-
    
-
    176    
-
    176 
Net loss   -    
-
    
-
    
-
    (289)   (289)
Balance at March 31, 2022 (unaudited)   2,152,945   $
-
   $9,908   $(180)  $(10,483)  $(755)
Conversion of convertible debt into common shares   457,604    
-
    141    
-
    
-
    141 
Issuance of shares to service provider   27,303    
-
    41    
-
    
-
    41 
Amortization of services   -    
-
    
-
    150    
-
    150 
Net loss   -    
-
    
-
    
-
    (942)   (942)
Balance at June 30, 2022 (unaudited)   2,637,852   $
-
   $10,090   $(30)  $(11,425)  $(1,365)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

3

 

 

SAMSARA LUGGAGE, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in thousands, except per-share amounts)

(Unaudited)

 

   For the Six Months Ended
June 30,
 
   2023   2022 
Cash Flows From Operating Activities          
Net loss  $(189)  $(1,231)
Adjustments to reconcile net loss to net cash used in operating activities          
Amortization of services receivable   
-
    326 
Stock based compensation   46    
-
 
Interest expense and amortization of debt discount   46    606 
Expenses in respect of warrants issued and convertible component in convertible loan, net interest expenses   (271)   (218)
Change in fair value of liability   (1)   
-
 
Change in operating assets and liabilities          
Inventory   78    (252)
Accounts receivable   (9)   
-
 
Prepaid expenses and other current assets   10    
-
 
Other current assets   
-
    43 
Accounts payable   100    (52)
Other current liabilities   98    (79)
Deferred revenues   (4)   38 
Related parties payable   23    (36)
Net cash provided by (used) in operating activities   (73)   (855)
           
Cash Flows From Investing Activities          
Purchase of property and equipment   
-
    
-
 
Net cash provided by (used in) investing activities   
-
    
-
 
           
Cash Flows From Financing Activities          
Proceeds from convertible loans, net of issuance cost   
-
    
-
 
Proceeds from issuance of preferred stock   
-
    129 
Prepayments of loans   (16)   
-
 
Net cash provided by financing activities   (16)   129 
           
Net change in cash and cash equivalents   (89)   (726)
           
Cash and cash equivalents, beginning of period   168    827 
Cash and cash equivalents, end of period  $79   $101 
           
Supplemental disclosure of cash flow information          
Cash paid for interest  $
-
   $
-
 
Cash paid for income tax  $
-
   $
-
 
           
Non-cash investing and financing activities          
Common stock issued for conversion of convertible note and accrued interest  $
-
   $197 
Common stock issued against accounts payables  $76   $41 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 

4

 

 

SAMSARA LUGGAGE, INC.

NOTES TO FINANCIAL STATEMENTS

(U.S. dollars in thousands, except per share data) 

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

  A.

Samsara Luggage is a global smart luggage and lifestyle brand that incorporates innovative design and functional technology into its smart travel products. The Company launched the first product from the Tag Smart collection of smart suitcases in April 2022, as travel resumed to pre-COVID levels. This collection is equipped with Apple AirTag technology, allowing travelers to track their suitcase using the iPhone’s Find My app. Lost luggage became a prominent issue for global travelers during the Summer 2022 travel season. The Tag Smart suitcase offered travelers precise tracking of their suitcase along with immediate information regarding their luggage’s whereabouts. The Tag Smart collection is currently available in two different sizes to accommodate both international and US domestic travel. The newest collection comes in three colors in durable polycarbonate and two colors in a lightweight, aviation-grade aluminum material.

 

The Company launched Street Smart in February 2023. Street Smart is a curated collection of travel and lifestyle accessories that builds on the fashion element of travel. Included in the collection are a selection of sunglasses, tote bag, stylish ballcaps and a stand-alone portable battery for electronic devices. Street Smart compliments Samsara Luggage’s aesthetic and allows the brand to offer more travel-ready products at varying price points. 

 

During the last quarter of 2020, Samsara launched Sarah & Sam Fashion and Lifestyle Collection. Sarah & Sam is a part of Samsara Direct business model prompted by the travel limitations due to the coronavirus pandemic, leveraging the company’s established digital assets and manufacturing and fulfillment supply chain capabilities to offer additional consumer products that respond to the changing needs of the market.

 

On November 12, 2019, the Company completed its merger with the Delaware corporation that was previously known as “Samsara Luggage, Inc.” (“Samsara Delaware”) in accordance with the terms of the Merger Agreement and Plan of Merger, dated as of May 10, 2019, (the “Merger Agreement”) by and among the Company, Samsara Delaware, and Avraham Bengio, pursuant to which Samsara Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”). Following the completion of the Merger, the business of the Company going forward became the business of Samsara Delaware prior to the Merger, namely, designing, manufacturing, and selling high quality luggage products to meet the evolving needs of frequent travelers and also seeking to present new technologies within the aluminum luggage industry, including an aluminum “smart” suitcase.

 

The Common Stock listed on the OTC Pink Marketplace, previously trading through the close of business on November 11, 2019 under the ticker symbol “DAVC,” commenced trading on the OTC Pink Marketplace under the ticker symbol “SAML” on November 12, 2019. The Common Stock has a new CUSIP number, 79589J101.

 

  B. Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2023, the Company had approximately $79 in cash and cash equivalents, approximately $2,117 in deficit of working capital, a stockholders’ deficit of approximately $2,203 and an accumulated deficit of approximately $12,789. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon raising capital from financing transactions and revenue from operations. Management anticipates their business will require substantial additional investments that have not yet been secured. Management is continuing in the process of fundraising in the private equity and capital markets as the Company will need to finance future activities. These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

 

5

 

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

 

Unaudited Interim Financial Statements

 

The accompanying unaudited financial statements include the accounts of the Company, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the for three-months ended June 30, 2023. However, these results are not necessarily indicative of results for any other interim period or for the year ended December 31, 2023. The preparation of financial statements in conformity with GAAP requires the Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

 

Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (“SEC”). The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on April 3, 2023 (the “Annual Report”). For further information, reference is made to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“‘US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As applicable to the financial statements, the most significant estimates and assumptions relate to the measurement of the convertible notes, derivative liabilities and going concern.

 

Functional currency

 

The functional currency of the Company is the US dollar (“US$”), which is the currency of the primary economic environment in which the operations of the Company are conducted.

 

Cash and cash equivalents

 

Cash equivalents are short-term highly liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired.

 

Inventory

 

Inventories are valued at the lower of cost or net realizable value. Cost of raw and packaging materials, purchased products, manufactured finished products and products in process are determined on the average cost basis. The Company regularly reviews its inventories for impairment and reserves are established when necessary.

 

Property and Equipment

 

Property and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the related assets, which range from three to five years. Maintenance and repair costs are expensed as they are incurred while renewals and improvements which extend the useful life of an asset are capitalized. At the time of retirement or disposal of property and equipment, the cost and related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated results of operations.

 

6

 

 

Derivative Liabilities and Fair Value of Financial Instruments

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815.

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.

 

Fair value of certain of the Company’s financial instruments including cash, accounts receivable, accounts payable, accrued expenses, notes payable, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments.

 

Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.

 

Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:

 

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

 

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.

 

Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.

 

The Company records a debt discount related to the issuance of convertible debts that have conversion features at adjustable rates. The debt discount for the convertible instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional paid-in capital and as a reduction to the carrying amount of the convertible instrument equal to the fair value of the conversion features. The debt discount will be accreted by recording additional non-cash gains and losses related to the change in fair values of derivative liabilities over the life of the convertible notes.

 

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:

 

   Balance as of June 30, 2023 
   Level 1   Level 2   Level 3   Total 
   (U.S. dollars in thousands) 
Liabilities:                
Fair value of convertible component in convertible loan, net of discounts and debt issue costs   
       -
    
      -
    361    361 
Fair value of warrants issued in convertible loan   
-
    
-
    
-
    
-
 
Total liabilities   
-
    
-
    361    361 

 

   Balance as of December 31, 2022 
   Level 1   Level 2   Level 3   Total 
   (U.S. dollars in thousands) 
Liabilities:                
Fair value of convertible component in convertible loan, net of discounts and debt issue costs   
     -
    
      -
    632    632 
Fair value of warrants issued in convertible loan   
-
    
-
    1    1 
Total liabilities   
-
    
-
    633    633 

 

7

 

 

Revenue recognition

 

Revenues are recognized when delivery has occurred and there is persuasive evidence of an agreement, the fee is fixed or determinable and collection of the related receivables is reasonably assured, and no further obligations exist. Revenues from sales of products are recognized when title and risk and rewards for the products are transferred to the customer.

 

Research and development expenses

 

Research and development expenses are charged to operations as incurred.

 

Income Taxes

 

Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Use of net operating loss carry forwards for income tax purposes may be limited by Internal Revenue Code section 382 if a change of ownership occurs.

 

Basic and Diluted Net Income (Loss) Per Common Share

 

Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon exercise of common stock equivalents such as stock options, warrants and convertible debt instruments. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. As a result, the basic and diluted per share amounts for the six months ended June 30, 2023, and the three and six months ended June 30, 2022, are identical. In the six months ended June 30, 2023, 67,406,500 anti-dilutive securities were excluded from the computation. In the three and six months ended June 30, 2022, 11,398,531 anti-dilutive securities were excluded from the computation.

 

   Three months
ended
June 30,
   Three months
ended
June 30,
   Six months
ended
June 30,
   Six months
ended
June 30,
 
   2023   2022   2023   2022 
                 
Numerator:                
Net income (loss)  $49    (942)   (189)   (1,231)
Convertible note interest   33    
-
    
-
    
-
 
Amortization of debt discounts   10    
-
    
-
    
-
 
Change of fair value of derivatives   (277)   
-
    
-
    
-
 
Adjusted net income (loss)  $(185)   (942)   (189)   (1,231)
                     
Denominator: Weighted average shares outstanding used in computing net income (loss) per share                    
Basic   7,078,754    2,353,012    6,043,236    2,221,576 
Effect of mezzanine shares   7,216,501    
-
    
-
    
-
 
Effect of convertible note weighted shares   60,189,999    
-
    
-
    
-
 
                     
Diluted   74,485,254    2,353,012    6,043,236    2,221,576 
                     
Net income (loss) per share applicable to common shareholders:                    
Basic  $0.01    (0.40)   (0.03)   (0.55)
Diluted  $(0.00)   (0.40)   (0.03)   (0.55)

 

8

 

 

Recent accounting pronouncements

 

From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date. Unless otherwise discussed, the Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on the Company’s financial position or results of operations upon adoption. 

 

NOTE 3 – CONVERTIBLE NOTES

 

  A. On June 5, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with YAII PN, Ltd. (the “Investor”), pursuant to which the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $1,100,000 in three tranches, and the Company agreed to issue convertible debentures and a warrant to the Investor. The funds were received in 2019.

 

In the period from loan inception through December 31, 2021, the full amount of outstanding principal and accrued interest was converted into shares of common stock.

 

In addition, the Company issued to the Investor a warrant to purchase 13,095 shares of common stock, at an exercise price equal to $21.00. The warrants may be exercised within 5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to the exercise price of the portion of the warrant being exercised.

 

The Company considered the provisions of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable warrants that were issued to the convertible loan, and determined that as a result of the “cashless exercise” and variable exercise price that would adjust the number of warrants and the exercise price of the warrants based on the price at which the Company subsequently issues shares or other equity-linked financial instruments, such warrants cannot be considered as indexed to the Company’s own stock. Accordingly, the warrants were recognized as derivative liability at their fair value on initial recognition. In subsequent periods, the warrants were marked to market with the changes in fair value recognized as financing expense or income in the consolidated statement of operations.

 

The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of the balance sheet dates:

 

   June 30,
2023
 
Common stock price  $0.02240 
Expected volatility   135.81%
Expected term   0.93 years 
Risk free rate   5.41%
Expected dividend yield   0%
Fair market value of warrants  $
-
*

 

   December 31,
2022
 
Common stock price   0.0902 
Expected volatility   262.09%
Expected term   1.43 years 
Risk free rate   4.59%
Expected dividend yield   0%
Fair market value of warrants  $
-
*

 

*represents an amount less than $1 thousand

 

9

 

 

  B. On September 3, 2020, the Company entered into a second SPA with the Investor, pursuant to which the Investor will invest an aggregate amount of $220 in two tranches, and the Company will issue convertible debentures and warrants to the Investor. The funds were received in 2020.

 

In the period from loan inception through December 31, 2021, the full amount of outstanding principal and accrued interest was converted into shares of common stock.

 

In addition, the Company issued to the Investor a warrant to purchase 2,619 shares of common stock, at an exercise price equal to $21.00. The warrants may be exercised within 5 years from the issuance date by cash payment or through cashless exercise by the surrender of warrants shares having a value equal to the exercise price of the portion of the warrant being exercised.

 

The Company considered the provisions of ASC 815-40, “Derivatives and Hedging: Contracts in Entity’s Own Equity”, with respect to the detachable warrants that were issued to the Convertible loan, and determined that as a result of the “cashless exercise” and variable exercise price that would adjust the number of warrants and the exercise price of the warrants based on the price at which the Company subsequently issues shares or other equity-linked financial instruments, such warrants cannot be considered as indexed to the Company’s own stock. Accordingly, the warrants were recognized as derivative liability at their fair value on initial recognition. In subsequent periods, the warrants were marked to market with the changes in fair value recognized as financing expense or income in the consolidated statement of operations.

 

The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet dates:

 

The following are the data and assumptions used as of the balance sheet dates:

 

   June 30,
2023
 
Common stock price  $0.0224 
Expected volatility   224.93%
Expected term (years)   2.18 
Risk free rate   4.80%
Expected dividend yield   0%
Fair market value of warrants  $
-
*

 

   December 31,
2022
 
Common stock price   0.0902 
Expected volatility   278.10%
Expected term (years)   2.68 
Risk free rate   4.28%
Expected dividend yield   0%
Fair market value of warrants  $
-
*

 

*represents an amount less than $1 thousand

 

10

 

 

  C.

On April 6, 2021, the Company entered into a third SPA with the Investor, pursuant to which the Investor agreed to provide the Company with a convertible loan in the aggregate amount of $150 and the Company agreed to issue convertible debentures and a warrant to the Investor. The loan will bear interest at an annual rate of ten percent (10%) and will be repayable after two years. The loan has reached maturity and the Company is negotiating an extension for this loan. The investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $3.46, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date.

 

In accordance with ASC 815-15-25 the conversion feature was considered to be a derivative instrument and is to be recorded at its fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The conversion feature derivative liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.

 

As of June 30, 2023, the convertible debentures have reached maturity. Therefore, the fair value of the Convertible Component was calculated based on its intrinsic value as of June 30, 2023.

 

The fair value of the convertible component at December 31, 2022 was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each of the issuance and balance sheet dates.

 

    The following are the data and assumptions used as of the balance sheet dates:

 

   June 30,
2023
 
Common stock price  $0.0224 
Discount to Common stock price   20.0%
Fair market value of convertible component  $46 

 

   December 31,
2022
 
Common stock price  $0.0902 
Expected volatility   146.61%
Expected term   0.26 
Risk free rate   4.46%
Expected dividend yield   0%
Fair market value of convertible component  $80 

 

   

As part of the transaction, the Company issued to the Investor warrants to purchase an aggregate of 10,838 shares of Common Stock, at an exercise price equal to $3.46. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised.

 

    The warrants were estimated by third party appraiser using the Black-Scholes option-pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each of the issuance and balance sheet dates.

 

11

 

 

    The following are the data and assumptions used as of the balance sheet dates:

 

   June 30,
2023
 
Common stock price  $0.0224 
Expected volatility   270.36%
Expected term   2.77 
Risk free rate   4.58%
Expected dividend yield   0%
Fair market value of warrants  $
-
*

 

   December 31,
2022
 
Common stock price  $0.0902 
Expected volatility   269.78%
Expected term   3.27 
Risk free rate   4.19%
Expected dividend yield   0%
Fair market value of warrants  $1 
      

 

*represents an amount less than $1 thousand

 

D.On June 7, 2021, the Company entered into a fourth SPA with the Investor, pursuant to which the Investor will invest an aggregate amount of $1,250 in three tranches, and the Company will issue convertible debentures and warrants to the Investor, in which each tranche is convertible into shares of the Company’s common stock, par value $0.0001. The funds were received in 2021.

 

On December 28, 2022, the Company signed a forbearance agreement with the Investor extending the maturity date for all outstanding principal and interest under this loan to June 30, 2023. The Company is currently negotiating an extension for this loan.

 

As of December 31, 2022, the full amount of the first tranche principal in the amount of $500 remains outstanding.

 

In the period from inception through December 31, 2022, $424 of outstanding principal from the second tranche and $43 of accrued interest was converted into 2,121,262 shares of common stock. As of December 31, 2022, the outstanding principal balance from the second tranche was $76. As a result of the conversion of the convertible loans, for the year ended December 31, 2022, the Company recorded losses from conversion in the amount of $71.

 

In the period from loan inception through December 31, 2021, the full amount of outstanding principal and accrued interest relating to the third tranche was converted into shares of common stock. 

 

The Convertible Debentures bear interest at a rate of 10% per annum (15% on default) and have a maturity date of one (1) year. The Convertible Debentures provide a conversion right, in which any portion of the principal amount of the Convertible Debentures, together with any accrued but unpaid interest, may be converted into the Company’s Common Stock at a conversion price equal to 80% of the lowest volume weighted average price of the Company’s Common Stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. The Convertible Debentures may not be converted into common stock to the extent such conversion would result in the Investor beneficially owning more than 9.99% of the Company’s outstanding Common Stock (the “Beneficial Ownership Limitation”); provided, however, that the Beneficial Ownership Limitation may be waived by the Investor upon not less than 65 days’ prior notice to the Company. The Convertible Debentures provide the Company with a redemption right, pursuant to which the Company, upon fifteen (15) business days’ prior notice to the Investor, may redeem, in whole or in part, outstanding principal and interest at a redemption price equal to the principal amount being redeemed plus a redemption premium equal to 5% of the outstanding principal amount being redeemed plus outstanding and accrued interest; however, the Investor shall have fifteen (15) business days after receipt of the Company’s redemption notice to elect to convert all or any portion of the Convertible Debentures, subject to the Beneficial Ownership Limitation.

 

12

 

 

In accordance with ASC 815-15-25 the conversion feature was considered to be a derivative instrument and is to be recorded at its fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The conversion feature derivative liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.

 

   

As of June 30, 2023, the convertible debentures have reached maturity. Therefore, the fair value of the Convertible Component was calculated based on its intrinsic value as of June 30, 2023.

 

The fair value of the convertible component was estimated by third party appraiser using the Monte Carlo Simulation Model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet dates:

 

    The following are the data and assumptions used as of the balance sheet dates:

 

   June 30,
2023
 
Common stock price  $0.0224 
Discount to Common stock price   20.0%
Fair market value of convertible component  $171 

 

   December 31,
2022
 
Common stock price  $0.0902 
Expected volatility   146.61%
Expected term   0.50 
Risk free rate   4.76%
Expected dividend yield   0%
Fair market value of Convertible component  $299 

 

  E. On December 14, 2021, the Company entered into a fifth SPA with the Investor, pursuant to which the Investor invested an aggregate amount of $500, and the Company issued convertible debentures to the Investor.

 

The Convertible Debenture bears interest at a rate of 10% per annum (15% on default) and has a maturity date of one (1) year. The Convertible Debenture provides a conversion right, in which any portion of the principal amount of the Convertible Debenture, together with any accrued but unpaid interest, may be converted into the Company’s Common Stock at a conversion price equal to 80% of the lowest volume weighted average price of the Company’s Common Stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. The Convertible Debenture may not be converted into common stock to the extent such conversion would result in the Investor beneficially owning more than 4.99% of the Company’s outstanding Common Stock; provided, however, that the Beneficial Ownership Limitation may be waived by the Investor upon not less than 65 days’ prior notice to the Company. The Convertible Debenture provides the Company with a redemption right, pursuant to which the Company, upon fifteen (15) business days’ prior notice to the Investor, may redeem, in whole or in part, outstanding principal and interest under the Convertible Debenture at a redemption price equal to the principal amount being redeemed plus a redemption premium equal to 5% of the outstanding principal amount being redeemed plus outstanding and accrued interest; however, the Investor shall have fifteen (15) business days after receipt of the Company’s redemption notice to elect to convert all or any portion of the Convertible Debenture, subject to the Beneficial Ownership Limitation.

 

On December 28, 2022, the Company signed a forbearance agreement with the Investor extending the maturity date for all outstanding principal and interest under this loan to June 30, 2023. The Company is currently negotiating an extension for this loan.

 

In accordance with ASC 815-15-25 the conversion feature was considered to be a derivative instrument and is to be recorded at its fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The conversion feature derivative liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.

 

13

 

 

The following are the data and assumptions used as of the balance sheet date:

 

   June 30,
2023
 
Common stock price  $0.0224 
Discount to Common stock price   20.0%
Fair market value of convertible component  $144 

 

   December 31,
2022
 
Common stock price  $0.9585 
Expected volatility   205.2%
Expected term   0.95 
Risk free rate   0.37%
Expected dividend yield   0%
Fair market value of convertible component  $522 

 

The following table presents the changes in fair value of the level 3 liabilities for the periods ended June 30, 2023 and December 31, 2022:

 

   Warrants   Convertible
component
 
   (U.S. dollars in thousands) 
Outstanding at December 31, 2021   24    1,017 
Settlement of derivative liabilities   
-
    (127)
Changes in fair value   (23)   (258)
Outstanding at December 31, 2022   1    632 
Changes in fair value   (1)   (271)
Outstanding at June 30, 2023   
-
    361 

 

NOTE 4 – STOCKHOLDERS’ EQUITY

 

Common Stock

  

On April 11, 2022, the Company issued 27,303 shares of Common Stock to a service provider as payment for services rendered. The fair market value of the shares was $41.

 

During the year ended December 31, 2022, and pursuant to the SPA, YAII exercised its option to convert Convertible Promissory Note principal in the amount of $249 and accrued interest of $20 into 1,930,735 shares of Common Stock of the Company. The fair market value of the shares was $56.

 

During the year ended December 31, 2022, and pursuant to the Series A SPA, the Preferred A Investor exercised its option to convert 27,966 shares of Series A Preferred Stock into 390,477 shares of Common Stock of the Company.

 

During the six months ended June 30, 2023, and pursuant to the Series A SPA, the Preferred A Investor exercised its option to convert 89,532 shares of Series A Preferred Stock into 3,531,137 shares of Common Stock of the Company.

 

On June 6, 2023, the Company issued 1,666,666 shares of Common Stock to executives on the Company as Stock based compensation with a fair value of $46.

 

Series A Preferred Stock

 

On May 12, 2022, the Company established a series of redeemable convertible preferred stock (the “Series A Preferred Stock”), par value $0.0001 per share, stated value $1.0 per share, pursuant to a Certificate of Designation, Preference and Rights of Series A Preferred Stock of the Company (the “Certificate of Designation”).

 

On May 17, 2022, the Company entered into a Series A Preferred Stock Purchase Agreement (the “Series A SPA”) with 1800 Diagonal Lending LLC f/k/a Sixth Street Lending LLC, a Virginia limited liability company (the “Preferred A Investor”) pursuant to which the Company issued and sold to the Preferred A Investor 148,062 shares of Series A Preferred Stock for a purchase price of $129, of which the Company received proceeds of $125, net of issuance costs. The Company has accounted for the Series A Preferred Stock as mezzanine equity.

 

14

 

 

On August 10, 2022, the Company entered into an additional Series A SPA with the Preferred A Investor pursuant to which the Company issued and sold to the Preferred A Investor 73,312 shares of Series A Preferred Stock for a purchase price of $63, of which the Company received proceeds of $60, net of issuance costs. The Company has accounted for the Series A Preferred Stock as mezzanine equity.

 

Pursuant to the Series A SPA, the Preferred A Investor may convert all or a portion of the outstanding Series A Preferred Stock into shares of the Company’s Common Stock beginning on the date which is 180 days after the issuance date of the Series A Preferred Stock (the “Issuance Date”) into Common Stock; provided, however, that the Preferred A Investor may not convert the Series A Preferred Stock to the extent that such conversion would result in beneficial ownership by the Preferred A Investor and its affiliates of more than 4.99% of the Company’s issued and outstanding Common Stock. The Series A Preferred Stock may be convertible into shares of Common Stock of the Company at the option of the holders thereof at any time after the issuance of the Series A Preferred Stock, at a conversion price equal to the Variable Conversion Price. The Variable Conversion Price means 80% multiplied by the Market Price. The Market Price means the average of the lowest two trading prices for the Common Stock during the ten-trading day period ending on the latest complete trading day prior to the conversion date.

  

The Company will have the right, at the Company’s sole option, provided that an event of default has not occurred, to redeem all or any portion of the shares of Series A Preferred Stock, exercisable on not more than 3 Trading Days prior written notice to the holders of the Series A Preferred Stock, in full. If the Company redeems the shares of Series A Preferred Stock within 180 days of its issuance, the Company must pay all of the principal at a cash redemption premium of 110%; if such prepayment is made between the 181st day and the 730th day after the issuance of the Series A Preferred Stock, then such redemption premium is 120%. After the 730th day following the Issuance Date, there shall be no further right of redemption.

 

The Series A Preferred Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior with respect to dividends and right of liquidation with the Company’s Common Stock and (b) junior with respect to dividends and right of liquidation to all existing and future indebtedness of the Company and existing and outstanding preferred stock of the Company.

 

The Series A Preferred Stock shall have no right to vote on any matters requiring shareholder approval or any matters on which the shareholders are permitted to vote.

 

Each share of Series A Preferred Stock will carry an annual dividend in the amount of 6% of the price per share of Series A Preferred Stock of $1.00, which shall be cumulative, payable solely upon redemption, liquidation or conversion. Upon the occurrence of an event of default (as further defined further in the Certificate of Designation), the Dividend Rate shall automatically increase to 15%.

 

15

 

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

Related party payable

 

   June 30,
2023
   December 31,
2022
 
   (U.S. dollars in thousands) 
Related parties payable due to management fee  $136   $119 
Related parties payable due to research and development   8    2 
Total  $144   $121 

 

General and Administrative Expenses

 

   For the period ended
June 30,
 
   2023   2022 
   (U.S. dollars in thousands) 
Management fee   50    50 

 

Research and Development Expenses

 

   For the period ended
June 30,
 
   2023   2022 
   (U.S. dollars in thousands) 
Consulting fee   19    40 

 

NOTE 6 – SUBSEQUENT EVENTS

 

In July 2023, and pursuant to the Series A SPA, the Preferred A Investor exercised its option to convert 14,250 shares of Series A Preferred Stock into 978,299 shares of Common Stock of the Company.

 

16

 

 

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

 

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included elsewhere in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022. Some of the information contained in this discussion and analysis, particularly with respect to our plans and strategy for our business and related financing, includes forward-looking statements within the meanings of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including statements regarding expectations, beliefs, intentions or strategies for the future. When used in this report, the terms “anticipate,” “believe,” “estimate,” “expect,” “can,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” and words or phrases of similar import, as they relate to our company or our management, are intended to identify forward-looking statements. We intend that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance, and we undertake no obligation to update or revise, nor do we have a policy of updating or revising, any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as may be required under applicable law. Forward-looking statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements as a result of several factors including those set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, and in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.

 

The Company notes that in addition to the description of historical facts contained herein, this report contains certain forward-looking statements that involve risks and uncertainties as detailed herein and from time to time in the Company’s other filings with the Securities and Exchange Commission and elsewhere. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. These factors include, among others: (a) the Company’s fluctuations in sales and operating results; (b) risks associated with international operations; (c) regulatory, competitive and contractual risks; (d) development risks; (e) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of enhanced sales force, new products, and customer service; and (f) pending litigation.

 

Overview and Outlook

 

The Company was incorporated on May 7, 2007 under the name, “Darkstar Ventures, Inc.” under the laws of the State of Nevada. On November 12, 2019, the Company completed its merger with the Delaware corporation that was previously known as “Samsara Luggage, Inc.” (“Samsara Delaware”) in accordance with the terms of the Merger Agreement and Plan of Merger, dated as of May 10, 2019, (the “Merger Agreement”) by and among the Company, Samsara Delaware, and Avraham Bengio, pursuant to which Samsara Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”). Following the completion of the Merger, the business of the Company going forward became the business of Samsara Delaware prior to the Merger, namely, the development and sale of smart luggage products.

 

On March 17, 2021, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada (the “Certificate of Change”) to effect a reverse split of Company’s common stock at a ratio of 1-for-7,000 (the “Reverse Stock Split”). The Reverse Stock Split took effect at the open of business on Tuesday, March 23, 2021. As a result of the Reverse Stock Split, each seven thousand (7,000) pre-split shares of common stock outstanding automatically combined into one (1) new share of common stock without any action on the part of the holders, and the number of outstanding shares common stock were reduced from 5,995,825,131 shares to 8,565,465 shares (subject to rounding of fractional shares). No fractional shares were issued in connection with the Reverse Stock Split. The Company issued one whole share of the post-Reverse Stock Split Common Stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split.

  

On October 5, 2020, the Board of Directors of the Company approved, and the holders of a majority of the outstanding shares of our common stock, par value $0.0001 per share, (the “Common Stock”), executed a written consent in lieu of a meeting that approved, amending the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 5,000,000,000 to 7,500,000,000 (the “Authorized Capital Increase”). On November 3, 2020, the Company effected the Authorized Capital Increase by filing with the Secretary of State of the State of Nevada a Certificate of Amendment amending the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 5,000,000,000 to 7,500,000,000.  

 

17

 

 

Recent Developments

 

Tag Smart Collection 

 

Samsara Luggage Inc. launched the Tag Smart collection of smart suitcases and travel accessories. The Tag Smart suitcase was introduced into the luggage market for consumers looking for precise and accurate tracking of their suitcase using technology that was familiar and user-friendly. The Tag Smart suitcase is the first of its kind and designed specifically for the Apple AirTag. The suitcase has a special compartment that secures the Apple AirTag from the interior of the suitcase. The suitcase comes with a customized AirTag with the Samsara logo on one side and Apple logo on the other. One side of the logo is visible from the exterior and protected with a transparent plastic. Consumers can track their suitcase using the Find My app that is standard on all iPhones. It is the same tracking solution that tracks all Apple devices and is streamlined for the Apple enthusiast.

 

The Tag Smart model is the first product in the Next Gen line of smart suitcases. The Next Gen collection was unveiled at CES in January 2020. This model is WiFi smart and equipped with a smart unit that has GPS tracking and WiFi Hotspot technology. The smart unit doubles as a portable wireless charger.

 

Street Smart Accessories

 

The Company launched Street Smart in February 2023. Street Smart is a curated collection of travel and lifestyle accessories that builds on the fashion element of travel. Included in the collection are a selection of sunglasses, tote bag, stylish ballcaps and a stand-alone portable battery for electronic devices. Street Smart compliments Samsara Luggage’s aesthetic and allows the brand to offer more travel-ready products at varying price points.

 

Strategic Partnerships

 

Samsara Luggage entered into strategic partnerships with wireless network operator T-Mobile and luxury lifestyle clothing brand Tommy Bahama after the launch of its Tag Smart collection of smart luggage. The Company began its collaboration with T-Mobile in July of 2022. The two companies conceptualized a new co-branded carry-on suitcase that would merge the Samsara Luggage and T-Mobile aesthetic. Samsara Luggage began the process of designing and manufacturing the Un-carrier On suitcase, a magenta colored carry-on that offered the same tracking technology as the Tag Smart suitcase and a power bank with wireless and USB-C charging capabilities. The Un-carrier On was launched in late November 2022 and garnered significant press.

 

During this time, Samsara Luggage also made its retail debut in Tommy Bahama stores. Select travel related items including Samsara’s Tag Smart carry-on became available in select Tommy Bahama stores in Florida and New York. Tommy Bahama also added the products to its online e-commerce store. The men’s and women’s clothing brand included the new Samsara Luggage products in its marketing assets for the Tommy Bahama website and social media channels. Samsara Luggage remains in Tommy Bahama stores and on its eponymous website.

 

Notable Accolades & Press Mentions

 

The Tag Smart Carry-on won Special Mention in TIME’s list of Best Inventions 2022. The prestigious list was published in early November, just before the launch of the Un-carrier On co-branded suitcase. Conde Nast Traveler included the Tag Smart Carry-on in its print edition, giving the smart suitcase an entire page in its October issue. Along with this special award, the Tag Smart Carry-on was included in several back-to-back “best of” roundups in noteworthy press outlets including Travel + Leisure, Tom’s Guide, Forbes, CBS News and Buy Side from WSJ. With the Tag Smart collection being designed for the AirTag, Apple-focused publications like iMore published stories around the new collection.

 

18

 

 

YAII PN Ltd. Convertible Debentures

 

December 2021 Convertible Loan Agreement (YAII PN, Ltd.)

 

On December 14, 2021, Samsara Luggage, Inc. (the “Company”) entered into a securities purchase agreement (the “Securities Purchase Agreement”) with YA II PN Ltd., a Cayman Islands exempt company (the “Investor”), pursuant to which the Company sold and issued a convertible debenture in the amount of $500,000 (the “Convertible Debenture”), which is convertible into shares of the Company’s common stock, par value $0.0001 (the “Common Stock”) (as converted, the “Conversion Shares”).

 

The Convertible Debenture bears interest at a rate of 10% per annum (15% on default) and has a maturity date of one (1) year. The Convertible Debenture provides a conversion right, in which any portion of the principal amount of the Convertible Debenture, together with any accrued but unpaid interest, may be converted into the Company’s Common Stock at a conversion price equal to 80% of the lowest volume weighted average price of the Company’s Common Stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. The Convertible Debenture may not be converted into common stock to the extent such conversion would result in the Investor beneficially owning more than 4.99% of the Company’s outstanding Common Stock (the “Beneficial Ownership Limitation”); provided, however, that the Beneficial Ownership Limitation may be waived by the Investor upon not less than 65 days’ prior notice to the Company. The Convertible Debenture provides the Company with a redemption right, pursuant to which the Company, upon fifteen (15) business days’ prior notice to the Investor, may redeem, in whole or in part, outstanding principal and interest under the Convertible Debenture at a redemption price equal to the principal amount being redeemed plus a redemption premium equal to 5% of the outstanding principal amount being redeemed plus outstanding and accrued interest; however, the Investor shall have fifteen (15) business days after receipt of the Company’s redemption notice to elect to convert all or any portion of the Convertible Debenture, subject to the Beneficial Ownership Limitation.

  

June 2021 Convertible Loan Agreement (YAII PN, Ltd.)

 

On June 7, 2021, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with the Investor, pursuant to which the Company sold and issued convertible debentures (individually a “Convertible Debenture” and collectively, the “Convertible Debentures”) in the aggregate amount of up to $1,250,000 (the “Purchase Price”), which are convertible into shares of the Company’s common stock, par value $0.0001 (the “Common Stock”) (as converted, the “Conversion Shares”), of which:

 

  (i) a Convertible Debenture (the “First Convertible Debenture”) in the principal amount of $500,000 (the “First Convertible Debenture Purchase Price”) was issued upon execution of the Securities Purchase Agreement (the “First Closing Date”);
     
  (ii) a Convertible Debenture (the “Second Convertible Debenture”) in the principal amount of $500,000 shall be issued within one (1) business day following the filing of a registration statement on Form S-1 (the “Registration Statement”) under the Securities Act of 1933, as amended, registering the Conversion Shares issuable upon conversion of the Convertible Debentures with the Securities and Exchange Commission (the “SEC”); and
     
  (iii) a Convertible Debenture (the “Third Convertible Debenture”) in the principal amount of $250,000 (the “Third Convertible Debenture Purchase Price”) shall be issued within one (1) business day following the Registration Statement having been declared effective by the SEC.

 

The Convertible Debentures bear interest at a rate of 10% per annum (15% on default) and have a maturity date of one (1) year. The Convertible Debentures provide a conversion right, in which any portion of the principal amount of the Convertible Debentures, together with any accrued but unpaid interest, may be converted into the Company’s Common Stock at a conversion price equal to 80% of the lowest volume weighted average price of the Company’s Common Stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. The Convertible Debentures may not be converted into common stock to the extent such conversion would result in the Investor beneficially owning more than 9.99% of the Company’s outstanding Common Stock (the “Beneficial Ownership Limitation”); provided, however, that the Beneficial Ownership Limitation may be waived by the Investor upon not less than 65 days’ prior notice to the Company. The Convertible Debentures provide the Company with a redemption right, pursuant to which the Company, upon fifteen (15) business days’ prior notice to the Investor, may redeem, in whole or in part, outstanding principal and interest at a redemption price equal to the principal amount being redeemed plus a redemption premium equal to 5% of the outstanding principal amount being redeemed plus outstanding and accrued interest; however, the Investor shall have fifteen (15) business days after receipt of the Company’s redemption notice to elect to convert all or any portion of the Convertible Debentures, subject to the Beneficial Ownership Limitation.

 

In connection with the Securities Purchase Agreement, the Company executed a registration rights agreement (the “Registration Rights Agreement”) pursuant to which it was required to file the Registration Statement with the SEC for the resale of the Conversion Shares, which went effective on or about August 31, 2021.

 

As of the date of this filing, $424,000 of the Second Convertible Debenture and the full $250,000 of the Third Convertible Debenture were converted into shares of common stock.

 

19

 

 

April 2021 Convertible Loan Agreement (YAII PN, Ltd.)

 

On April 6, 2021, the Company entered into a Securities Purchase Agreement (“SPA”) with the Investor, pursuant to which the Investor invested $150,000, and the Company issued a convertible debenture and warrants to the Investor. The $150,000 investment was provided upon signature of the SPA.

 

The investment bears interest at an annual rate of ten percent (10%) and will be repayable after two years. The investment will be convertible at any time into shares of the Company’s Common Stock at a conversion price equal to the lower of (a) $3.46, or (b) 80% of the lowest the daily dollar volume-weighted average price for the Company’s Common Stock during the 10 trading days immediately preceding the conversion date.

 

As part of the transaction, the Company issued to the Investor warrants to purchase an aggregate of 10,838 shares of Common Stock, at an exercise price equal to $3.46. The term of each warrant is five years from the issue date. Each warrant may be exercised by cash payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion of the warrant being exercised. 

 

Results of Operations

 

Six months ended June 30, 2023 compared to the six months ended June 30, 2022

 

Revenue

 

The Company generates revenues through the sale and distribution of smart luggage products and sales through the Sarah & Sam fashion brand. Revenues during the six months ended June 30, 2023 totaled $349,000 compared to $143,000 for the six months ended June 30, 2022. The increase in the total revenue is mainly due to increased sales in the current period partly due to a promotional sales campaign.

 

Costs of Sales

 

Costs of sales consist of the purchase of raw materials and the cost of production. Cost of sales during the six months ended June 30, 2023 totaled $186,000 compared to $81,000 for the six months ended June 30, 2022. The increase in the costs of sales is mainly due to the increase in sales as described above.

 

Gross Profit

 

During the six months ended June 30, 2023, Gross Profit totaled $163,000, representing a Gross Profit margin of 46.70%. During the six months ended June 30, 2022, Gross Profit totaled $62,000, representing a Gross Profit margin of 43.36%.

 

Operating Expenses

 

Operating expenses totaled $460,000 during the six months ended June 30, 2023, compared to $905,000 during the six months ended June 30, 2022, representing a net decrease of $445,000. The decrease in the operating expenses is mainly due to a decrease in sales and marketing activities resulting from less consulting services as well as a decrease in general and administrative expenses relating to a decrease in stock-based compensation.

 

Financing Income (expenses)

 

Financing income totaled $108,000 during the six months ended June 30, 2023 compared to a financing expense of $388,000 during the six months ended June 30, 2022 representing a net increase of $496,000. The decrease in the financing expenses is mainly due to a gain from the movement in the fair value of the derivatives.

 

20

 

 

Net Profit/Loss 

 

We realized a net loss of $189,000 for the six months ended June 30, 2023, as compared to a net loss of $1,231,000 for the six months ended June 30, 2022, for the reasons described above.

 

Three months ended June 30, 2023 compared to the three months ended June 30, 2022

 

Revenue

 

The Company generates revenues through the sale and distribution of smart luggage products. Revenues during the three months ended June 30, 2023 totaled $101,000 compared to $112,000 for the three months ended June 30, 2022. The decrease in the total revenue is mainly due to decreased demand in the current period.

 

Costs of Sales

 

Costs of sales consists of the purchase of raw materials and the cost of production. Cost of revenues during the three months ended June 30, 2023 totaled $40,000 compared to $61,000 for the three months ended June 30, 2022. The decrease in the costs of sales is mainly due to the decrease in sales.

 

Gross Profit

 

During the three months ended June 30, 2023, Gross Profit totaled $61,000, representing a Gross Profit margin of 60.40%. During the three months ended June 30, 2022, Gross Profit totaled $51,000, representing a Gross Profit margin of 45.54%. 

 

Operating Expenses

 

Operating expenses totaled $238,000 during the three months ended June 30, 2023, compared to $451,000 during the three months ended June 30, 2022, representing a net decrease of $213,000. The decrease in the operating expenses is mainly due to a decrease in sales and marketing activities resulting from less consulting services as well as a decrease in general and administrative expenses relating to a decrease in stock-based compensation.

 

Financing Income (expenses)

 

Financing income totaled $226,000 during the three months ended June 30, 2023 compared to a financing expense of $542,000 during the three months ended June 30, 2022 representing a net decrease of $768,000. The decrease in the financing expenses is mainly due to a gain from the movement in the fair value of the derivatives.

 

Net Profit/Loss 

 

We realized a net profit of $49,000 for the three months ended June 30, 2023, as compared to a net loss of $942,000 for the three months ended June 30, 2022, for the reasons described above.

 

Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

 

As of June 30, 2023, the Company had $79,000 of cash, total current assets of $177,000, and total current liabilities of $2,294,000, creating a working capital deficit of $2,117,000. As of December 31, 2022, the Company had $168,000 of cash, total current assets of $345,000 and total current liabilities of $2,320,000 creating a working capital deficit of $1,975,000.

 

21

 

 

The increase in our working capital deficit was mainly attributable to decreases of $89,000 in cash and cash equivalents, $78,000 in inventory, $10,000 of other current assets and increases in accounts payable of $100,000, other current liabilities of $98,000, related party payables of $23,000, and convertible notes payable of $59,000, partially offset by an increases of $9,000 of accounts receivable, and decreases of $272,000 in the fair value of derivative liabilities, $4,000 of deferred revenue, and $29,000 of Notes payable, net.

 

Net cash used in operating activities was $73,000 for the six months ended June 30, 2023, as compared to cash used in operating activities of $855,000 for the six months ended June 30, 2022. The Company’s primary uses of cash have been for research and development expenses, sales and marketing expenses, and working capital purposes.

 

We have principally financed our operations through the sale of our common stock and the issuance of debt. Due to our operational losses, we relied to a large extent on financing our cash flow requirements through issuance of common stock and debt. There can be no assurance we will be successful in raising the necessary funds to execute our business plan.

 

Necessity of Additional Financing

 

Securing additional financing is critical to the implementation of our business plan. If and when we obtain the required additional financing, we should be able to fully implement our business plan. In the event we are unable to raise any additional funds we will not be able to pursue our business plan, and we may fail entirely. We currently have no committed sources of financing.

 

Going Concern Consideration

 

The above conditions raise substantial doubt about our ability to continue as a going concern. Our independent auditors included an explanatory paragraph in their report on the accompanying financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. Although we anticipate that our current operations will provide us with cash resources, we believe existing cash will not be sufficient to fund planned operations and projects through the next 12 months. Therefore, we believe we will need to increase our sales, attain profitability, and raise additional funds to finance our future operations. Any meaningful equity or debt financing will likely result in significant dilution to our existing stockholders. There is no assurance that additional funds will be available on terms acceptable to us, or at all.

 

To address these risks, we must, among other things, implement and successfully execute our business and marketing strategy surrounding our products, continually develop and upgrade our website, respond to competitive developments, lower our financing costs, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

 

Seasonality

 

We do not expect our sales to be impacted by seasonal demands for our products.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

22

 

 

Item 3. - Quantitative and Qualitative Disclosures about Market Risk

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information necessary under this item.

 

Item 4. - Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. The controls evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures are also designed to reasonably assure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

  

Based on the controls evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the Commission, and that material information relating to our company and our consolidated subsidiary is made known to management, including the Chief Executive Officer and Chief Financial Officer, particularly during the period when our periodic reports are being prepared.

 

Inherent Limitations on Effectiveness of Controls

 

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. 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. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within a company have been detected.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15f and 15d-15f under the Exchange Act) that occurred during the quarter ended June 30, 2023 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

 

23

 

 

Part II: Other Information

 

Item 1 - Legal Proceedings

 

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interests.

 

Item 1A. Risk Factors

 

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

   

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosure

 

Not applicable.

 

Item 5. Other Information

 

None.

  

Item 6. Exhibits

 

Exhibit No.    Description
2.1   Merger Agreement, dated May 10, 2019, among the Company, Avraham Bengio, and Samsara Luggage, Inc. (filed as Exhibit 10.1 to the Company’s Form 8-K filed on May 10, 2019 and incorporated herein by reference).
3.1   Articles of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Form S-1 (File No. 333-176969) filed on September 23, 2011 and incorporated herein by reference).
3.2   Certificate of Amendment to Articles of Incorporation (filed as Exhibit 3.1 to the Company’s current Report on Form 8-K filed on November 12, 2019 and incorporated herein by reference).
3.3   Articles of Merger (filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on November 12, 2019 and incorporated herein by reference).
3.4   Amended Bylaws (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 14, 2019 and incorporated herein by reference).
3.5   Certificate of Change to Articles of Incorporation (filed as Exhibit 3.1 to the Company’s current report on Form 8-K filed on March 22, 2021 and incorporated herein by reference).
3.6   Certificate of Change to the Articles of Incorporation Form of Convertible Debenture (incorporated by reference into the Company’s Form 8-K filed with the United States Securities and Exchange Commission on March 22, 2021).
10.1   Securities Purchase Agreement, dated June 5, 2019, between the Company and YAII PN, Ltd. (filed as Exhibit 10.1 to the Company’s Form 8-K filed on June 7, 2019 and incorporated herein by reference).
10.2   Form of Share Purchase Agreement, signed on September 26, 2019, between the Company and investors who invested $500,000 in the Company (filed as Exhibit 10.1 to the Company’s Form 8-K filed on October 2, 2019 and incorporated herein by reference).

 

24

 

 

10.3   Assignment and Assumption Agreement, dated as of November 12, 2019, between the Company and Avraham Bengio (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 12, 2019 and incorporated herein by reference).
10.4   License Agreement dated as of July 18, 2019, between the Company and Sterling/Winters Company, a California corporation, doing business as Meharey MIVI LLC (filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed on February 3, 2020 and incorporated herein by reference).
10.5   Securities Purchase Agreement, dated June 25, 2020, between the Company and Power Up Lending Group Ltd. (filed as Exhibit 10.1 to the Company’s Form 10-Q filed on June 29, 2020 and incorporated herein by reference).
10.6   Securities Purchase Agreement, dated September 3, 2020, between the Company and YAII PN, Ltd. (filed as Exhibit 10.1 to the Company’s Form 8-K filed on September 4, 2020 and incorporated herein by reference).
10.7   Form of Convertible Debenture between the Company and YAII PN, Ltd. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 4, 2020 and incorporated herein by reference).
10.8   Form of Warrant to Purchase Common Stock between the Company and YAII PN, Ltd. (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 4, 2020 and incorporated herein by reference).
10.9   Securities Purchase Agreement, signed April 6, 2021, between Samsara Luggage, Inc. and YAII PN, Ltd. (incorporated by reference into the Company’s Form 8-K filed with the United States Securities and Exchange Commission on April 7, 2021)
10.10   Form of Convertible Debenture (incorporated by reference into the Company’s Form 8-K filed with the United States Securities and Exchange Commission on April 7, 2021)
10.11   Form of Warrant to Purchase Common Stock (incorporated by reference into the Company’s Form 8-K filed with the United States Securities and Exchange Commission on April 7, 2021)
10.12   Securities Purchase Agreement, dated June 7, 2021, between the Company and YA II PN Ltd. (incorporated by reference into the Company’s Form 8-K filed with the United States Securities and Exchange Commission on June 10, 2021)
10.13   Convertible Debenture, dated June 7, 2021, between the Company and YA II PN Ltd. (incorporated by reference into the Company’s Form 8-K filed with the United States Securities and Exchange Commission on June 10, 2021)
10.14   Registration Rights Agreement, dated June 7, 2021, between the Company and YA II PN Ltd. (incorporated by reference into the Company’s Form 8-K filed with the United States Securities and Exchange Commission on June 10, 2021)
10.15   Securities Purchase Agreement, dated December 14, 2021, by and between the Company and YA II PN Ltd. (incorporated by reference into the Company’s Form 8-K filed with the United States Securities and Exchange Commission on December 14, 2021)
10.16   Convertible Debenture, dated December 14, 2021, by and between the Company and YA II PN Ltd. (incorporated by reference into the Company’s Form 8-K filed with the United States Securities and Exchange Commission on December 14, 2021)
14.1   Code of Ethics (filed as Exhibit 14.1 to the Company’s Annual Report on Form 10-K filed on February 3, 2020 and incorporated herein by reference).
31*   Section 302 Certification of the Sarbanes-Oxley Act of 2002 of Atara Dzikowski
32*   Section 906 Certification of the Sarbanes-Oxley Act of 2002 of Atara Dzikowski
101.INS   Inline XBRL Instance Document.
101.SCH   Inline XBRL Taxonomy Extension Schema Document.
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase 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 (formatted as Inline XBRL and contained in Exhibit 101).

 

*Filed herewith

 

#The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

 

25

 

 

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.

 

  SAMSARA LUGGAGE, INC.
  (Registrant)
     
Date: August 14, 2023 By: /s/ Atara Dzikowski
    Atara Dzikowski
    Chief Executive Officer
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)

 

 

26

 

 

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Exhibit 31

 

CERTIFICATIONS

 

I, Atara Dzikowski, certify that:

 

1.I have reviewed this Report on Form 10-Q of Samsara Luggage, Inc. (the “Company”) for the period ending June 30, 2023;

 

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 Company as of, and for, the periods presented in this report;

 

4.I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in 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 Company, including its 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 Company’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 Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

5.I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s Board of Directors (or persons performing the equivalent functions):

 

(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 Company’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 Company’s internal control over financial reporting.

 

Date: August 14, 2023  
   
By: /s/ Atara Dzikowski  
  Atara Dzikowski,  
  Chief Executive Officer  
  and Principal Financial and Accounting Officer  

 

 

Exhibit 32

 

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. 1350)

 

In connection with the Report of Samsara Luggage, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Atara Dzikowski, Chief Executive Officer and Principal Financial and Accounting Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350), that to my 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  
   
By: /s/ Atara Dzikowski  
  Atara Dzikowski,  
  Chief Executive Officer  
  and Principal Financial and Accounting Officer  

 

 

v3.23.2
Document And Entity Information - shares
6 Months Ended
Jun. 30, 2023
Aug. 14, 2023
Document Information Line Items    
Entity Registrant Name SAMSARA LUGGAGE, INC.  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   10,582,414
Amendment Flag false  
Entity Central Index Key 0001530163  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
Document Period End Date Jun. 30, 2023  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q2  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Document Quarterly Report true  
Document Transition Report false  
Entity File Number 000-54649  
Entity Incorporation, State or Country Code NV  
Entity Tax Identification Number 26-0299456  
Entity Address, Address Line One 135 E. 57th Street  
Entity Address, Address Line Two Suite 18-130  
Entity Address, City or Town New York  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 10022  
City Area Code (855)  
Local Phone Number -256-7477  
Entity Interactive Data Current Yes  
v3.23.2
Condensed Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Current assets    
Cash and cash equivalents $ 79 $ 168
Accounts receivable 10 1
Inventory 77 155
Other current assets 11 21
Total current assets 177 345
TOTAL ASSETS 177 345
Current liabilities    
Accounts payable 147 47
Other current liabilities 382 285
Related party payable 144 121
Deferred revenue 2 6
Convertible notes and short-term loans 1,226 1,167
Note payable, net 32 61
Conversion option derivative liability 361 632
Warrant derivative liability 1
Total current liabilities 2,294 2,320
TOTAL LIABILITIES 2,294 2,320
MEZZANINE EQUITY:    
Convertible and redeemable preferred shares, $0.0001 par value, 1,000,000 shares authorized, 103,876 and 193,408 shares outstanding at June 30, 2023 and December 31, 2022, respectively 86 161
STOCKHOLDERS’ DEFICIT    
Common stock, $0.0001 par value; 7,500,000,000 shares authorized; 9,604,115 and 4,406,312 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively. 1
Additional paid-in capital 10,585 10,464
Accumulated deficit (12,789) (12,600)
Total stockholders’ deficit (2,203) (2,136)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 177 $ 345
v3.23.2
Condensed Balance Sheets (Parentheticals) - $ / shares
Jun. 30, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Convertible and redeemable preferred shares, par value 0.0001 0.0001
Convertible and redeemable preferred shares, authorized 1,000,000 1,000,000
Convertible and redeemable preferred shares, outstanding 103,876 193,408
Common stock, par value (in Dollars per share) $ 0.0001 $ 0.0001
Common stock, authorized shares 7,500,000,000 7,500,000,000
Common stock, shares issued 9,604,115 4,406,312
Common stock, shares outstanding 9,604,115 4,406,312
v3.23.2
Condensed Statements of Operations (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Income Statement [Abstract]        
REVENUE $ 101 $ 112 $ 349 $ 143
COST OF GOODS SOLD 40 61 186 81
GROSS PROFIT 61 51 163 62
OPERATING EXPENSES        
Research and development 5 6 43 46
Sales and marketing 58 164 128 410
General and administrative 175 281 289 449
TOTAL OPERATING EXPENSES 238 451 460 905
OPERATING LOSS (177) (400) (297) (843)
FINANCING INCOME (EXPENSES)        
Interest and amortization of issuance cost on note and short-term loan and other (51) (398) (164) (606)
Income (expenses) in respect of warrants issued and convertible component in convertible loan, net interest expenses 277 (144) 272 218
TOTAL FINANCING INCOME (EXPENSES) 226 (542) 108 (388)
NET INCOME (LOSS) $ 49 $ (942) $ (189) $ (1,231)
Net Income (Loss) Per-share        
Basic (in Dollars per share) $ 0.01 $ (0.4) $ (0.03) $ (0.55)
Diluted (in Dollars per share) $ 0 $ (0.4) $ (0.03) $ (0.55)
Weighted average number of common shares outstanding        
Weighted average number of common shares outstanding (in Shares) 7,078,754 2,353,012 6,043,236 2,221,576
Diluted (in Shares) 74,485,254 2,353,012 6,043,236 2,221,576
v3.23.2
Condensed Statements of Changes in Stockholders’ Deficit (Unaudited) - USD ($)
$ in Thousands
Common Stock
Additional Paid-In Capital
Services receivable
Accumulated Deficit
Total
Balance at Dec. 31, 2021 $ 9,852 $ (356) $ (10,194) $ (698)
Balance (in Shares) at Dec. 31, 2021 2,055,487        
Conversion of convertible debt into common shares 56 56
Conversion of convertible debt into common shares (in Shares) 97,458        
Amortization of services 176 176
Net income (loss) (289) (289)
Balance at Mar. 31, 2022 9,908 (180) (10,483) (755)
Balance (in Shares) at Mar. 31, 2022 2,152,945        
Balance at Dec. 31, 2021 9,852 (356) (10,194) (698)
Balance (in Shares) at Dec. 31, 2021 2,055,487        
Net income (loss)         (1,231)
Balance at Jun. 30, 2022 10,090 (30) (11,425) (1,365)
Balance (in Shares) at Jun. 30, 2022 2,637,852        
Balance at Mar. 31, 2022 9,908 (180) (10,483) (755)
Balance (in Shares) at Mar. 31, 2022 2,152,945        
Conversion of convertible debt into common shares 141 141
Conversion of convertible debt into common shares (in Shares) 457,604        
Issuance of shares to service provider 41 41
Issuance of shares to service provider (in Shares) 27,303        
Amortization of services 150 150
Net income (loss) (942) (942)
Balance at Jun. 30, 2022 10,090 (30) (11,425) (1,365)
Balance (in Shares) at Jun. 30, 2022 2,637,852        
Balance at Dec. 31, 2022 10,464 (12,600) (2,136)
Balance (in Shares) at Dec. 31, 2022 4,406,312        
Conversion of Preferred A shares into common shares $ 1 40 41
Conversion of Preferred A shares into common shares (in Shares) 1,481,840        
Net income (loss) (238) (238)
Balance at Mar. 31, 2023 $ 1 10,504 (12,838) (2,333)
Balance (in Shares) at Mar. 31, 2023 5,888,152        
Balance at Dec. 31, 2022 10,464 (12,600) (2,136)
Balance (in Shares) at Dec. 31, 2022 4,406,312        
Net income (loss)         (189)
Balance at Jun. 30, 2023 $ 1 10,585 (12,789) (2,203)
Balance (in Shares) at Jun. 30, 2023 9,604,115        
Balance at Mar. 31, 2023 $ 1 10,504 (12,838) (2,333)
Balance (in Shares) at Mar. 31, 2023 5,888,152        
Conversion of Preferred A shares into common shares 35 35
Conversion of Preferred A shares into common shares (in Shares) 2,049,297        
Stock Based Compensation 46   46
Stock Based Compensation (in Shares) 1,666,666        
Net income (loss) 49 49
Balance at Jun. 30, 2023 $ 1 $ 10,585 $ (12,789) $ (2,203)
Balance (in Shares) at Jun. 30, 2023 9,604,115        
v3.23.2
Condensed Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Cash Flows From Operating Activities    
Net loss $ (189) $ (1,231)
Adjustments to reconcile net loss to net cash used in operating activities    
Amortization of services receivable 326
Stock based compensation 46
Interest expense and amortization of debt discount 46 606
Expenses in respect of warrants issued and convertible component in convertible loan, net interest expenses (271) (218)
Change in fair value of liability (1)
Change in operating assets and liabilities    
Inventory 78 (252)
Accounts receivable (9)
Prepaid expenses and other current assets 10
Other current assets 43
Accounts payable 100 (52)
Other current liabilities 98 (79)
Deferred revenues (4) 38
Related parties payable 23 (36)
Net cash provided by (used) in operating activities (73) (855)
Cash Flows From Investing Activities    
Purchase of property and equipment
Net cash provided by (used in) investing activities
Cash Flows From Financing Activities    
Proceeds from convertible loans, net of issuance cost
Proceeds from issuance of preferred stock 129
Prepayments of loans (16)
Net cash provided by financing activities (16) 129
Net change in cash and cash equivalents (89) (726)
Cash and cash equivalents, beginning of period 168 827
Cash and cash equivalents, end of period 79 101
Supplemental disclosure of cash flow information    
Cash paid for interest
Cash paid for income tax
Non-cash investing and financing activities    
Common stock issued for conversion of convertible note and accrued interest 197
Common stock issued against accounts payables $ 76 $ 41
v3.23.2
Organization and Description of Business
6 Months Ended
Jun. 30, 2023
Organization and Description of Business [Abstract]  
Organization and Description of Business

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

  A.

Samsara Luggage is a global smart luggage and lifestyle brand that incorporates innovative design and functional technology into its smart travel products. The Company launched the first product from the Tag Smart collection of smart suitcases in April 2022, as travel resumed to pre-COVID levels. This collection is equipped with Apple AirTag technology, allowing travelers to track their suitcase using the iPhone’s Find My app. Lost luggage became a prominent issue for global travelers during the Summer 2022 travel season. The Tag Smart suitcase offered travelers precise tracking of their suitcase along with immediate information regarding their luggage’s whereabouts. The Tag Smart collection is currently available in two different sizes to accommodate both international and US domestic travel. The newest collection comes in three colors in durable polycarbonate and two colors in a lightweight, aviation-grade aluminum material.

 

The Company launched Street Smart in February 2023. Street Smart is a curated collection of travel and lifestyle accessories that builds on the fashion element of travel. Included in the collection are a selection of sunglasses, tote bag, stylish ballcaps and a stand-alone portable battery for electronic devices. Street Smart compliments Samsara Luggage’s aesthetic and allows the brand to offer more travel-ready products at varying price points. 

 

During the last quarter of 2020, Samsara launched Sarah & Sam Fashion and Lifestyle Collection. Sarah & Sam is a part of Samsara Direct business model prompted by the travel limitations due to the coronavirus pandemic, leveraging the company’s established digital assets and manufacturing and fulfillment supply chain capabilities to offer additional consumer products that respond to the changing needs of the market.

 

On November 12, 2019, the Company completed its merger with the Delaware corporation that was previously known as “Samsara Luggage, Inc.” (“Samsara Delaware”) in accordance with the terms of the Merger Agreement and Plan of Merger, dated as of May 10, 2019, (the “Merger Agreement”) by and among the Company, Samsara Delaware, and Avraham Bengio, pursuant to which Samsara Delaware merged with and into the Company, with the Company being the surviving corporation (the “Merger”). Following the completion of the Merger, the business of the Company going forward became the business of Samsara Delaware prior to the Merger, namely, designing, manufacturing, and selling high quality luggage products to meet the evolving needs of frequent travelers and also seeking to present new technologies within the aluminum luggage industry, including an aluminum “smart” suitcase.

 

The Common Stock listed on the OTC Pink Marketplace, previously trading through the close of business on November 11, 2019 under the ticker symbol “DAVC,” commenced trading on the OTC Pink Marketplace under the ticker symbol “SAML” on November 12, 2019. The Common Stock has a new CUSIP number, 79589J101.

 

  B. Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2023, the Company had approximately $79 in cash and cash equivalents, approximately $2,117 in deficit of working capital, a stockholders’ deficit of approximately $2,203 and an accumulated deficit of approximately $12,789. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon raising capital from financing transactions and revenue from operations. Management anticipates their business will require substantial additional investments that have not yet been secured. Management is continuing in the process of fundraising in the private equity and capital markets as the Company will need to finance future activities. These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern.

v3.23.2
Summary of Significant Accounting Policies and Basis of Presentation
6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

 

Unaudited Interim Financial Statements

 

The accompanying unaudited financial statements include the accounts of the Company, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the for three-months ended June 30, 2023. However, these results are not necessarily indicative of results for any other interim period or for the year ended December 31, 2023. The preparation of financial statements in conformity with GAAP requires the Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

 

Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (“SEC”). The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on April 3, 2023 (the “Annual Report”). For further information, reference is made to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“‘US GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As applicable to the financial statements, the most significant estimates and assumptions relate to the measurement of the convertible notes, derivative liabilities and going concern.

 

Functional currency

 

The functional currency of the Company is the US dollar (“US$”), which is the currency of the primary economic environment in which the operations of the Company are conducted.

 

Cash and cash equivalents

 

Cash equivalents are short-term highly liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired.

 

Inventory

 

Inventories are valued at the lower of cost or net realizable value. Cost of raw and packaging materials, purchased products, manufactured finished products and products in process are determined on the average cost basis. The Company regularly reviews its inventories for impairment and reserves are established when necessary.

 

Property and Equipment

 

Property and equipment are stated at cost less accumulated depreciation and amortization. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the related assets, which range from three to five years. Maintenance and repair costs are expensed as they are incurred while renewals and improvements which extend the useful life of an asset are capitalized. At the time of retirement or disposal of property and equipment, the cost and related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated results of operations.

 

Derivative Liabilities and Fair Value of Financial Instruments

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815.

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.

 

Fair value of certain of the Company’s financial instruments including cash, accounts receivable, accounts payable, accrued expenses, notes payable, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value investments.

 

Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.

 

Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:

 

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

 

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and

 

Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.

 

Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of income.

 

The Company records a debt discount related to the issuance of convertible debts that have conversion features at adjustable rates. The debt discount for the convertible instruments is recognized and measured by allocating a portion of the proceeds as an increase in additional paid-in capital and as a reduction to the carrying amount of the convertible instrument equal to the fair value of the conversion features. The debt discount will be accreted by recording additional non-cash gains and losses related to the change in fair values of derivative liabilities over the life of the convertible notes.

 

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:

 

   Balance as of June 30, 2023 
   Level 1   Level 2   Level 3   Total 
   (U.S. dollars in thousands) 
Liabilities:                
Fair value of convertible component in convertible loan, net of discounts and debt issue costs   
       -
    
      -
    361    361 
Fair value of warrants issued in convertible loan   
-
    
-
    
-
    
-
 
Total liabilities   
-
    
-
    361    361 

 

   Balance as of December 31, 2022 
   Level 1   Level 2   Level 3   Total 
   (U.S. dollars in thousands) 
Liabilities:                
Fair value of convertible component in convertible loan, net of discounts and debt issue costs   
     -
    
      -
    632    632 
Fair value of warrants issued in convertible loan   
-
    
-
    1    1 
Total liabilities   
-
    
-
    633    633 

 

Revenue recognition

 

Revenues are recognized when delivery has occurred and there is persuasive evidence of an agreement, the fee is fixed or determinable and collection of the related receivables is reasonably assured, and no further obligations exist. Revenues from sales of products are recognized when title and risk and rewards for the products are transferred to the customer.

 

Research and development expenses

 

Research and development expenses are charged to operations as incurred.

 

Income Taxes

 

Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Use of net operating loss carry forwards for income tax purposes may be limited by Internal Revenue Code section 382 if a change of ownership occurs.

 

Basic and Diluted Net Income (Loss) Per Common Share

 

Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon exercise of common stock equivalents such as stock options, warrants and convertible debt instruments. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. As a result, the basic and diluted per share amounts for the six months ended June 30, 2023, and the three and six months ended June 30, 2022, are identical. In the six months ended June 30, 2023, 67,406,500 anti-dilutive securities were excluded from the computation. In the three and six months ended June 30, 2022, 11,398,531 anti-dilutive securities were excluded from the computation.

 

   Three months
ended
June 30,
   Three months
ended
June 30,
   Six months
ended
June 30,
   Six months
ended
June 30,
 
   2023   2022   2023   2022 
                 
Numerator:                
Net income (loss)  $49    (942)   (189)   (1,231)
Convertible note interest   33    
-
    
-
    
-
 
Amortization of debt discounts   10    
-
    
-
    
-
 
Change of fair value of derivatives   (277)   
-
    
-
    
-
 
Adjusted net income (loss)  $(185)   (942)   (189)   (1,231)
                     
Denominator: Weighted average shares outstanding used in computing net income (loss) per share                    
Basic   7,078,754    2,353,012    6,043,236    2,221,576 
Effect of mezzanine shares   7,216,501    
-
    
-
    
-
 
Effect of convertible note weighted shares   60,189,999    
-
    
-
    
-
 
                     
Diluted   74,485,254    2,353,012    6,043,236    2,221,576